In the presence of Gulf ministers of industry and industrial and investment pioneers

Under the patronage of His Highness Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, Emir of the State of Kuwait, the 15th Industrialists’ Conference “Foreign Direct Investment in GCC and its Impact on Industry” was inaugurated on Wednesday, November 25, 2015 at the Sheraton Hotel, Kuwait. The Conference was organised by Kuwait’s Ministry of Commerce and Industry, Kuwait’s Public Authority for Industry (PAI) and the Gulf Organization for Industrial Consulting (GOIC), in collaboration with Kuwait Direct Investment Promotion Authority (KDIPA) and Kuwait’s Chamber of Commerce and Industry (KCCI), and in coordination with the Secretariat General of the Cooperation Council for the Arab States of the Gulf and the Federation of GCC Chambers (FGCCC). The sessions of the 15th Industrialists’ Conference will continue till Thursday, November 26, 2015.

 

The Opening Session

The opening session started with the recitation of the Holy Quran, followed by the address of His Excellency Dr. Yousef Al-Ali, Kuwait’s Minister of Commerce and Industry, who conveyed the salutations of His Highness the Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, patron of the 15th Industrialists’ Conference.
His Excellency stated: “I share your same ambition and interest in encouraging foreign investments to stimulate Gulf economies in the face of economic crises and fluctuations. In fact, weak economies have been hit by a serious financial crisis, which made us give even more attention to the industrial sector. Therefore, concerted efforts and endeavours are needed to draw the much-needed foreign investments, particularly in this era when global trade is witnessing successive developments. Although we have taken several steps to stimulate industrial development, we still aspire for more in order to further boost this vital sector.”
HE Dr. Al-Ali said: “Stakeholders in GCC countries seek to achieve the common objective of developing clear policies guaranteeing development in the GCC. These policies are built on a comprehensive set of factors to draw foreign investors. Furthermore, we all aim at putting together an ambition strategy to develop the industrial sector by enacting legislations and laws and offering facilitations to foreign investors in order to lay the foundations of a promising investment environment. In addition to that, measures need to be taken to improve competitiveness of the GCC industrial sector by attracting not only foreign cash funds, but also advanced technologies, research and development, knowledge-based industries, marketing, organisation and innovative administration of all productive and services sectors. The ultimate objective is to improve the competitiveness of Gulf industries driven by the adoption of modern technologies and the creation of global links with value chains and demand to support sustainable economic development.”
His Excellency explained: “GCC countries enjoy a strong base capable of attracting industrial FDIs, particularly in petrochemicals, their main natural resources, in addition to food industries to achieve strategic food security. Moreover, Gulf countries are a suitable destination for investments in innovative industries based on knowledge and innovation to stimulate non-oil exports. These measures would result in a better future and a successful economic diversification to achieve sustainable growth economically, socially and environmentally. In fact, GCC countries’ share of FDIs increased from 27 billion USD in 2013 to 29.5 billion USD in 2014 according to the UNCTAD. GCC countries attracted approximately 61% of FDIs from 2009 till 2014, driven by sturdy economic growth, political stability and other attractive factors.”

 

The GCC Secretariat General

The address of His Excellency Dr. Abdullatif Bin Rashid Al-Zayyani, Secretary General of the Cooperation Council of the Arab States of the Gulf was delivered by His Excellency Mr. Abdullah Bin Juma Al-Shibli, Assistant Secretary General for Economic and Development Affairs at the Secretariat General. HE stated: “Investments are the main driver of development. This is why the GCC Economic Agreement underlined the importance of developing local, regional and international investments and providing a transparent and stable investment environment. Since the GCC market is the largest free economic market in the Middle East, it needs to create an appropriate environment drawing investments. The GCC market is indeed replete with necessary factors like political and social stability, economic prosperity, being the biggest oil and gas exporter and enjoying largest oil and gas reserves, flexible monetary policies, stable exchange rates of local currencies, law inflation rates and a positive growth of the non-oil sector’s contribution to GDP. All of these factors resulted in a great trust of local and international investors in GCC countries’ efficient economic policies and competitive environment attracting a wider diversity of investments.”
His Excellency opined: “Based on these factors, GCC countries took several steps to improve the investment environment like enacting laws and regulations to create a framework for investments including FDIs and to continue on the path of structural and organisational reforms, with a constant review and updating of these laws and regulations. Thus, quality changes took place within socio-economic structures, particularly in meeting infrastructure requirements in terms of roads, transport, energy, telecommunications and new ICT. Furthermore, education and healthcare witnessed a quantum leap and a remarkable improvement was achieved at the level of scientific and applied researches, the shift towards knowledge-based economy, quality products, transparency and factors encouraging investors. Moreover, the relationship between public and private sectors was reviewed in a way that insures joint and sustainable development to build a true partnership between the two sectors and reinforce the competitiveness of their products.”
His Excellency concluded: “These measures had positive repercussions on the GDP of GCC countries that witnessed a surge last year from 1.619 billion USD in 2013 to 1.635 billion USD. In addition, GCC national exports were valued at 739.7 billion USD last year, which contributed to the stability of the trade balance deficit and kept it within reasonable rates. I encourage local and foreign investors to seize the promising investment opportunities in GCC countries in several economic fields including oil, gas, metallurgy, renewable energy, ICT, power stations, water treatment, petrochemical and engineering industries, pharmaceutical industries, industries relating to the joint railway project, electricity interconnection and insurance companies.”

