FDI into Middle East Benefits SMEs

UAE and other Gulf countries among top 15 most attractive FDI market in the world according to A.T. Kearney

 Dubai (18 May 2010) —  In the two years since A.T. Kearney released its last Foreign Direct Investment Confidence Index, the global economy has faced unprecedented turmoil—a housing market collapse, a banking system teetering on the edge, rising unemployment and falling sales across almost all industries. While conditions have improved, senior executives at the world’s largest companies remain wary of investing during the current climate and few expect a full global turnaround before 2011. However in the region, A.T. Kearney has identified a more positive FDI outlook which will benefit the growth of Small and Medium Enterprises (SMEs) and innovators.

Conducted regularly since 1998 by global management consulting firm A.T. Kearney, the Index provides a unique look at the present and future prospects for international investment flows. Companies participating in the survey account for more than $2 trillion in annual global revenue.

“In light of the current global recovery, the Middle East is expected to be fast to pick up on FDI and the SME sector is expected to be the fastest sector to respond positively. With the support of Government initiatives, the SME sector will continue to strengthen and enhance the attractiveness of the Middle East to large international corporations – driving additional foreign direct investment (FDI) into the entire region,” said Dan Starta, managing director and partner, A.T. Kearney Middle East.

Among the top 15 investment destinations, the UAE and Other Gulf States have developed a stable business environment and created investment opportunities that have drawn investor interest globally, reinforcing the belief international investors have in the ability for this region to rebound and remain attractive. Among the investors with existing or planned investments in the Middle East, the UAE is perceived the fifth most attractive FDI market in the world, a testimony to the region’s growth and a reward for the efforts of Dubai and Abu Dhabi to develop the country into an attractive FDI destination.

Access to new markets and growth of economies are cited in the A.T. Kearney 2010 FDI Confidence Index as the main reasons to invest in a certain country. SMEs are by far the simplest and cheapest way for an economy to diversify and create growth; these businesses typically contribute more to the GDP and the provisions of jobs in a nation than many other sectors.

“Private ownership, knowledge, entrepreneurial spirit, flexibility and adaptability are key attributes that enable SMEs to rapidly contribute to the success of a nation’s economic development agenda and the ability to attract and maintain FDI flows,” commented Dr. Omar Sawaya, principal and head of Public sector Practice with A.T. Kearney Middle East.

According to A.T. Kearney, Governments in the region play a key role in the growth of SMEs, by providing and sharing information on regulation, standards, taxation and marketing. Knowledge transfer of affordable but high quality advice and consulting services in business planning and business development definitely spur the sector. The development of safe incubation environments for new SME ventures could provide both logistical and financial support to new entrepreneurs and investors.

“Government initiatives should be accelerated to create platforms for entrepreneurs and partners (suppliers, investors and banks, customers, education/R&D) to meet, exchange ideas and innovate. With excess liquidity in the region, governments have a clear mandate to support their ongoing economic diversification plans and will succeed in attracting further FDI,” concluded Mr. Starta.

Supporting Materials

Please click to download the full report: Investing in a Rebound - A.T. Kearney 2010 FDI Confidence Index.

About A.T. Kearney

A.T. Kearney is a global management consulting firm that uses strategic insight, tailored solutions and a collaborative working style to help clients achieve sustainable results. Since 1926, we have been trusted advisors on CEO-agenda issues to the world’s leading corporations across all major industries. A.T. Kearney’s offices are located in major business centers in 37 countries. From our fast growing Middle East offices in Abu Dhabi, Bahrain, Dubai and Riyadh, A.T. Kearney actively contributes to the operational excellence and profitable growth of the private sector industries and services in the region as well as the agility of governments. For more information, visit www.atkearney.com or follow A.T. Kearney Middle East on Twitter profile: AT_Kearney_ME.

About Our Experts

Dan Starta
Partner & Managing Director
Experienced in variety of industries with a core focus on process industries and manufacturing companies concerning growth strategies, operational excellence, logistics and organizational transformation.In addition significant economic development experience from across the Middle East.

Dr. Omar Sawaya
Principal
Experienced in adressing public sector issues, such as Government efficiency within Health care and Education as well as Economic Development of nations.