DUBAI, June 30, 2021 (WAM) – Omar bin Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy and Teleworking Applications and Director General of the World Organization of the Summit of Governments, said social and economic priorities are essential for governments’ work, which has been drastically altered due to the effects of the COVID-19 pandemic.
This happened on the occasion of the launch of a new report for the World Summit of Governments, in partnership with global management consultancy Oliver Wyman, entitled “De-risking the Investment Landscape … High-impact FDI Policies for the GCC “, which is one in a series of new reports that aim to forecast the future of governments in a post-pandemic phase.
The reports aim to propose and recommend new mechanisms and methodologies based on the latest innovations, best practices and smart solutions to enable the next generation of governments.
Al Olama said, “The World Summit of Governments series of reports, in cooperation with its knowledge members, reflects the summit’s efforts to improve government knowledge, highlight the most important global trends and transformations, help governments to harmonize their plans, chart the future of key sectors and improve the level of preparedness. “
“Oliver Wyman is proud to be part of the World Summit of Governments again,” said Pedro Oliveira, Managing Partner of the IMEA region at Oliver Wyman. “The Summit provides an important international platform for many forward-thinking initiatives that can be exploited as nations emerge from one of the most difficult years of recent times. We look forward to tackling the key topic of FDI (Foreign Direct Investment) in GCC States and supporting regional and global recovery through our expertise and thought leadership. “
The report highlights the significant drop in foreign direct investment in the world, which is 42% in 2020, or about $ 859 billion, against $ 1.5 trillion in 2019, and this is due to the uncertainty caused by the pandemic. of COVID-19; These figures are the lowest recorded since the 1990s, highlighting that it was also 30% lower than the level of foreign direct investment in 2009 after the global financial crisis.
The decline was evident in developed countries, with flows down 69% to about $ 229 billion, while foreign direct investment flows to North America fell 46% to 166 billion dollars, with a decrease in cross-border mergers and acquisitions of 43%. There has also been a significant drop in investment on projects already announced by 29%, and a clear 2% drop in funding deals.
Although inward foreign direct investment for developing economies declined by 12%, registering around $ 616 billion, these economies accounted for 72% of global foreign direct investment, which is the highest percentage of direct investment flows. foreigners.
The report indicates that the Arab Gulf States, in recent years, have started to view foreign direct investment as an essential part of their long-term policies aimed at economic development and diversification.
This change is due to the growing awareness of the potential for great economic impact that foreign direct investment will generate; and how it is crucial to focus on innovation and invest in human capital; these are two key factors that make foreign direct investment more valuable than just a source of external finance.
FDI in the Arab Gulf region has seen a steady increase since 2017, by 26% and that is during the period from 2017 to 2019. The main reason for this increase is the effort made by the United Arab Emirates and Saudi Arabia in this area. and he also reports that the Sultanate of Oman and Bahrain recorded an increase in foreign direct investment relative to GDP (gross domestic product).
The report also states that to cope with the current state of uncertainty, the Arab Gulf countries must prepare for a series of scenarios and develop strong policies with specific strategic objectives that will help strengthen structural attractiveness in the long run. term of the main economic sectors for foreign investors.
The report also presented a set of policies successfully targeted to attract foreign direct investment, such as the Dubai International Financial Center, which has strengthened Dubai’s regional and global leadership in financial services; which has earned it one of the top 10 cities in the world index of financial centers.
The report also states that the center has managed to register assets worth more than $ 178 billion and 820 companies. The report also highlighted the success of the Khalifa Industrial Zone in Abu Dhabi (KIZAD) in attracting investments amounting to around $ 20 billion.
The report also presented the efforts and experiences of the Royal Commission for Jubail and Yanbu in the Kingdom of Saudi Arabia in which it diversified the sources of its economic activity and reduced its dependence on the extraction of crude hydrocarbons.
The report also pointed out that each city has become an urban industrial center using the current advantages of the petrochemical sector in wider economic development and that Jubail has attracted foreign direct investment worth more than $ 30 billion, while that Yanbu attracted $ 8 billion. in investments.
The report suggests that the global pandemic has negatively affected foreign direct investment around the world, bringing the decline to a record number not seen in the world since World War II. There is still a lot of ambiguity about the timeframe for resuming foreign direct investment on a global scale; however, most estimates point to a slight recovery in 2021, with absolute values remaining much lower than in previous years.
The report suggested that global economic factors would make it more difficult to increase foreign direct investment in the near future, in light of the financial shock to which many economies were exposed, which could have been a source of large inflows.
The report recommended strengthening tax incentives to attract foreign direct investment to all countries in the region; by encouraging them to take advantage of the relatively low tax rate compared to many other countries in the world.
He also underlined how important it is for decision-makers in economic sectors to support the development of more flexible financial and regulatory policies, to improve the scope and levels of international trade relations as well as to align with the funds. sovereigns to unite efforts to attract foreign direct investment.
The report also underscored the importance of reducing broader barriers to investment, carrying out comprehensive regulatory reforms that help ensure the sustainability of foreign investment, and opening up markets to international companies.
The World Summit of Governments recently announced the signing of eight new knowledge memberships with a selection of the world’s leading advisory agencies and research institutes, to launch a series of reports and studies that will identify trends and opportunities most important in supporting governments and improving their preparedness for the future.
These reports will focus on forecasting the future of governments around the world, studying global transformations and the challenges facing humanity, setting priorities and demands for the next era, and developing new mechanisms. and modern data-driven working methodologies to empower the next generation of governments.