FDI to the UAE surges 44.2 per cent in 2020, backed by billion-dollar infrastructure investments

Foreign direct investment to the UAE surged 44 per cent to reach nearly $20 billion (Dh73.45bn) in 2020, the government said on Saturday.

"Despite the UN's estimates that global foreign direct investment flows decreased by 42 per cent in 2020 over Covid-19, the UAE witnessed 44 per cent growth in FDI flows in 2020, compared to 2019, to reach Dh73bn," Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said in a tweet.

"Good crisis management is a guaranteed investment," he added.

The UAE's significant inflows of FDI last year in the middle of the pandemic were largely due to Adnoc monetising some of its non-core assets.

Last year, Adnoc helped attract Dh62bn ($16.8bn) in foreign direct investment to the UAE, mainly through various multibillion-dollar transactions signed in the midstream and infrastructure segments.

Over the past four years, the state-owned company helped drive Dh237bn in FDI flows to the UAE.

The national oil company opened up partnership opportunities across its midstream and real estate sectors to allow foreign private equity and pension funds to pool in capital.

In July, a consortium of the world’s leading infrastructure and sovereign wealth funds signed an agreement worth $20.7bn to invest in Abu Dhabi’s natural gas pipeline infrastructure. The transaction, the largest single global energy infrastructure deal last year and the Middle East's biggest, will unlock $10.1bn of foreign investment into the UAE.

Dubai, the UAE's financial, transportation and trade hub, attracted Dh24.7bn ($6.7bn) in FDI last year, through 455 projects, according to government data published in April.

The inbound FDI created an estimated 18,325 new jobs in the emirate last year, according to data from the Dubai FDI Monitor released by the Dubai Investment Development Agency (Dubai FDI), an agency of Dubai Economy. It did not provide comparative figures for 2019.

The large inflows to the UAE come amid the country's plans to double the size of its economy over the coming decade. The Ministry of Economy aims to drive efforts to expand the size of the economy to reach Dh3 trillion over the next 10 years.

The UAE's economy is set to grow by 2.5 per cent this year, and its non-oil economy by 3.6 per cent, according to estimates from the Central Bank of the UAE. The economy is forecast to expand 3.5 per cent in 2022 and non-oil growth will rise to 3.9 per cent.

The UAE has also introduced a number of regulatory changes – such as amendments to the commercial companies' law and the offer of citizenship to talented residents – to support its plan to boost output and attract FDI.

"The next phase" of FDI-accelerated growth will witness more initiatives to raise the efficiency of the business environment, enhance investor confidence and increase opportunities in priority sectors, Abdullah bin Touq Al Marri, the minister of economy, said on Saturday.

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How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

Top investing tips for UAE residents in 2021

Build an emergency fund: Make sure you have enough cash to cover six months of expenses as a buffer against unexpected problems before you begin investing, advises Steve Cronin, the founder of DeadSimpleSaving.com.

Think long-term: When you invest, you need to have a long-term mindset, so don’t worry about momentary ups and downs in the stock market.

Invest worldwide: Diversify your investments globally, ideally by way of a global stock index fund.

Is your money tied up: Avoid anything where you cannot get your money back in full within a month at any time without any penalty.

Skip past the promises: “If an investment product is offering more than 10 per cent return per year, it is either extremely risky or a scam,” Mr Cronin says.

Choose plans with low fees: Make sure that any funds you buy do not charge more than 1 per cent in fees, Mr Cronin says. “If you invest by yourself, you can easily stay below this figure.” Managed funds and commissionable investments often come with higher fees.

Be sceptical about recommendations: If someone suggests an investment to you, ask if they stand to gain, advises Mr Cronin. “If they are receiving commission, they are unlikely to recommend an investment that’s best for you.”

Get financially independent: Mr Cronin advises UAE residents to pursue financial independence. Start with a Google search and improve your knowledge via expat investing websites or Facebook groups such as SimplyFI.