‘Investors suspicious of GCC despite improvements’
Dubai, April 1, 2014
Despite improvements in global rankings for ease of doing business in the GCC, investors remain suspicious, said an Economist Intelligence Unit report.
The business environment in GCC countries, sponsored by Merck Serono, looked at investor attitudes towards the GCC’s six member countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
Foreign investment has fallen in most GCC states since the global financial crisis in 2008-09, both in absolute terms and as a percentage of GDP. This is despite the introduction of policies to encourage foreign investment, it said.
Aviva Freudmann, the editor of the report, said: “The overall picture is one of uneven progress. On one level, investors are welcomed: the countries are open to foreign ownership and red tape on things like construction permits has been cut.
“But on another level, there are policies restricting foreign labour and widely varying business regulations, which can stall projects and growth. These two contrasting messages from GCC countries present a conundrum for investors.”
The Arab Spring has focused the attention of GCC policymakers on high youth unemployment.
The policies to promote local employment are considered necessary to prevent social and political unrest and are likely to continue, said the report.
The GCC governments’ tendency to buy their way out of trouble by subsidising citizens directly and indirectly could stifle entrepreneurial initiatives, maintaining state-led economies in the region, it added. - TradeArabia News Service