Privatisation boost needed to woo investment

Dubai: The privatisation drive throughout the Middle East must be speeded up to attract more foreign direct investment, analysts say.

With oil and share prices soaring in the Gulf, the rest of the Arab world wants to attract more petrodollars into their economies to help boost growth. However, investors claim these countries must deliver faster economic reforms and more liquid financial markets.

?Trying to attract more Gulf money has become something of a government policy in many Arab countries,? said Hany Genena, senior economist for EFG-Hermes, a financial institution based in Cairo.

?Egyptian cabinet ministers travel regularly to the Gulf for this purpose, it is also evident in countries like Jordan and Lebanon,? added Genena.

The need to invest their oil revenues is the motive behind Gulf countries seeking opportunities around the region, mainly in the telecommunications and real estate sectors.

The UAE?s Etisalat and Saudi Telecom are among the 13 companies bidding for a 35 per cent stake in Tunisie Telecom, Tunisia?s largest carrier.

Lebanon is also opening its doors to private investment as Mobile Telecommunications Co. has teamed up with Atheer Telecom in Iraq to create MTC Atheer, running one of Lebanon?s two mobile operations.

Booming real estate developments are proving very attractive for potential investors who are already active in Lebanon and Egypt.

Real estate has doubled in the past four years in Lebanon, and the reenergised Egyptian market has been the best performing emerging market for the past three years, according to Shuaa Capital.

Dubai?s Emaar Properties will build a $3.9 billion (Dh14.2 billion) real estate project in Cairo, slated for completion by 2010.

Apart from buying real estate and telecom assets, the Gulf?s petrodollars are still chasing few assets in the region and making it hard to attract new investment.

?There is a lack of depth in the region?s financial markets. Investors have very few stocks to choose from,? said Steve Brice, senior Middle East econ-omist at Standard Chartered Bank, Dubai.

Brice added that the market ranked poorly in business environment because of underdeveloped debt markets.