Assessing the suitability of Arab countries for FDI

Assessing the suitability of Arab countries for FDI

Blog Article

The GCC countries are actively carrying out policies to invite foreign investments.

The volatility associated with currency rates is something investors just take seriously since the unpredictability of currency exchange price fluctuations could have an impact on their profitability. The currencies of gulf counties have all been pegged to the US currency since the late 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah would likely see the pegged exchange rate being an crucial attraction for the inflow of FDI into the country as investors more info do not need to be worried about time and money spent handling the forex uncertainty. Another crucial advantage that the gulf has is its geographic position, situated on the crossroads of Europe, Asia, and Africa, the region serves as a gateway towards the rapidly raising Middle East market.

To look at the viability of the Arabian Gulf being a destination for international direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and sufficient conditions to encourage FDIs. One of many consequential variables is governmental stability. Just how do we assess a country or perhaps a region's stability? Political security will depend on up to a large degree on the satisfaction of residents. Citizens of GCC countries have actually an abundance of opportunities to help them attain their dreams and convert them into realities, making many of them content and happy. Furthermore, international indicators of political stability show that there's been no major political unrest in the region, plus the incident of such a possibility is very unlikely because of the strong political will and the vision of the leadership in these counties specially in dealing with political crises. Furthermore, high rates of corruption can be hugely detrimental to foreign investments as potential investors dread hazards for instance the blockages of fund transfers and expropriations. But, when it comes to Gulf, experts in a study that compared 200 states categorised the gulf countries as being a low risk in both aspects. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor may likely attest that several corruption indexes make sure the GCC countries is increasing year by year in eliminating corruption.

Countries all over the world implement different schemes and enact legislations to attract foreign direct investments. Some countries such as the GCC countries are increasingly implementing flexible laws and regulations, while others have cheaper labour expenses as their comparative advantage. Some great benefits of FDI are, needless to say, mutual, as if the multinational firm discovers lower labour costs, it will be able to cut costs. In addition, in the event that host state can grant better tariffs and savings, business could diversify its markets via a subsidiary branch. Having said that, the country should be able to develop its economy, develop human capital, enhance employment, and provide access to expertise, technology, and abilities. Therefore, economists argue, that in many cases, FDI has generated efficiency by transmitting technology and knowledge to the host country. Nonetheless, investors look at a many aspects before making a decision to move in a country, but among the list of significant factors which they consider determinants of investment decisions are geographic location, exchange volatility, governmental stability and government policies.

Report this page