Economy Foreign investment in UAE surges to record $23bn By Sarah Townsend July 6, 2023 Wam UAE minister of economy Abdullah bin Touq Al Marri meets with South Korea's minister of SMEs and start-ups Lee Young in Abu Dhabi Country took fourth largest number of ‘greenfield’ investments Flows into Saudi Arabia plummeted 59% to $7.9bn Global FDI dropped 12% to $1.3trn on turbulent macro conditions The UAE attracted 60 percent of the total $37 billion of foreign direct investment into the GCC in 2022, helped by inflows from Austria and South Korea in particular. According to the World Investment Report 2023 by the UN Conference on Trade and Development (Unctad), foreign direct investment (FDI) flows into the UAE jumped 10 percent year on year to a record $23 billion in 2022. The country received the fourth largest number of greenfield projects (997), an 84 percent increase on the previous year, according to the report. South Korea delivers as UAE trade continues to grow UAE sets up new ministry to attract foreign investment UAE’s 2023 economic outlook remains ‘positive’ says IMF Greenfield is a type of FDI in which a parent company creates a subsidiary in a different country in order to administer the investment. The report noted two major FDI projects in the UAE last year. The first was the construction of a neutron therapy hospital, medical university and convention centre in Abu Dhabi by Austria’s Star Energy, in a $1.8 billion joint venture with UAE-based Royal Strategy Partners and MIG Group. The second was the building of a $1 billion green hydrogen plant at Abu Dhabi’s Khalifa Industrial Zone by Korea Electric Power Corporation. FDI inflows into Dubai rose 10 percent to $23 billion last year, state news agency Wam said. The UAE overall attracted well over half of the total FDI into the GCC, which more than doubled to $37 billion last year, according to Unctad’s report. It noted the UAE’s recent move to allow investors and entrepreneurs to establish 100 percent foreign-owned companies in almost all sectors was a likely contributor to 2022’s record FDI figure. Industries deemed to be strategic, such as defence and communications were not included in this. Historically, foreign ownership was capped at 49 percent with the remaining 51 percent mandated for UAE nationals. Saudi Arabia, the Gulf’s largest market, saw FDI inflows plummet almost 60 percent year on year to $7.9 billion. The report gave no reason for this fall. The kingdom is making sizable domestic public investments to grow its economy in line with Vision 2030, but is seeking international investment to enable it to meet its goals. Globally, FDI fell 12 percent to $1.3 trillion, hit by “extremely gloomy” prospects for international investment last year with a “cascading crisis of health, climate change and economic shocks causing investor uncertainty around the world”, the report said. Rising inflation, fears of a recession and turbulence in financial markets caused many investors to pause plans at the beginning of this year, too. Yet, while international investment flows did suffer last year, they proved more resilient than expected, the report added. FDI flows to developed economies fell by 37 percent to $378 billion, but flows to developing economies rose slightly, by 4 percent to $916 billion. Investors “finished the year announcing new projects in both industry and infrastructure”. Asia accounted for more than half of global FDI, though remained flat year on year at $662 billion. The downward global trend is likely to continue in 2023, Unctad added, as the global environment for international business and cross-border investment “remains challenging”. This is mainly due to geopolitical tensions, market volatility and high levels of debt in some developed countries, it said.