GCC FDI LOGISTICS OVERVIEW
Neighbourhood Watch: What’s happening in the GCC’s inward investment market in 2021? How much of a magnet is the GCC for attracting new businesses and foreign direct investment (FDI)? In this contribution, Joe Hepworth, Director, OCO Middle East, and Founder of the British Centres for Business (BCB), examines the landscape and analyses the prevailing conditions and economic ecosystem in the region.
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n August last year we had the milestone Abraham Accords signalling the rapprochement between Israel and the UAE and Bahrain; in January the Al-Ula Agreement was signed in Saudi Arabia to end the diplomatic stand-off with Qatar and to return the latter to the GCC fold; and in February 2021, Saudi Arabia signalled that multinationals wanting to win public contracts would need to have their regional headquarters in the Kingdom. With so many significant initiatives and changes, it’s hard to keep up with what this actually means for companies looking at moving to, and growing, in the region, but I think it is possible to discern a few clear trends. Firstly, for the short-to-medium term at least, the UAE’s position as the pre-eminent regional business hub is secure on the basis that, along with Bahrain, it’s the only
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country that can provide total regional connectivity to the whole of the Levant and GCC.
Founding pitch This very much plays back to the founding pitch for pioneer free zones like JAZFA, DIFC and DMCC – that they can offer complete regional access and that, ostensibly, they can support companies and investors from anywhere in the world. Whilst the UAE’s regional play is intact, most obviously through Dubai, we’re also seeing the rise of challenger jurisdictions in the UAE. Ras Al Khaimah is one example, which, through RAKEZ, has built an international reputation as a cost effective and efficient place to set up manufacturing operations. FDI is less interested in reputations and more attracted to practicalities, particularly post-
Covid, so a number of the newer and more agile locations are grabbing market share based on their more pragmatic approaches. For Qatar, freshly back in the fold, there’s obviously a serious benefit for the likes of QFC (Qatar Financial Centre) and QFZ (Qatar Free Zone), that companies established there can now access the rest of the GCC, so we can expect to see more regional competition for investment from Qatar.
Logistics boost For the logistics sector, the most obvious manifestation will of course be the resumption of transhipment operations in Jebel Ali and KIZAD, much to the detriment of the Oman ports. Indeed, that investment attraction in the Middle East is now altogether more competitive can only be of benefit to the
