Research
finds stability and reform critical to improving FDI in the Middle
East
Posted: 16 September 2003
Findings to be released at MEIDC meet preceding IMF/World
Bank summit
With recent World Bank studies indicating that the Middle East
only receives a modest 1 per cent of global foreign direct investment
(FDI), a new research report has highlighted the key challenges
to attracting more international capital to the region.
David McLean, Executive Director of the Middle East Infrastructure
Development Congress, commented that the research study highlighted
both opportunities and threats to the flow of investment:
“There is huge potential in the region and major investment
projects are happening. However, there are some challenges concerning
broader political stability, economic reform, and legal frameworks
that need to be successfully tackled or they will hamper further
opportunity and growth.”
The research study was conducted during a series of in-depth interviews
with 30 senior executives from companies representing the banking
and finance, power, water, oil and gas, and construction sectors
many of whom are looking to expand their investment base in the
region.
The overwhelming majority of executives interviewed identified
the creation of an attractive environment for foreign direct investment
in key countries of the region as the most vital factor.
The role and political will of host governments was seen as critical
to providing a workable framework with acceptable terms and conditions
for infrastructure investment.
The most significant components of this framework were identified
as follows: Ensure political and social stability; demonstrate a
genuine commitment to reform; and establish a commercial environment
that provides predictability in the marketplace.
However, it was also noted that many countries in the region have
committed themselves to removing these obstacles and are making
significant progress in the creation of an environment conducive
to private sector investment in infrastructure.
Ibrahim El Husseini, Vice President with Booz Allen Hamilton said:
"In assisting its clients on major infrastructure projects
in the region, Booz Allen identified a set of challenges that need
to be addressed to ensure successful implementation. They include
managing contract complexity in a relatively immature legal and
financial environment, navigating through sensitive political issues
and constraints, exploiting the regional debt financing market,
leveraging both the public and private sector and finally engaging
the right strategic partners to drive the process" concluded
El Husseini.
With rapidly growing demand for core infrastructure services such
as water and energy in the region likely to be the most attractive
opportunities for international investment, Eryl Edwards, Country
Director for the Gulf States of Thames Water said:
“Sustainable water and sanitation services can only be achieved
if the public sector make the right choice in terms of how they
want to involve the private sector, with due regard for the legal
and regulatory framework and appropriate risk allocation. Thames
Water firmly believe that Private Sector Participation
can contribute powerfully to sustainable development in the Middle
East”.
The full findings of the research study will be released at the
forthcoming meeting of the Middle East Infrastructure Development
Congress to be held in Dubai at the Moevenpick Hotel on the 21st
and 22nd of September 2003.
The conference features keynote speakers such as H.H. Prince Abdullah
bin Faisal bin Turki Al Saud, Chairman of the Board and CEO of the
Saudi Arabian General Investment Authority (SAGIA), H.E. Tahmasb
Mazaheri, Iran Minister of Finance & Economic Affairs, H.E.
Fidel Ramos, former President of the Philippines and the initiative
has been undertaken with the support of Dubai 2003 and in strategic
partnership with Total, Thames Water, Booz Allen Hamilton, Honeywell,
PricewaterhouseCoopers, Denton Wilde Sapte and Metito.
Posted by Richard Price,
Editor Pipeline Magazine
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