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23613
Fri, 10/10/2008 - 12:31
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https://www.oananews.org//node/23613
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Investment in Abu Dhabi - Opportunities and Prospects: DPE report
Abu Dhabi, Oct. 10, 2008 (WAM) - Over the past six years, Abu Dhabi's economy has experienced its profoundest and longest lasting upturn ever, as a result of higher oil prices on world markets, favourably impacting various economic sectors, which, in response, have lately been growing at record rates.
In light of the huge structural and geographical transformations the global economy is currently undergoing, and with the increasingly intermingling economic interests of the world's nations, which have gone beyond geographical borders in such aspects as movements of capital, sources of energy and the opening up of different markets; the Emirate is moving firmly towards economic reform and restructuring, a more effective private sector, and further development and transparency of the various government agencies. Meanwhile both the public and the private sectors are in for further changes in regard to their respective roles in development. In addition a wide range of legislative developments are expected to come into effect.
Notwithstanding the essential role the oil sector continues to play in the local economy, there is an evident trend towards encouraging investment, both domestic and foreign in the productive sectors at the expense of service sectors, which have gone a long way in expansion since the beginnings of development. The Emirate of Abu Dhabi is going through a hectic process for improving the general investment climate in order to attract foreign investment through the formulation of policies that can attract foreign capital to invest in the local economy.
In this context, a number of important initiatives have been launched that focus on economic development and support the activities of domestic and foreign private investment. Foreign direct investment (FDI) has turned into an important element in the perpetuation of development in all of its economic, social and human dimensions in the long run, if the state's manages to attract the types of investments that would serve the true objectives of development.
Until recently the investment environment in Abu Dhabi gave too little of what the private sector would desire. The only course for the private sector to embark on any activity in the Emirate was to join hands with government institutions or with big business enterprises. This gave rise to a host of difficulties as to the management and profit sharing of joint projects. Such obstacles have, until recently, continued to limit investment opportunities for the private sector, reducing the efficiency of the whole business environment in the Emirate. However, the plans and strategies adopted by the Emirate as of late chalk out a mounting role for domestic and foreign investments in future development projects of all types and sizes.
The existing business environment has benefited from a set of factors that collectively constitute the basic features of a conducive business environment and contribute towards building a broad and diversified economic base. The current progress and prosperity is arguably the product of this environment in the first place.
As for the status Abu Dhabi from the vantage point of the world's foreign investment, field surveys and personal interviews with potential investors reveal some of the areas that require a thorough review in the next stage, especially those relating to the system of ownership, capital/shareholding quotas, high operating costs, etc (see table 10). The factors listed in the table are primarily linked to a policy framework and need to be reviewed in order to protect and improve the business environment and strengthen incentives for local and foreign investment in the Emirate.
There are huge prospects for upgrading the local business environment to attract more high-quality foreign investments, improve the value added and to the economy and raise the volume of non-oil exports. This is true since Abu Dhabi is in fact a local as well as regional business centre that has the potential to evolve into an international centre, which requires that policies, business enterprises and services need to be comparable to those typically found in international business centres.
Upon putting into effect package of economic reforms and incentives recently by the Emirate to improve the investment environment, the volume of foreign investments grew to AED 17.8 billion, (see table 11). However, direct foreign investment, which is instrumental to the support and diversification of the nation economic base remains low, relative to Emirate's aspirations and resources: Abu Dhabi attracts only 24% of foreign investments in the country, while it contributes some 58% of the federal GDP.
Another particularity distinguishing the Emirate of Abu Dhabi is the fact that the Emirate seeks to maximize its slice of FDI despite its ample financial resources, a strength that most developing countries lack. For there are also other reasons prompting the Emirate to attract foreign investments which are in conformity with its general policy line for diversification of the economic base, and benefiting from the advanced managerial, operational and technical expertise of foreign companies, besides their experience in the utilization of national resources.
The trend towards attracting foreign investments to Abu Dhabi is not driven by the need for capital, despite the increasing importance of this factor, but has to do with technology transfer. Also since the flow of foreign investments to any country results in an intermingled network of vertical and horizontal relations the benefits to be reaped go beyond the mere attraction of capital and modern technology.
FDI consists of a package of intangible assets, such as capital, management skills, modern technology and access to foreign markets. Therefore, the flow of direct foreign investment contributes significantly to the improvement of the various means of production, whether they are technical, administrative or market oriented, in addition to developing the infrastructures of the host country.
There is no doubt that access to technology through direct foreign investments gives domestic enterprises in the host country the opportunity to benefit from its availability in the local environment, through new ideas in production processes and quality of the practical training imparted to national manpower, which can extend to impact local enterprises.
