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UAE remains top FDI recipient in Arab world: UNCTAD report

Imporves global ranking to 27th and is No.2 FDI host nation in West Asia

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The UAE continues to be the top recipient of Foreign Direct Investment (FDI) in the Arab world while improving its global ranking three places to 27th, according to the World Investment Report 2019 published by the United Nations Conference on Trade and Development (UNCTAD).

The country attracted FDI of more than USD 10.4 billion in 2018, accounting for 36 percent of all FDI to the Arab world and 33.4 percent of FDI into the West Asia region.

The UNCTAD report corroborates investor confidence in the UAE's business-friendly environment and reinforces the country's positioning as a key regional investment hub.

The UAE has improved its ranking at a time when FDI flows globally shrank by 13 percent to USD 1.3 trillion, the third consecutive annual decline, according to UNCTAD.

FDI flows to the UAE targeted a diverse range of sectors, from oil and gas to digital technologies, driven, among other factors, by the country's decision to allow 100 percent foreign investment in certain industries.

The UNCTAD report also acknowledges the role played by special economic zones (SEZs) in attracting investment. In the UAE, such zones were initially intended to attract export-oriented manufacturing; these are now diversifying towards services and vertical integration.

The UAE's first free zone was established at the Jebel Ali Port in 1985. Following its success, such zones increased in number, many of them now operating as re-export hubs.

In 2000, the first non-trade free zone was established, targeting investment in a range of IT-related services. Subsequently, other specialized free zones were established, including Dubai Internet City, Dubai Media City,
Knowledge Village, Dubai Multi Commodities Center, and Dubai Health Care City.

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The report shows that FDI outflows from the UAE also increased in 2018 to USD 15.079 billion, placing the country in the top 20 globally and at the No.2 rank in West Asia with 31 percent of total FDI outflows from this region.

The UAE was the second most active in concluding bilateral investment treaties (BITs) with six BITs out of 40. It is also the third-largest investor globally in greenfield projects with USD 179 million, compared with USD 63 million in 2017.

A survey of Investment Promotion Agencies (IPAs) by UNCTAD has also revealed that the UAE, not traditionally in the top 20 outward investor countries, is now considered as among the top 10 most important sources of FDI for the 2019 to 2021 period.

Access the full report