70pc businesses approve Bahrain investment
Manama, May 31, 2010
Almost 70 per cent of business leaders from around the world would approve of investment coming from Bahrain, said a report.
The Sovereign Brands Survey 2010, conducted by Hill & Knowlton and Penn Schoen Berland, two pre-eminent communications, research and strategy consultants, also said a total of 98 per cent of the respondents felt the reputation of the country directly influences the reputation of sovereign wealth funds.
The survey, an extensive study of attitudes to SWFs, interviewed business leaders in seven markets on their views of 19 host countries and their SWFs.
It also identified that lack of familiarity with SWFs may lead to suspicion about the overall objectives of the funds.
Of the countries surveyed, the US, UK and India were least familiar and least favourable to SWF investment, whilst Egypt, Germany, Brazil and China were most familiar and most favourable.
"Despite being considered one of the least volatile forms of investment compared to other sources of capital, it is surprising that low familiarity still drives low favourability towards this type of funding," said Hill & Knowlton financial communications head Stephen Davie.
"The survey results show by working on their reputation and by increasing awareness of their SWFs is a key step for Middle East countries looking to open up significant investment opportunities."
Bahrain scored well in terms of good governance and performance, but was marked down on transparency, especially by the UK with only 6 per cent of respondents seeing Bahrain's SWF as transparent, compared with 27 per cent in China and 23 per cent in Brazil.
This figure goes against the official transparency ratings and highlights the need for SWFs to increase their levels of communication.
The survey showed that transparency is still an issue for Bahrain. When business leaders were asked whether they thought Bahrain adheres to international regulatory standards, only 13 per cent of respondents from the US believed this to be true.
Most countries have a positive view of investment from Bahrain, and when asked about the areas they would like to see Bahrain investing in, respondents pointed to construction, leisure and finance.
The areas where they would have more concern if Bahrain tried to invest were the automotive, defence and technology sectors.
The survey looked in detail at the factors business leaders wanted to see if SWFs intended to invest in their country or industries.
They identified transparency as essential, 72 per cent citing this as very important, closely followed by accountability 68 per cent and good governance 65 per cent.
"The economic downturn has created a real opportunity for SWFs," said Penn Schoen Berland EMEA chief executive Joel Levy.
"SWF's images are largely determined by country reputation, and despite low familiarity and concerns over transparency, business sees SWFs as least likely to have contributed to recent market turmoil.”
"This puts SWFs in a prime position to consider their positioning and reputation in contrast to other funds and asset classes,” he added. – TradeArabia News Service