The scale of foreign direct investments (FDI) attracted by the six-nation GCC grouping has by and large remained the same over the past two years. The GCC attracted some $26.5 billion (Dh97.3 billion) worth of FDI in 2012.

This was highlighted in the World Investment Report 2013 released last week by the United Nations Conference on Trade and Development (Unctad). The report focuses on the value of investments in trade and development.

Among other things, the report cites the increasing share of the GCC in global FDI flows — from 1.7 per cent in 2011 to almost 2 per cent in 2012. However, this partly reflects a drop in worldwide capital flow, from 2011’s $1.652 trillion to $1.351 trillion last year, in large part reflecting the uncertainties in the global economy.

To be sure, all GCC countries experienced mixed growth in fund inflow, with Saudi Arabia being the sole, but important, exception. Nevertheless, the kingdom remained the largest regional recipient of FDI.

With a GDP of $727 billion in 2012, it is the largest economy within the GCC grouping. This is a sizeable amount going by regional statistics, by virtue of representing nearly 47 per cent of the GDP of Gulf states.

Drop in FDI inflow

But Saudi Arabia continued the trend of experiencing drops in FDI funding — from $39.5 billion in 2008 to $36.5 billion in 2009 and to $29.2 billion in 2010. It dropped further to $16.3 billion in 2011 and $12.2 billion last year.

Conversely, the other GCC economies experienced attractive gains in FDI figures. The UAE in particular continued the trend — which has been in evidence over recent years — of making steady progress, pulling in $9.6 billion in 2012, up from $7.7 billion in 2011 and 2010’s $5.5 billion.

Furthermore, other GCC countries registered notable growth in inward investments. Kuwait succeeded in doubling inflow of FDI to $1.8 billion.

Oman also managed to double FDI to $1.5 billion, reflecting the interest of international investors in the country’s tourism prospects.

Notably, Bahrain succeeded in seeing FDI growing from a mere $156 million in 2010 to $781 million in 2011 and last year’s $891 million, notwithstanding the socio-political tensions since February 2011.

The advances serve as a testimony of Bahrain’s capability to attract foreign investment, thanks to several factors, notably the availability of locally qualified and trained human resources.

Advantage Qatar

Qatar is likely to attract substantial FDI in the years to come, ahead of the football World Cup in 2022.

Needless to say, GCC countries need to streamline laws and business practices in order to attract more — and substantial — foreign investments. Unlike indirect investments such as in stocks, FDI represents a commitment on the part of investors to particular countries.

Attracting foreign investment is a daunting task. Economies throughout the world give it pre-eminence in order to help find solutions to economic challenges.

For instance, Saudi authorities have the opportunity to adopt liberal measures to the existing foreign investment law (FIL) as a means to attract outside funding in critical industries. Enacted in April 2000, the FIL continues to restrict foreign investments in the much-sought-after petroleum sector.

According to the ‘BP Statistical Review of World Energy June 2013’, Saudi Arabia retains its status as the largest producer and exporter of crude oil in the world.

Certainly, GCC countries have the capacity to increasinly attract global investments.

— The writer is a Member of Parliament in Bahrain.