Abu Dhabi is seeking to share experience with other countries of the world that have success stories in this area. In the course of the past few years, many developing countries have sought to implement large-scale programmes aimed at enhancing their appeal in the eyes of foreign investors. Prominent among those are Malaysia, Singapore, Korea, Taiwan and China, which successfully attracted foreign investments and managed to maximize the benefits drawn from them.
These programmes were mainly cantered on three, different but interrelated pivots: First: changes in economic policies and legislation to make them more flexible and attractive, particularly in respect of those parts that deal with foreign investment; second: providing new incentives, or improvement of existing incentives to match the needs and requirements of foreign investors; and, third: to launch promotional campaigns in order to publicize the merits of investing in the state interested in hosting foreign investments. It is perhaps this third factor that is gaining increasing significance in attracting foreign investment.
The time has finally come to integrate foreign investment in of Abu Dhabi with the Emirate's development vision, now that the Emirate has embarked on a new era characterized by qualitative development investment-friendly trends that prompt the Emirate to move firmly towards carving out a place for itself among the hosts of foreign investment at a scale that matches the present boom of the national economy. This would necessitate some crucial steps that are yet to be taken: the body of laws regulating economic activities needs to be reviewed and reformed, such as the sponsorship system and the Labour Laws. More transparency is needed in the business environment, in addition to upgrading investors' access to information of on the local economy and investment opportunities and reformulating the legal provisions governing foreign investment to ensure enhanced competitiveness.
In order to expand and facilitate the participation of foreign investment in the local economy, an expedited enacting of new legislation would offer greater incentives and guarantees to foreign investors, with national interest in mind. A likely outcome could be the introduction of advanced technology, modernization of domestic industry, boosting of production efficiency and opening more of productive employment opportunities for nationals, improving the quality of domestic products, bolstering the competitiveness of local industries and venturing into new markets across the globe.
What is needed then is to employ any investment laws the Emirate of Abu Dhabi might promulgate in the fulfilment of a specific task consisting in attracting foreign investments that would complement and augment local investments rather than compete with or replace them. This in turn requires giving priority to investments that use advanced technology, and high-level expertise and those investments that are capable of creating a series of interconnections in such a way at to create a mechanism for gradual indigenization of technology in a manner that suits the needs of the local economic environment. A new investment law would also be expected to encourage newly introduced foreign industries to support the diversification of the local industrial base, and reputed foreign companies to benefit from their vast experience and international marketing relations.
In this context, the strategic vision of foreign investments is based on the following themes and facts: - Foreign investment is to become one of the cornerstones of the economic and development policy of the Emirate of Abu Dhabi in order for the Emirate to press ahead with its development efforts and keep up with developments in the global economy.
- Unification of the various formalities and procedures through which investor have to go, through a centre for comprehensive services under one roof; taking necessary measures to attract foreign investment; channelling foreign investment towards priority sectors and activities, development of partnerships between local and foreign investors, giving publicity to the available opportunities for investment and partnerships and prospects for their success.
- Upgrading the various systems related to trade and investment in order to bring about a qualitative change, in line with the current requirements as well as the future needs of investors, providing them with all the facilities they might desire.
- Moving forward with the efforts put in to enhance the efficiency and appeal of the investment climate through a set of generous and carefully studied incentives and facilities, consistent with national constants and interests, noting that the absence of taxes is not a strong incentive for foreign investors, therefore more can be achieved through a future focus on other determinants that appear to be of greater importance to foreign investors.
- Preparation of a comprehensive investment profile for Abu Dhabi, providing detailed information on investment opportunities in the Emirate. The profile can be edited regularly or updated according to relevant developments locally and globally.
- Promoting the Emirate of Abu Dhabi as a haven for potentially successful investment opportunities, not only within the domestic market but also on the regional and international scales.
- Adopt novel approaches in attracting foreign investment, with reduced focus on free zones as they were found not to be the best arrangement for attracting the kinds of foreign investments that would serve the goals of economic development in Abu Dhabi and the UAE at large.
- Deepening the culture of investment and its importance among members of the community and business sectors, and fostering the spirit of initiative and encouraging creativity among individuals and institutions wishing to invest.
- Thoroughly reviewing and amending economic policies and legislation to render them more flexible and appealing in the eyes of foreign investors, since the restrictions on ownership and investment in the state hugely influence the decisions of major foreign companies wishing to invest in the country.
- Promoting quality investments that help to reinforce economic stability and constitute a real additional to the wellbeing of the society and instil a spirit of modernity into its way of life.
- Paying particular attention to traditional economic sectors and help boost their competitiveness amidst the tide of opening up on modern economic sectors.
- Laying down clear bases for competition, prohibiting monopoly and directing foreign investment towards furthering development plans and programmes through augmenting the competitiveness of the economy and also by contributing towards upgrading national capabilities.
