Gulf Cooperation Council (GCC) countries have posted mixed results in the recently released annual World Investment Report 2010. The World Conference on Trade and Development (Unctad) report traces movements of foreign direct investments around the world.

Unfortunately, four out of the six GCC countries attracted a lower level of foreign direct investments in 2009, with Qatar and Kuwait being the two exceptions. For instance, Saudi Arabia attracted $35.5 billion (Dh130.3 billion), down from a record $38.1 billion in 2008.

Nevertheless, the kingdom succeeded in strengthening its grip over inward foreign direct investments in West Asia, a region encompassing Turkey and Iran plus other GCC states.

Strangely enough, Saudi Arabia controlled 52 per cent of foreign direct investments going into the West Asia region in 2009, up from 42 per cent in 2008. The difference reflected lower foreign direct investment amounts entering West Asia, specifically $68.3 billion in 2008 versus $90.3 billion in 2009.

Saudi Arabia itself attracted $24.3 billion worth of foreign direct investment in 2007 compared to $18.3 billion in 2006, up from $12 billion in 2005. The extraordinary progress partly reflects sustained economic reforms, in conjunction with the kingdom's official drive to join the World Trade Organisation (WTO).

Saudi Arabia acceded to the World Trade Organisation in December 2005 following a decade of protracted negotiations. In particular, it deserves credit for liberal measures encompassing the foreign investment law, enacted in April 2000.

The foreign investment law grants foreign firms the right to own majority stakes in companies within the kingdom. Also, the law allows foreign banks to operate in the form of locally incorporated joint stock companies or as branches of international financial institutions.

One-stop processing

Also, the Saudi Arabian General Investment Auth-ority, which looks after foreign investments, has put in place a one-stop-shop application process besides a 30-day deadline for decisions on investment applications.

From around $13.7 billion in 2008, foreign direct investment (FDI) flow into the UAE dipped to nearly $4 billion in 2009, Unctad said in its 2010 global investment report.

The extraordinary development can only be understood in the context of adverse effects of the global financial crisis, which erupted in the second half of 2008. Among other things, the crisis undermined confidence in economies throughout the world.

Conversely, Qatar succeeded in more than doubling inward foreign direct investment from $4.1 billion in 2008 to $8.8 billion in 2009. It has now overtaken the UAE as the second largest recipient of foreign direct investment within the GCC.

The achievement is nothing short of a vote of confidence in the Qatari economy.

The credit partly relates to sustained progress of the country's energy sector notably gas.

In reality, Qatar is the largest exporter of liquefied natural gas (LNG) in the world, a position overtaken from Indonesia several years ago. For good reasons, the country continues to expand its gas industry with annual LNG output amounting to 54 million tonnes, up from 38 million tonnes only three years or so ago. Still, the plan calls for reaching an output level of 77 million tonnes a year by 2012.

Reversing several years of unpleasant results, Kuwait managed to change course from a deficit $51 million in 2008 to a surplus of $145 million in 2009. However, the size of incoming foreign direct investment in Kuwait remains the lowest among the GCC states.

Global decline

To be sure, 2009 has proven to be an exceptionally difficult year for inward foreign direct investment, with the global graph dropping by a hefty 37 per cent to $1.1 trillion. Ostensibly, the extraordinary development reflected complexities caused by the global financial crisis.

Undoubtedly, GCC countries at large could not escape the wrath of the unwelcome development in the global economy. Yet, Qatar in particular deserves to be commended for an outstanding performance in an otherwise difficult year for foreign investments.

The writer is a Member of Parliament in Bahrain.