 

His Excellency Mr. Abdulaziz Bin Hamad Al-Ageel, Secretary General of the Gulf Organization for Industrial Consulting then delivered his speech in which he expressed his deepest gratitude to the State of Kuwait for hosting the 15th Industrialists’ Conference and to His Highness the Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah for his patronage of this event. He also thanked all Kuwaiti authorities for their cooperation, notably the two co-organisers, the Ministry of Commerce and Industry in Kuwait and the Public Authority for Industry (PAI). Mr. Al-Ageel continued to thank all co-organisers and sponsors of this event for their support and trust to guarantee the success of this Conference.
His Excellency stated: “The 15th Industrialists’ Conference “Foreign Direct Investment in GCC and its Impact on Industry” is held at a time when GCC countries are trying to diversify income sources and reduce dependence on oil as the main engine for economic development. In fact, oil still represents approximately 47% of the GCC countries’ GDP. These countries have utilised foreign direct investments (FDIs) as one of the methods to guarantee economic diversification, hence increasing FDIs in the GCC from about 84.3 billion USD in 2005 to approximately 416.3 billion in 2014.”
He added: “Gulf countries realised the importance of industrial diversification in particular and decided to attract more foreign investments in this vital sector. As a result of these policies, FDIs in 2014 were valued at approximately 53 billion USD in GCC countries. These investments were mainly in the production of metal products, machinery and electrical appliances, in addition to chemical and petrochemical industries. They have provided about 302000 job opportunities in the GCC market. In this regard, strategic partnerships with renowned multinationals are among the best methods that GCC countries can adopt to transfer and localise technology and create an economy based on industry and exportation. GCC countries have the financial capacities and the appropriate infrastructure and legislations to create such partnerships aiming at attracting quality investments in the industrial sector. GCC countries will undoubtedly achieve many benefits from attracting foreign capital, especially that these investments will contribute to boosting economic development, stimulating national economies to keep up with global technological advances, promoting economic diversification and gradually shifting from consumer economies to productive economies. Furthermore, national products’ competitiveness will increase in the face of imported products, which helps them take control of a share of the local markets, fulfil part of consumption needs, increase local exports, reduce importing and reduce chronic deficit in the non-oil trade balance. In addition to that, these investments will provide job opportunities for national labour force and contribute to the improvement of its competences.”
GOIC Secretary General opined: “Therefore, Gulf countries are invited to deploy additional efforts to create an investment environment capable of encouraging foreign investors to invest in GCC countries. Gulf countries enjoy many factors capable of attracting foreign investments, notably the developed infrastructure, low customs duties and income taxes and high purchasing power which drives individual consumption demand. Moreover, GCC countries have free zones allowing for industrial, commercial and services activities. In order to achieve this outcome, GCC countries need to take a series of measures like enacting and developing foreign investment policies, regulations and laws, endeavouring to remove obstacles as much as possible, continuing to offer incentives and exemptions and facilitating the issuance of licences which encourages and attracts foreign investments.”

His Excellency Mr. Al-Ageel hoped to see the Conference resulting in recommendations and suggestions aiming at improving the investment environment and overcoming obstacles hindering foreign investments. He also hoped to see foreign investments in line with GCC strategic plans and serving GCC development interests. “To maximise the benefit from these investments, main pillars of industrial investment roadmaps should be determined”, he said.
HE the Secretary General concluded: “GOIC seeks to facilitate the flow of foreign investments towards Gulf markets through a variety of programs, particularly the Manufacturing Investment Opportunities Program (MIOP). GOIC carries out studies to determine promising investment opportunities in the region. These studies analyse supply and demand, determine the latest technologies relating to clean industrial practices. They seek to identify added value products by using available resources in the GCC and then promote them to find investors capable of executing the projects locally and internationally.”