- Bridging the gap between outputs of the educational system and the actual needs of sustainable economic development and investment in a way that would ensure sound economic planning.
- Basing investment planning on the precise and complete information currently being compiled about the realities of the local economy, and determining the size structure and inputs of domestic investment. – Emirates News Agency, WAM
In light of the huge structural and geographical transformations the global economy is currently undergoing, and with the increasingly intermingling economic interests of the world's nations, which have gone beyond geographical borders in such aspects as movements of capital, sources of energy and the opening up of different markets; the Emirate is moving firmly towards economic reform and restructuring, a more effective private sector, and further development and transparency of the various government agencies. Meanwhile both the public and the private sectors are in for further changes in regard to their respective roles in development. In addition a wide range of legislative developments are expected to come into effect.
Notwithstanding the essential role the oil sector continues to play in the local economy, there is an evident trend towards encouraging investment, both domestic and foreign in the productive sectors at the expense of service sectors, which have gone a long way in expansion since the beginnings of development. The Emirate of Abu Dhabi is going through a hectic process for improving the general investment climate in order to attract foreign investment through the formulation of policies that can attract foreign capital to invest in the local economy.
In this context, a number of important initiatives have been launched that focus on economic development and support the activities of domestic and foreign private investment. Foreign direct investment (FDI) has turned into an important element in the perpetuation of development in all of its economic, social and human dimensions in the long run, if the state's manages to attract the types of investments that would serve the true objectives of development.
Until recently the investment environment in Abu Dhabi gave too little of what the private sector would desire. The only course for the private sector to embark on any activity in the Emirate was to join hands with government institutions or with big business enterprises. This gave rise to a host of difficulties as to the management and profit sharing of joint projects. Such obstacles have, until recently, continued to limit investment opportunities for the private sector, reducing the efficiency of the whole business environment in the Emirate. However, the plans and strategies adopted by the Emirate as of late chalk out a mounting role for domestic and foreign investments in future development projects of all types and sizes.
The existing business environment has benefited from a set of factors that collectively constitute the basic features of a conducive business environment and contribute towards building a broad and diversified economic base. The current progress and prosperity is arguably the product of this environment in the first place.
As for the status Abu Dhabi from the vantage point of the world's foreign investment, field surveys and personal interviews with potential investors reveal some of the areas that require a thorough review in the next stage, especially those relating to the system of ownership, capital/shareholding quotas, high operating costs, etc (see table 10). The factors listed in the table are primarily linked to a policy framework and need to be reviewed in order to protect and improve the business environment and strengthen incentives for local and foreign investment in the Emirate.
There are huge prospects for upgrading the local business environment to attract more high-quality foreign investments, improve the value added and to the economy and raise the volume of non-oil exports. This is true since Abu Dhabi is in fact a local as well as regional business centre that has the potential to evolve into an international centre, which requires that policies, business enterprises and services need to be comparable to those typically found in international business centres.
Upon putting into effect package of economic reforms and incentives recently by the Emirate to improve the investment environment, the volume of foreign investments grew to AED 17.8 billion, (see table 11). However, direct foreign investment, which is instrumental to the support and diversification of the nation economic base remains low, relative to Emirate's aspirations and resources: Abu Dhabi attracts only 24% of foreign investments in the country, while it contributes some 58% of the federal GDP.
Another particularity distinguishing the Emirate of Abu Dhabi is the fact that the Emirate seeks to maximize its slice of FDI despite its ample financial resources, a strength that most developing countries lack. For there are also other reasons prompting the Emirate to attract foreign investments which are in conformity with its general policy line for diversification of the economic base, and benefiting from the advanced managerial, operational and technical expertise of foreign companies, besides their experience in the utilization of national resources.
The trend towards attracting foreign investments to Abu Dhabi is not driven by the need for capital, despite the increasing importance of this factor, but has to do with technology transfer. Also since the flow of foreign investments to any country results in an intermingled network of vertical and horizontal relations the benefits to be reaped go beyond the mere attraction of capital and modern technology.
FDI consists of a package of intangible assets, such as capital, management skills, modern technology and access to foreign markets. Therefore, the flow of direct foreign investment contributes significantly to the improvement of the various means of production, whether they are technical, administrative or market oriented, in addition to developing the infrastructures of the host country.
There is no doubt that access to technology through direct foreign investments gives domestic enterprises in the host country the opportunity to benefit from its availability in the local environment, through new ideas in production processes and quality of the practical training imparted to national manpower, which can extend to impact local enterprises.
Abu Dhabi is seeking to share experience with other countries of the world that have success stories in this area. In the course of the past few years, many developing countries have sought to implement large-scale programmes aimed at enhancing their appeal in the eyes of foreign investors. Prominent among those are Malaysia, Singapore, Korea, Taiwan and China, which successfully attracted foreign investments and managed to maximize the benefits drawn from them.
