KUWAIT CITY, July 30: The Arab Investment & Export Credit Guarantee Corporation (Dhaman), an autonomous Arab regional organization, launched its annual report “Investment Climate in Arab countries 2011” in its headquarters in Kuwait on Monday. The report revealed that inter-Arab FDI inflows reached $6.82 billion in 2011, according to official data received from 5 Arab countries; Algeria, Egypt, Jordan, Tunisia, and Yemen, compared with $12.5 billion received by 10 Arab countries in 2010.
This year’s report has seen new structural improvements in monitoring the components of the investment climate in Arab countries focusing on the political, economic, social and institutional environments. The report shows that during the past 17 years (1995 — 2011), accumulated inter-Arab FDI inflows reached $178.5 billion, of which 82 percent ($144.4 billion) was directed towards 7 Arab countries; Saudi Arabia, Sudan, Egypt, Lebanon, Algeria, Bahrain and UAE.

The report showed that Saudi Arabia topped the list of host countries for inter-Arab FDI over the past 17 years, with an accumulated total value of US$ 47.8 billion and a 27 percent share of the total, followed by Sudan in with $23.3 billion and a 14.1 percent share, then Egypt in third place with $19.9 billion and a 9.0 percent share, Lebanon was ranked fourth with $14.8 billion and an 8.4 percent share, Algeria fifth with $13.8 billion and a 7.8 percent share, Bahrain sixth with $13.5 billion and a 7.7 percent share, UAE seventh with $13.8 billion and a 6.4 percent share, Morocco eighth with $6.5 billion and a 3.7 percent share, Jordan ninth with $4.6 billion and a 2.6 percent share, then Tunisia tenth with US$ 4.3 billion and a 2.44 percent share of the accumulated total inter-Arab FDI inflows over the past 17 years.

The report also revealed that inter-Arab FDI inflows increased significantly during the last seven years (2005 — 2011) reaching an accumulated value of $151.7 billion, at an annual average of $21.7 billion. This is more than 6 times the accumulated value of $21.7 billion and an annual average of $3.1 billion for the corresponding period 1998-2004.
According Dhaman’s data collected from 6 Arab countries; Saudi Arabia, Egypt, Jordan, Tunisia, Djibouti, and Libya, accumulated inter-Arab FDI stock reached $77.2 billion. The majority of which was directed towards the services sector, which accounted for 68.8 percent share of the total, and the industrial sector accounted for 26.1 percent, whereas the agriculture sector accounted for 4.1 percent of the total, while other sectors accounted for 1 percent.

Foreign direct investment:
The report “Investment Climate in Arab Countries Report 2011” revealed a decline of 37.4 percent for FDI inflows to Arab countries (21 countries) reaching a total value of $43 billion in 2011, compared with $68.6 billion in 2010.The report attributed this decline to the ongoing political and social events which have been taking place in the region since the end of 2010, and also to the repercussions of the global economical and financial crisis. Global FDI inflows increased during the year 2011 to reach $1.5 trillion, dropping the Arab countries’ share of it from 5.2 percent in 2010 down to 2.8 percent in 2011.
The report shed the light on the different FDI performances of Arab countries, where FDI inflows increased in 9 Arab countries; Algeria, Bahrain, Djibouti, Iraq, Jordan, Kuwait, Morocco, Palestine, and UAE. On the other hand, FDI inflows decreased in 8 countries; Lebanon, Mauritania, Oman, Saudi Arabia, Somalia, Sudan, Syria, and Tunisia. Whereas, 3 countries; Egypt, Qatar and Yemen reported negative FDI inflows in 2011.
Saudi Arabia ranked first among Arab countries as the largest host country for FDI inflows, with $16400 million and a 38.2 percent share of the total Arab FDI inflows for the year 2011, followed by the UAE with $7679 million and a 17.9 percent share, Lebanon in third place with $3381 million and a 7.9 percent share, Sudan fourth with US$ 2692 million and a 6.3 percent share of the total Arab FDI inflows for the year 2011.

As for Arab countries cross border mergers & acquisitions, the report shows that they reached $9 billion in 2011, compared with a negative value of $9.8 billion in 2010.
According to Dhaman’s data received from official national sources in seven countries; Saudi Arabia, Egypt, Tunisia, Syria, Jordan, Libya, and Palestine, FDI stock inflows from 1990 — end of 2011 reached $189 billion, out of which, $122.7 billion went to Saudi Arabia with a share of 65 percent of the total, followed by Egypt with $26.4 billion and a share of 14 percent, Tunisia in the third place with $25.6 billion and a share of 13 percent.
In terms of geographical distribution of FDI stock from/in counterpart economy data, the report reveals that the United States of America is the largest foreign investor in Arab countries, with an accumulated value of $26.1 billion and 14 percent share of the total, followed by France in second place with $19 billion and a 10 percent share, Germany third with $16.6 billion and a 9 percent share, United Kingdom fourth with $14.8 billion and a 8 percent share, followed by Japan in fifth place with US$ 14.8 billion and an 8 percent share of the total.

In terms of sectoral distribution for FDI stock, it is evident that the service sector was largest recipient of FDI since the early 90’s with a 43 percent share of the total, followed by the industrial sector ranked second with a 29.6 percent share, then the agriculture sector with only a 1.3 percent share, whereas the remaining 26.1 percent was distributed among other unclassified sectors and activities.
In conclusion, Dhaman would like to thank the various official contact points and investment promotion agencies and organizations for their contribution in this year’s report “Investment Climate in Arab Countries 2011” as well as their assistance and cooperation to provide Dhaman with updated and accurate data. Dhaman also calls on the rest of the Arab countries to respond and provide Dhaman with the required data as soon as it is published in order to provide a more realistic view about the investment climate and the doing business environment in Arab countries.