Saudi Arabia accounted for 42.3% of the total inflow of investment of the 14-state Western Asia region, which stood at $90.2bn.
Three countries combined, Saudi Arabia, Turkey, and the UAE accounted for 77.6 % of the flow of investment to the region.
According to the United Nations Conference on Trade and Development’s 2009 report, which covers the 2008 investment results, the Turkish economy had attracted some $18.1bn in 2008, down from $22bn recorded in 2007, while the UAE attracted $13.4bn, up from the $13.2bn recorded in 2007. For comparison, in 2006 Turkey came in first place having attracted $21.1bn in investment, followed by Saudi Arabia, and UAE.
The increase in investment in Saudi Arabia took place with the influx of several foreign companies, including Royal Dutch/Shell (UK-Netherlands), Sinopec (China), Eni (Italy), and Lukoil (Russia), for natural gas exploration in the south-eastern region of the Kingdom.
In addition to awarding contracts to Mac Dermont (United States), Hyundai Engineering & Construction (Korea), and Petrofac (UK) to develop the onshore and offshore fields of Karan gas field.
By comparison, last year Saudi investments failed to exceed $1bn, representing a sharp decline compared to the $13bn in 2007. The report stressed the need to engage in institutional investment rather than individual investment, for its rewarding returns and reduced risks.
Saudi Arabia has jumped three places in business environment and investment competitiveness ranking to number 13, according to a report by the International Finance Corporation of the International Bank for Reconstruction and Development.
The reforms pursued by King Abdullah bin Abdulaziz seem clear, as the country has gone from number 67 in 2005 to number 13 in 2009 on the index, which measures 183 countries around the world.
The Kingdom has continued to maintain its performance as the best country for investment in the Middle East and North Africa, as it moved up the business starting index from 28 to 13. The country also came 16 on the index for protecting investors.
Recent investments have focused on the real estate sector with an estimated 21%, the petrochemical industry with 16%, and the extraction of gas and oil with 10%, with economists projecting an increase of 40% of investment during the coming four years to exceed $3bn.
The global financial crisis has altered the image of foreign direct investment, by recording a sharp rise in the share of developing economies to total 43% in 2008. Inflow of foreign direct investment to developing economies has reached $621bn. This change in the pattern of inflows may partly be attributed to the significant decline in FDI flows to developed countries which fell by 29% in 2008 compared to the previous year, to $962bn.
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