Al-Ageel: GCC countries have opportunities to attract foreign investments
The Gulf Organization for Industrial Consulting (GOIC) took part in the GCC-France Economic Forum held at Salons Hoche in Paris on the 18th and 19th of October, 2016. The forum was organised by the Federation of GCC Chambers (FGCCC) in collaboration with the Franco-Arab Chamber of Commerce (FACC).
His Excellency Mr. Abdulaziz Bin Hamad Al-Ageel, GOIC Secretary General, delivered a presentation on “Strategic GCC-France Projects” during the forum. He stated that cumulative foreign investments are valued today at 431 billion USD, five times more than their value in 2005. On the other hand, GCC investments abroad reached approximately 248 billion USD, excluding sovereign funds valued at around 2.7 trillion USD.
Mr. Al-Ageel tackled the evolution of foreign direct investments (FDIs) in the GCC. He explained that since 2000, GCC countries have been witnessing a remarkable increase in FDIs from about 30 billion USD in 2000 to approximately 431 billion USD in 2015. He added: “the average annual growth rate of FDIs in the GCC was two times bigger compared to the rest of the world: around 19% in GCC countries versus 9% internationally. The 2008 global financial crisis resulted in an increase of the flow of foreign investments towards GCC countries that were viewed as a stable environment and safe haven for capital.”
As to the distribution of foreign investments throughout the GCC, Mr. Al-Ageel said that Saudi Arabia attracted 52% of the cumulative foreign investments, given its large economy and absorptive capacity, in addition to its unique geographic position. The UAE was the second GCC country attracting 26% of the total investments, followed by other GCC countries. He opined that the remaining GCC countries have many opportunities to further draw foreign investments.
Furthermore, GOIC Secretary General detailed FDIs in the industrial sector. He explained that there were approximately 2303 joint industrial projects with foreign investments, i.e. 16% of the total GCC industrial projects that counted 16890 in 2015. He added that the total value of FDIs in the GCC industrial sector was around 53 billion USD (14% of the total investments in GCC industrial sector valued at about 380 billion USD). These investments offered 303000 job opportunities, i.e. 19% of the total labour force of about 1.6 million workers in the GCC industrial sector.
Mr. Al-Ageel then talked about the distribution of cumulative FDIs in the industrial sector, explaining that the contribution of cumulative FDIs in industrial projects in Qatar reached approximately 20% of the total investments in its industrial sector, the highest share compared to other GCC countries like Bahrain where it was only about 1.4% of the total investments.
As for the investment relationship between GCC countries and France, Mr. Al-Ageel explained that cumulative GCC FDIs in France increased by about 9.8% annually between 2012 and 2015 to be valued at around 10 billion USD in 2015. Likewise, French investments in GCC countries increased remarkably at an annual rate of 25% during the same period to reach approximately 5.5 billion USD in 2015.
His Excellency said that Saudi Arabia attracted about half of France’s FDIs in the GCC (approximately 5 billion USD in 2015), followed by Qatar (28% or about 3 billion USD of the total cumulative French FDIs in the GCC), and then Oman (17.9%) followed by Kuwait, UAE and Bahrain with close figures reflecting potential investment opportunities in the future.
Talking about GCC FDIs in France, Mr. Al-Ageel stated that Qatari cumulative FDIs’ share of the total GCC cumulative FDIs in France was about the third with a value of approximately two billion USD in 2015, as a result of increasing economic relations between the two countries. Qatar was followed by Oman and the UAE with approximately 27% and 23% respectively, and then KSA, Kuwait and Bahrain.
GOIC Secretary General then talked about the evolution of trade between GCC countries and France. In fact, French imports witnessed a steady growth between 2005 and 2015 with a compound annual growth rate (CAGR) of 5.5%, to fulfil the increasing local demand as a result of their growing economies, which reveals huge potential investment opportunities in the future. Similarly, GCC exports to France witnessed a surge that was smaller (1.3% CAGR) from about 7 billion USD in 2005 to approximately 8 billion USD in 2015.
In addition to that, non-oil industrial imports from France to GCC countries registered a 4% CAGR between 2009 and 2014 as they were valued at approximately 11 billion USD in 2014. KSA’s share was about 83% of the total imports, followed by Qatar, Bahrain, Kuwait and Oman.
Transport machinery, devices and equipment formed about 42% of the total industrial imports from France to the GCC in 2014, followed by chemical and plastic products (27%). On the other hand, non-oil industrial exports to France were valued at about 4 billion USD (approximately 34% of the total GCC exports to France in 2014). In this regard, Qatar was ranked first with about 43% of the total exports, followed by Bahrain, Kuwait and Oman. Chemical and plastic products were the top exports (63% of the total non-oil exports from GCC countries to France).
Mr. Al-Ageel also gave an overview of joint GCC-French projects in the industrial sector, particularly oil, gas, pharmaceuticals, military, aviation, renewable energy, railways and other manufacturing industries.
He concluded by highlighting the services offered by GOIC to industrial investors and the Organization’s achievements in the field of industrial development, notably preparing industrial investment opportunities and determining economically feasible opportunities in a variety of industries such as: smelting of base metals like aluminium, magnesium and copper that require large investments and partnerships between public and private sectors allowing for investments in a large number of accompanying knowledge-based industries; the production of catalysts, construction of chemical materials and engineering of plastic materials in the chemical sector; the extraction of edible oils, meat processing and production of processed food, knowing that investment opportunities in this field are usually medium-sized and executed by the private sector. In addition, GOIC provides subcontracting and partnership through the GCC Subcontracting and Partnership Exchange Network (GSPX) aiming at reinforcing production and marketing capacities of Gulf industries. GOIC also provides technical industrial assistance to carry out technical measuring and assessment of SMEs to promote competitiveness in the GCC by assessing production costs, quality control and monitoring environmental issues. Furthermore, GOIC offers industrial and socio-economic information through the IMI Plus portal, the gateway to industrial and socio-economic data of member states and the comprehensive tool providing subscribers with online information.