Mohammed Faisal Ibrahim
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The FDI destination of choice" has been released by the Foreign Investment Office (FIO) part of the Dubai Economic Department. The findings are encouraging as overall investor confidence in Dubai fared well, indicating a positive position after times of global turbulence.
Asked about their future plans, 81 percent of investors who have investments in Dubai, mentioned that they plan to maintain or increase investment in the emirate. These findings are especially striking when compared to equivalent global figures. When asked about their global investment budgets, 37 percent of global investors indicated that they plan to decrease their investments. Almost half of the investors who are planning to increase their investments in Dubai plan to reinvest in their current businesses.
"The general rule that the current investor is essential to future investment flows appears to hold true in Dubai. This is especially important in times of global turbulence when many investors seek new opportunities" said Mr. Fahad Al Gergawi, CEO of Foreign Investment Office (FIO).
The report finds that approximately 29 percent of the bullish investors plan to enter into new joint ventures with local partners, and 14 percent plan to acquire equity in local companies in order to grow their presence in the market.
The report highlights a number of industries as more positively inclined than others to invest in. The industries that have the most attractive profile in Dubai are telecoms and utilities. Dubai is also a top ten choice among executives from the financial services industry, being the sixth most important destination globally for future investments. Non-financial services executives (representing companies from fields such as transportation, business services, health care, legal services and education) ranked Dubai among the global top 20 FDI destinations. Finally, primary industry investors rank Dubai above the global median while manufacturing industries (both heavy and light manufacturing) are more bearish about Dubai's prospects ranking Dubai below the global median.
"Considering the solid foundation of FDI attractiveness in Dubai and the reported future prospects, the Foreign Investment Office (FIO) will continue to consider ways and venues to further support Dubai in cementing its top FDI destination globally," concluded Mr. Al Gergawi.
The recent release of the 2010 A.T. Kearney FDI Confidence Index report ranked UAE as the 11th global FDI destination. Dubai was ranked as the preferred destination of choice in the MENA region for future Foreign Direct Investment (FDI) serving as a major gateway for fortune 1000 global investors.
Fahad Al Gergawi, CEO of Foreign Investment Office part of the Dubai Department of Economic Development, believes that the results will support the emirate to maintain and eventually improve Dubai's FDI status, thus supporting the overall UAE economy. "We are pleased to see the confidence investors have in Dubai. It is now up to us to seal our position as the FDI destination of choice for future investments in the MENA region, and fulfil our obligations to maintain and grow current and future investors”.
Foreign investors look towards Dubai and the UAE now as an established, more advanced market as it has the experience, the infrastructure and the dynamic business environment. To a great extent, Dubai is facing similar challenges to many developed economies which is a sign of economic maturity. However, this presents a new set of policy challenges for Dubai to support ongoing strategic investments.
The rise of foreign investment in Dubai has been meteoric and its sheer momentum has played a large role in the economic well-being of the emirate. According to the FT Intelligence Report, in 2008, Dubai’s FDI contributed US$21 billion (AED77.3 billion) to the GDP, hence positioning Dubai as one of the most attractive markets for investment. Further to the report, FDI magazine stated that Dubai was also ranked first in the classification of the ‘future cities for investments in the MENA region’. There are still challenges to be met, but with the strength of existing businesses, and the commitment to develop the emirate further, Dubai aims to attract even more FDI in the years to come.
“We have plans to further increase investors’ confidence that Dubai offers the right environment for any business to establish itself or expand. We will make every possible effort to leverage the enormous advantages the city of Dubai offers. Moving forward, FIO will continue to develop policies and legislation that enhances the competitiveness of Dubai and promote the interests of investors,” added Al Gergawi.
The Dubai Foreign Investment Office (FIO) has the responsibility of attracting and facilitating foreign investment into Dubai and has commissioned an in-depth special survey and research report on how to achieve added competitiveness by developing and changing foreign investment policy. The report is expected in September 2010
Dubai has been named “Middle East City of the Future 2010-11” by fDi Magazine, with judges pointing to the emirate’s popularity as a foreign direct investment destination. The report by fDi Magazine comes soon after Dubai was ranked a destination of choice for FDI by the 2011 AT Kearney FDI Confidence Index Report.
Sami Al Qamzi, director general of the Department of Economic Development (DED), said: “The ranking is a strong testament to the economic fundamentals of the city, and the growth potential that Dubai offers to investors from around the world. From creating the right infrastructure to establishing business-friendly policies, Dubai has been focused on all-round development and creating a conducive environment for growth.”
The fDi Intelligence division collected data from 46 cities under six categories — economic potential, human resources, cost-effectiveness, quality of life, infrastructure and business friendliness — in order to make its decision. The independent judging panel also evaluated data for a new category — FDI promotion strategy — collected from 12 cities. Cities were scored on a maximum of ten points under each criterion and were weighted by importance to get the overall scores.
Irfan Al Hassani, a UAE-based economist, told Gulf News: “This acknowledgement is due to the flexible business climate and several leverages being given for businesses in Dubai. “A consistently strong economic output has greatly helped in increasing foreign direct investment in Dubai by attracting international firms to conduct business.”
Dubai attained a score of 52.05, highest among 25 Middle East cities. The report also observed that Dubai scored highest in the region in terms of the number of FDI projects from 2003 to June 2010. The city scored a perfect 100 in terms of economic potential, evaluated on the basis of population, total number of patents, GDP, total number of FDI projects, number of companies in R&D, number of FDI mega-projects, global competitiveness and other key parameters.
Fahd Al Gergawi, chief executive officer of Dubai FDI, the foreign investment promotion arm of DED, said: “The sustained top ranking by fDi Magazine for Dubai reiterates the strong growth potential that the city offers for foreign investors to set up business and record tangible growth. Foreign investors in Dubai stand to benefit from the city’s advanced infrastructure as well as its strategic location as the regional business hub. The top ranking will further catalyse foreign direct investments to Dubai.” Foreign direct investment in Dubai has grown 4.5 percent this year compared with 2010 and the growth is poised to jump to 30 percent next year, said Al Gergawi.
“The access to a rich talent pool of skilled professionals, the high quality of life that the city offers and the ease of doing business in Dubai are all driving forces for the continued competitiveness of the city.”
Dubai also clinched a perfect 100 score in infrastructure measured by the number of international destinations connected, airlines served, internet upload and download speeds of its seaport, time taken to export and import, internet users, logistics performance index and e-government web measure index, among others. With the tax free corporate structure in the free zones, as well as the advanced logistics and infrastructure facilities, it was not a surprise that Dubai scored so high, Al Hassani said. “Dubai could establish itself as a gateway city between Europe and the Far East.
“There are several other factors that are involved in business regulations. A number of government initiatives to update the business rules and regulations have helped enhance the role of Dubai in the region as the main business hub.”
Investment destination, blazing to the top:
4.5%, Growth in foreign investment in Dubai this year.
52.05, Dubai’s survey score, highest among 25 cities.
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