Dubai looks to investment boost from China and India

Asian giants could be crucial to emirate's recovery after crisis as cost of doing business declines and new investment legislation is implemented, say experts.

Dubai is expected to benefit from a recovery of foreign investment this year, helped by a surge of regional activity by investors from China and India. Foreign direct investment in the MENA region declined by more than half last year from the previous year as inflows from the US and Europe declined during the global downturn, said Alessandro Teixeira, the president of the World Association of Investment Promotion Agencies.

"In the second quarter we will see a recovery in Dubai, and that's important for the future," he said. "Dubai had a very strong hit during 2009 and we will see it starting to bounce back during this year." Globally, last year was one of the worst on record for foreign direct investment, with a drop of almost half in investment flows as countries cut financial ties to stabilise their domestic economies during the financial crisis.

Regionally, Dubai has been particularly affected by the weakened investment climate because it relied heavily on foreign investment to support its growth in recent years. The emirate and the Middle East would benefit from a shift in investment flows coming out of fast-emerging economies such as China and India, Mr Teixeira said yesterday on the sidelines of a regional meeting of the association in Dubai. China could have invested as much as US$90 billion (Dh330.6bn) abroad last year but invested only $35bn to $40bn, he said. "We are starting to see more Chinese and Indian investment."

Foreign direct investment to Dubai would pick up this year as the cost of doing business declined and new investment legislation was implemented, said Fahad al Gergawi, the chief executive of the Dubai Foreign Investment Office, which was set up by the Dubai Government. Inflation has fallen dramatically since the financial crisis hit, after reaching double-digit highs two years ago. A low-inflation economy is viewed as an attractive environment for business.

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