 

A dialogue was then opened with Keynote Speaker His Excellency Mr. Abdullah Bin Hamad Al-Attiyah, former Second Deputy Prime Minister of the State of Qatar, former Minister of Energy and Industry and Chairperson of Abdullah Bin Hamad Al-Attiyah Foundation for Energy and Sustainable Development. During this dialogue, His Excellency said he was very pleased to be in his second country, Kuwait. He said: “We have witnessed the flow of FDIs towards Gulf countries throughout the previous years. We started thinking about how to benefit from Gulf countries’ raw materials in order to transform them into added value products, especially that the economies of various GCC countries are very similar. Indeed, they are hydrocarbon countries relying on oil and gas products transformed into different petrochemical products, fertilizers and their derivatives.” His Excellency highlighted the successful foreign investments in the region: “We have built international partnerships with companies having the funds, marketing skills and technology. We have built an industrial hydrocarbon base that later became one of the most important in the world, we were then strong competitors and we exported our products to countries all over the globe.”
His Excellency said: “In the 90s, the prices of these products fell with the decrease of oil prices. We had to optimise the utilisation of raw materials in the GCC through several industries like complementary and re-export industries. Gulf countries focused on hydrocarbon and derivatives industries and people started talking about an internal competition between Gulf countries. We responded by highlighting that these were export industries. The Gulf has indeed exported many of these products and we benefited from the rise in oil prices. The prices then decreased, and so did the prices of these materials, before rising again.”
HE Mr. Al-Attiyah called on the Gulf states to be cautious in the period to come, for the United States of America began exporting large quantities of fertilizers and petrochemical products to global markets creating a strong competition, which requires planning ahead of any crisis. He said: “My advice to Gulf countries and big producers in the Gulf is for them to work together to manage the crisis instead of waiting for it to happen. Our problem is that sometimes we wait for the crises to strike before we react to them. This has recently happened with the fall in oil prices, and it was not the first time. Oil prices follow a cycle of low and high, and both happen very suddenly. We should learn from the lessons of the 70s and 80s.”
His Excellency concluded: “I was Minister of Energy and Industry for long years and I took part in many industrial conferences. During dialogues between ministers of industry and industrialists, the problem has always been recurring complaints about obstacles that we could find no solution to. Governments need to take into account the problems voiced by the industrialists, particularly in the SME sector, because they need solutions. Since 1992 when I was appointed Minister of Industry, I have been attending meetings that had “removing obstacles” on their agendas. Twenty years later, I no longer am minister, and the same point remains on the agendas. We cannot offer lectures. We know industrialists face problems. Advices and problems have been recurrent, mainly routine, logistic problems and export subsidies by some countries. “Removing obstacles” has become a permanent agenda point and we all know of hidden protections. We need to face this problematic issue united and I hope to find a solution to this agenda point during the 15th Industrialists’ Conference.”

 

HE Mr. Abdulrahim Hassan Naqi, Secretary General of the FGCCC then delivered his speech in which he said: “The patronage of His Highness the Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah is one form of support offered by Kuwait to all types of joint economic activities aiming at broadening the horizons of coordination, integration and full economic unity that we seek.”
HE Mr. Naqi stressed the importance of this Conference that reinforces industrial activities in the GCC and optimises the benefit from strategic projects to be carried out by GCC countries at the level of infrastructure, like the joint railway project, manufacturing and complementary industries, SME projects and other projects relating to oil, gas, petrochemicals and other derivatives.
His Excellency underlined the fact that the GCC private sector relies on foreign investments to transfer technology and stimulate main industries in various fields. As a result, new job opportunities would be available for citizens and standards of living would improve. In fact, the fall in oil prices requires GCC countries to work together on developing oil industries to re-export their products at higher prices compared to the prices of exported crude oil.
HE Mr. Naqi opined that the large participation of the Gulf private and public sectors, in addition to representatives of foreign companies in this Conference will allow participants to reach the desired outcomes, notably localising Gulf industries, building strong relationships, creating new job opportunities and maximising the benefit from raw materials. In fact, GCC countries offer a series of facilitations and a market backed by legislations and laws encouraging investments.
His Excellency concluded: “Since its foundation 35 years ago, the FGCCC endeavoured to support economic development in GCC countries by organising various events aiming at drawing investments and seizing available opportunities in GCC countries. GCC countries are invited to fully implement their decision made during the consultative summit of 2009 to allow for the participation of the private sector through the FGCCC in meetings discussing economic issues. Furthermore, I would like to commend Gulf ministers of commerce and industry and the Secretary General of the GCC for the positive contributions during the joint meeting with representatives from the private sector that was held on the 4th of November in Riyadh. The positive results of that meeting will have fruitful repercussions on the future of the public-private partnership in the GCC.