A stable political and economic environment in the UAE has propelled the country into 19th position on a global foreign direct investment confidence index.
The UAE, the second-biggest Arab economy, moved two places higher than its 2017 position in the 2020 Kearney Foreign Direct Investment Confidence Index, the global management consultancy said on Sunday.
The Gulf country was among three emerging markets – in addition to Brazil and China – ranked on the index, which is an annual survey of global business executives that lists markets that are expected to attract the highest level of investment in the next three years.
The UAE’s ranking, the consultancy said, reflects positive investor sentiment based on the government’s commitment to economic diversification, innovation, infrastructure and the ease of doing business.
These policies are “now paying clear dividends”, boosting the country’s attractiveness to foreign investors, Rudolph Lohmeyer, partner at Kearney Middle East’s National Transformations Institute, said.
“Investors clearly anticipate that these fundamentals, combined with an extremely effective response to the crisis, will enable the country to emerge strongly from the Covid-19 crisis,” Mr Lohmeyer said.
“The UAE is also expected to benefit from the entry into force of the Africa Continental Free Trade Area, through new trade opportunities with African countries, although Covid-19 has delayed the timeline for the agreement.”
The UAE has taken various measures to attract foreign investment as part of efforts to reduce the country’s reliance on oil revenue and diversify its economy.
The country introduced a new FDI law in November 2018. It also announced a list of 122 economic activities across 13 sectors, in which foreign investors would be allowed complete ownership, last July.
These sectors include renewable energy, space, agriculture, manufacturing, transport, logistics and hospitality. Sweeping visa changes, reduced fees and the removal of administrative barriers have also boosted the amount of investment coming into the country.
The acquisition of Careem for $3.1 billion (Dh11.38bn) by US ride-sharing company Uber also supports the country’s technology sector, adding to its appeal as one of the world’s most attractive FDI destinations, according to Kearney.
Mr Lohmeyer said “the shift of the Dubai Expo [to] 2021 is expected to fuel growth and stimulate foreign investment as the world emerges from the crisis”.
The agency forecast that global FDI will fall this year due to the coronavirus pandemic.
The world economy is facing its deepest recession since the Second World War, according to the International Monetary Fund, and the nature and timetable of the recovery remain uncertain.
"The pandemic and its subsequent economic shocks show just how quickly and profoundly the external operating environment can change," Paul A Laudicina, founder of the FDI Confidence Index, said.
“Some markets will recover faster than others, and this likely explains why there appeared to be a return to the fundamentals — to large, more stable markets with more predictable political and regulatory structures.
The report said developed markets will continue to do well this year because they show strength in the factors that investors tend to put a priority on, including an attractive investment environment and strong technology infrastructure.
Emerging and frontier markets, on the other hand, will suffer much more due to the fallout from the coronavirus outbreak.
The US, Canada, Germany and Japan make up the top four countries on the global FDI confidence index.
France, the UK, Australia, China, Italy and Switzerland complete the top 10.