The head of Dubai-based developer Emaar, Mohamed Alabbar, has said political instability is preventing his company from expanding across the Middle East and North Africa.
Alabbar said investment opportunities abounded across the region, particularly in countries that had experienced a change in government, but he would not risk Emaar’s money in countries that were unpredictable and did not have clear regulations or a history of dealing cooperatively with the private sector.
“There are other countries we’d like to invest in but they still have problems with decision making, with government, they have a lot of strikes and these have a negative impact on our work and what kinds of activities and future projects that can be undertaken in these countries,” he said during a session at the World Economic Forum in Jordan on Saturday.
“The private sector wishes to participate, it has a need to participate but it’s not the policy of the government. As a private sector company we cannot work under these conditions.
“We know that opportunities in the Arab region are promising opportunities and there is a need, there is a demand, but if the structure of the government in the countries is not stable, we cannot work there.
“These are new regimes, they have not stabilised yet; they have not got the experience of dealing with political parties [and] working together. We hope that they will reach this point.”
Alabbar lamented that Asia was spending more on infrastructure and increasing its spend at a faster rate than the Arab countries. During the first quarter of 2013, Asia spent $17bn, an increase of 50 percent, he said.
“However, unfortunately … this capital exists in the Arab world but we can’t do this [build infrastructure] because there’s no stability,” Alabbar said.
There was a lack of cooperation with the private sector, clear legislation and ability to get finance from banks.
“We have new political parties; unfortunately, we can’t know whether these guys know how to cooperate with the private sector [and] as an investor, for this capital to be invested I need stability
“Unfortunately, Asia is attracting these investments and the Arab world isn’t because we don’t have these tools.”
Group CEO of Qatar’s privately-owned telecommunications company Ooredoo, Nasser Marafih, said governments were hindering the delivery of services despite the related benefits of having internet access.
“After we started investing, we found [some] government[s] started to submit new laws or constraints on investment and new taxes that did not exist when we started investing in the telecommunications sector," Marafih said.
"In telecommunications, we need a long time for installing infrastructure … so we need clarity in the long-term on policies, on regulations and legislation to encourage investment in these countries.
“Infrastructure in the Arab world is under-developed. As we know, we live in a modern [world] and we need modern services.
“If we do not become developed in this field then we will lose our opportunity.”
Bank of Jordan chairman Bassem Al Salem said the Arab Spring had negatively affected the investment climate, creating a shift away from discussion of private sector involvement.
“I believe this trend is negative and the reason is, regulations were not clear in the past,” he said.
“We need the private sector as the engine of growth, as the stimulus for growth.”
Al Salem said the problem was not as prominent in the GCC countries, which could afford to fund infrastructure, but states that lacked energy resources faced dire problems, particularly in light of increased public demands for improved services and welfare.
“The Arab Spring will increase pressure on public budgets … that will transform countries like Jordan into welfare states and this means governments will no longer be able to invest in infrastructure development, so we need to re-visit the regulations and basis for the involvement of the private sector as the engine for growth,” he said.