Foreign investment in Abu Dhabi grew significantly last year, following efforts from the Government to attract outside money. However, the emirate still receives only a quarter of the nation's total foreign investment, even though it contributes to 58 per cent of gross domestic product (GDP), according to a report from the Department of Planning and Economy. "The emirate of Abu Dhabi is going through a hectic process for improving the general investment climate in order to attract foreign investment," the report said.
Foreign investment in Abu Dhabi reached Dh17.8 billion (US$4.85bn) last year, up from Dh16.1bn in 2006. The report listed the finance and insurance sector as the largest recipient of foreign investment, receiving 36 per cent last year. Next was construction, with 19 per cent. The report said that until recently the investment environment in Abu Dhabi gave too little of what the private sector desired. Among the most significant difficulties facing investors last year were the requirement of having a local partner or sponsor and the complexity of administrative procedures. The Government needed to take steps to remove these obstacles, the report said.
It said the emirate was taking particular measures to increase foreign direct investment, or at least investments large enough to guarantee the investor some control of a local company's management. "Abu Dhabi is seeking to share experience with other countries of the world that have success stories in this area," including Malaysia, Singapore and China, the report said. However, unlike other countries, Abu Dhabi's drive to attract foreign investment is not motivated by a need for extra capital. Instead, it is meant to attract technological knowledge, management skills and access to foreign markets.
According to the report, the emirate should quickly enact new laws to attract foreign investments that "would complement and augment local investments, rather than compete with or replace them". This would require giving priority to investments that use advanced technology and technical expertise in order to "create a mechanism for gradual indigenisation of technology in a manner that suits the needs of the local economic environment".
tpantin@thenational.ae
