DUBAI: The UAE has returned to the A.T. Kearney FDI Confidence Index this year with the global ranking at 21 and is the only entry in the top 25 list from the Middle East region.
FDI inflows have remained steady in recent years, reaching $11 billion (Dh40.40 billion) in 2014 and 2015, and greenfield investments nearly tripled to 129 announced projects in that period.
The United States again tops the FDI Confidence Index, holding its first-place position for the fifth year in a row. Germany rises to the second position in the FDI Confidence Index, followed by China in third place. The United Kingdom and Canada round out the top five spots.
The A.T. Kearney FDI Confidence Index is an annual survey of global business executives that ranks which markets are likely to attract the most investment in the next three years. In contrast to other backward-looking data on FDI flows, the FDI Confidence Index provides unique forward-looking analysis of which markets investors intend to target for FDI in the coming years.
Analyst expect a number of investor-oriented reforms including updated bankruptcy and investment laws, simplifying the process for obtaining construction permits are expected to boost inward investments. The UAE has also pledged to continue to advance its technological readiness and deepen its commitment to innovation.
The government’s recent efforts show signs of gaining significant traction. In the World Bank’s Doing Business 2017, the UAE is highlighted as one of the top 10 economies that made the greatest improvements in business relations.
“Investors clearly consider the UAE to be one of the strongest, most diversified economies in the region and value its position as a regional and global gateway. The UAE’s ranking this year is a function of many factors, including excellence in governance, demonstrated resilience, world-class infrastructure and a deep, unwavering commitment to innovation,” said Rudolph Lohmeyer, Vice President of A.T. Kearney’s Global Business Policy Council.
According A.T. Kearney study, globally, three-fourths of companies plan to increase their foreign direct investment in the next three years. This is an increase from last year’s results, despite expectations that geopolitical events and rising anti-globalisation could have put a damper on FDI worldwide.
The study shows that for the third year in a row, global business executives see an increase in geopolitical tensions as the greatest risk in the external environment. Investors’ concerns about geopolitics and rising protectionism are in fact likely driving some of their motivation to increase FDI. In an environment of slowing global trade growth and increasing barriers to trade, FDI may offer a localisation strategy for investors in key markets.
“Investors told us that they are optimistic about the future of the global economy, global uncertainties notwithstanding, and see many quality opportunities for FDI worldwide,” says Paul A. Laudicina, founder of the FDI Confidence Index and chairman of A.T. Kearney’s Global Business Policy Council. “For the first time since the Global Financial Crisis, we saw a rise in the number of emerging markets on the Index. This could be an inflection point after years of increasing dominance by developed markets on the FDI Confidence Index.”
Despite some continued economic volatility due to low global commodity prices, the Middle East and Africa made a comeback on the Index after a two-year absence with the UAE ranked at 21 on the Index. South Africa rounds out the Index in the 25th spot.
