UAE emerges as investment safe haven

Yinchuan, China: Unrest sweeping some Arab countries is expected to have a positive outcome for the UAE as it stands to gain funds displaced from the countries in upheaval, according to Fujairah Free Zone Authority Director-General Sharif Habib Al Awadi.

"A lot of rush will come. A lot of people made money. This needs breathing space," he told Gulf News in an exclusive interview. In fact, the UAE's position has improved in the wake of political turmoil in parts of the Middle East given its reputation as a stable and peaceful location for investments, he said.

At the same time, Al Awadi said he did not expect the unrest to spread to the UAE and the Gulf Cooperation Countries (GCC).

"In the GCC, we have a leadership that is more educated, more accessible, more aware," he said. "See how Abu Dhabi has been developed."

Speaking of the UAE in particular, he said, "We have a very firm government, a government that is very mature. They [the leaders] know the risks."

Critical role for banks

Explaining why he did not expect the unrest to seep into the GCC, Al Awadi said: "Things are very different in the GCC today than they were in the past. We did not have a proper negotiation platform in the old days. Today, we have more negotiation platforms, more communication skills."

The unrest in Arab states has, however, shown that banks have an important role to play, he said. "Banks should take more risks. They must invest in the future, not just in the tangibles," he said in reply to a question during the conference.

The Arab Spring has shaken up a lot of investors, who will now think twice before putting their money in countries affected by it, he said.

Investors had gone to Syria and Libya attracted by the labour and cost advantages in those countries, he said. "Those people are now coming back."

One reason was that Arabs sought to be in a place that shares the same culture as theirs, he said, highlighting the difficulty for some businesses in Europe.

"But our reaction has to be right. We have to be careful when we talk to investors coming from, say, Egypt," he said.

There is no likelihood of Americans and Europeans moving away from GCC countries out of fear of unrest, he said, observing that investments had risen in the GCC since the 9/11 attack. At the same time, a lot of funds will move for reconstruction in places like Egypt, Tunisia and Libya, he added.

Asked if he felt oil investors will begin moving to non-Arab countries that have proven resources, he said it was not likely. Each country has advantages and disadvantages compared to others. Investors will consider the business aspects of proposals as well as political risks before venturing into new projects.