Arabian Business - Dubai’s focus to take FDI ‘to new heights’ will spur profits, productivity, and create new jobs: experts

Vijay Valecha, Special to Arabian Business May 10, 2022

For each dollar of FDI, the local economy generates another one and exports two more. This means that every added flow of FDI investment has a ripple effect in augmenting value for the local economy, experts told Arabian Business

Dubai’s continued focus to take its foreign direct investment (FDI) ecosystem and infrastructure to new heights, while enhancing the ease of doing business, will boost technology transfer, labour productivity, profits, and lead to more jobs, experts told Arabian Business.

Dubai recently achieved the top ranking in the world for its ability to attract foreign direct investment (FDI) in 2021, notching up another record with 418 greenfield FDI projects.

“The top ranking in the world for being the hub for the highest FDI in 2021 is not but expected, given the revised and innovative strategies and reforms that the government has set to attract, ease, and facilitate foreign entrepreneurship and startups in the country,” said Scott Cairns, the managing director of Middle East-based Creation Business Consultants.

“The UAE has adopted a supportive culture that nurtures a digital-based and innovation environment, which further pioneers UAE globally in its shift toward knowledge-based industries, specifically as it seeks to pool and attract talented individuals and investors, creating extraordinary wealth, and additional job and investment opportunities.”

The CEO of Seven Capitals, Mohammed Shaheen, added: “The country’s resilience and relentless pursuit of successful economic transformation and sustainability are clearly manifested in the high global rankings it has achieved. The focus will be now on enhancing UAE’s international reputation as an investment hub and mobilising concrete investments, along with bringing in solutions for sustainable economic growth”

As a result of the steps taken to strengthen its economic sectors and increase the ease of doing business, the UAE attracted $20.7 billion (AED 76 billion) in foreign direct investments in 2021, up 3.9 percent from 2020.

The chief investment officer at Century Financial, Vijay Valecha, said: “The government of Dubai has developed a stable, sustainable economic environment as well as a thriving business ecosystem for enterprises and entrepreneurs to launch new initiatives, capitalise on new possibilities, and expand their operations both within and beyond its boundaries.

“The increased focus on FDI helps bring the latest technology and transfer of knowledge and skills, thus improving labour productivity and leading to more jobs. This leads to improvement in the state of the economy-boosting the profits of businesses. Additionally, consumption rises as per capita income rises. As a result, tax revenues rise, and government spending also rises.”

The UAE and the Dubai governments are keen to continue increasing FDI at a time when the global investment landscape is changing rapidly, thanks to post-pandemic trends, evolving economic priorities, and a sharp rise in digitalisation.

Scott Livermore, the ICAEW economic advisor and chief economist at Oxford Economics, said: “I think while improved focus on FDI can stimulate activity in 2022 both in greenfield and IPO activities, the more significant benefits are over the medium-term and are set to accumulate.”

The UAE has established itself as one of the world’s top 20 economies in terms of FDI, indicating the country’s strong economic performance.

In response to the pandemic, it was one of the first countries in the world to launch stimulus packages and initiatives to provide the necessary support to the economy’s various sectors and adapt to pandemic-related challenges.

“I know how hard the FDI industry works, how competitive it is and reaching the top ranking is a great milestone,” Carolina Arriagada, the managing director of Cities & Collaboration Ltd and founder of fdiCampus, said.

“FDI is as an economic development methodology that is well known for its spill-overs. For example, according to UNCTAD, for each dollar of FDI, the local economy generates another one and exports two more. This means that every added flow of FDI investment has a ripple effect in augmenting value for the local economy. It is a virtuous circle, where the more you bring, the more value the local economy generates and at the same time captures.”

Arriagada concludes: “There is also another factor, which has to do with the attitude of high-performing athletes. When you are at the top of your game, you feel even more motivated to continue focusing, working hard, delivering results, and venturing to new heights. This is the track Dubai is on.”