These programmes were mainly cantered on three, different but interrelated pivots: First: changes in economic policies and legislation to make them more flexible and attractive, particularly in respect of those parts that deal with foreign investment; second: providing new incentives, or improvement of existing incentives to match the needs and requirements of foreign investors; and, third: to launch promotional campaigns in order to publicize the merits of investing in the state interested in hosting foreign investments. It is perhaps this third factor that is gaining increasing significance in attracting foreign investment.
The time has finally come to integrate foreign investment in of Abu Dhabi with the Emirate's development vision, now that the Emirate has embarked on a new era characterized by qualitative development investment-friendly trends that prompt the Emirate to move firmly towards carving out a place for itself among the hosts of foreign investment at a scale that matches the present boom of the national economy. This would necessitate some crucial steps that are yet to be taken: the body of laws regulating economic activities needs to be reviewed and reformed, such as the sponsorship system and the Labour Laws. More transparency is needed in the business environment, in addition to upgrading investors' access to information of on the local economy and investment opportunities and reformulating the legal provisions governing foreign investment to ensure enhanced competitiveness.
In order to expand and facilitate the participation of foreign investment in the local economy, an expedited enacting of new legislation would offer greater incentives and guarantees to foreign investors, with national interest in mind. A likely outcome could be the introduction of advanced technology, modernization of domestic industry, boosting of production efficiency and opening more of productive employment opportunities for nationals, improving the quality of domestic products, bolstering the competitiveness of local industries and venturing into new markets across the globe.
What is needed then is to employ any investment laws the Emirate of Abu Dhabi might promulgate in the fulfilment of a specific task consisting in attracting foreign investments that would complement and augment local investments rather than compete with or replace them. This in turn requires giving priority to investments that use advanced technology, and high-level expertise and those investments that are capable of creating a series of interconnections in such a way at to create a mechanism for gradual indigenization of technology in a manner that suits the needs of the local economic environment. A new investment law would also be expected to encourage newly introduced foreign industries to support the diversification of the local industrial base, and reputed foreign companies to benefit from their vast experience and international marketing relations.
In this context, the strategic vision of foreign investments is based on the following themes and facts: - Foreign investment is to become one of the cornerstones of the economic and development policy of the Emirate of Abu Dhabi in order for the Emirate to press ahead with its development efforts and keep up with developments in the global economy.
- Unification of the various formalities and procedures through which investor have to go, through a centre for comprehensive services under one roof; taking necessary measures to attract foreign investment; channelling foreign investment towards priority sectors and activities, development of partnerships between local and foreign investors, giving publicity to the available opportunities for investment and partnerships and prospects for their success.
- Upgrading the various systems related to trade and investment in order to bring about a qualitative change, in line with the current requirements as well as the future needs of investors, providing them with all the facilities they might desire.
- Moving forward with the efforts put in to enhance the efficiency and appeal of the investment climate through a set of generous and carefully studied incentives and facilities, consistent with national constants and interests, noting that the absence of taxes is not a strong incentive for foreign investors, therefore more can be achieved through a future focus on other determinants that appear to be of greater importance to foreign investors.
- Preparation of a comprehensive investment profile for Abu Dhabi, providing detailed information on investment opportunities in the Emirate. The profile can be edited regularly or updated according to relevant developments locally and globally.
- Promoting the Emirate of Abu Dhabi as a haven for potentially successful investment opportunities, not only within the domestic market but also on the regional and international scales.
- Adopt novel approaches in attracting foreign investment, with reduced focus on free zones as they were found not to be the best arrangement for attracting the kinds of foreign investments that would serve the goals of economic development in Abu Dhabi and the UAE at large.
- Deepening the culture of investment and its importance among members of the community and business sectors, and fostering the spirit of initiative and encouraging creativity among individuals and institutions wishing to invest.
- Thoroughly reviewing and amending economic policies and legislation to render them more flexible and appealing in the eyes of foreign investors, since the restrictions on ownership and investment in the state hugely influence the decisions of major foreign companies wishing to invest in the country.
- Promoting quality investments that help to reinforce economic stability and constitute a real additional to the wellbeing of the society and instil a spirit of modernity into its way of life.
- Paying particular attention to traditional economic sectors and help boost their competitiveness amidst the tide of opening up on modern economic sectors.
- Laying down clear bases for competition, prohibiting monopoly and directing foreign investment towards furthering development plans and programmes through augmenting the competitiveness of the economy and also by contributing towards upgrading national capabilities.
- Bridging the gap between outputs of the educational system and the actual needs of sustainable economic development and investment in a way that would ensure sound economic planning.
- Basing investment planning on the precise and complete information currently being compiled about the realities of the local economy, and determining the size structure and inputs of domestic investment. – Emirates News Agency, WAM
