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Sun 21 Apr 2019 09:44 AM

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Video: Dubai FDI projects explained

Dubai attracts $10.5bn worth of FDI with 523 is the number of projects it attracted in 2018.

6th place is the position it has jumped to in global FDI capital flows ranking.

$10.5bn is the worth of FDI Dubai attracted.

523 is the number of projects it attracted.

Very impressive, isn’t it?

Now to understand how this happened, it is important to understand the FDI structure in the country.

So in Dubai we have 3 major FDI types or sources – i.e. the kind of projects that attract foreign investors

1. Greenfield Projects

Basically the usual, common kindsa projects where a parent company builds its operation in a foreign country from the ground up.

For example, as we saw recently, Amazon set up its operation in Dubai.

This is great because it comes with a lot of benefits to the host country like creation of jobs, economic boost etc.

63% of the investments are such projects.

2. Mergers and acquisitions

Uber acquired Careem, Naspers acquired Dubizzle, Amazon acquired souq… with so many M&As happening here, Dubai has become a centre for such activities. And when local companies are acquired by global giants, we just get a lot of money and become rich.

And we saw this when it was announced that employees in Careem had been offered stock options, which would lead to the creation of hundreds of news millionaires. We’ve done a detailed story on our website. Go check it out.

Although the numbers of deals aren’t very high, the value is slowly growing.

2% investment.

3. New Forms of Investment

I’m going to let Dr HenryLoewendahl from Wavteq explain it to you first.

So these are basically non-equity modes of investment where a new project is 100% owned by a domestic firm but is established in partnership with a foreign owned company for its name or experience or brand etc.

29% investment.

So what makes Dubai such an attractive destination?

My top picks would be no direct taxation of corporations, no foreign exchange control, super strategic geographic location, and hence lower cost of labour force.

But there are problems too such as heavy dependence on imports for most of the manufactured good, rigid monetary policy, risks of speculative bubbles, and bureaucracy in some cases.

But there is also a landmark new FDI law coming in soon. Go to arabianbusiness.com to find out more about that.

Some other key announcements were made too.

One of the most interesting one was the creation of 25,000 jobs. Yes, you heard it right. And these were created by the investors themselves.

Currently, the major contributors to Dubai’s FDI are the United States (37 percent), India (12 percent), Spain (9 percent), China (7 percent), and the United Kingdom (5 percent).

And the industries attracting this kind of investors here are accommodation and food, construction, arts and entertainment and finance and insurance.

And now both you and I won’t really have to wait for a whole year to get the latest results from FDI. There is the Dubai FDI Monitor Live service, which is an open data platform that gives free access to FDI data.

Anyway, if you want to know what Fahad Al Gergawi, CEO of Dubai FDI has to say about all this, just got to our YouTube channel and watch the FDI video.

(Source: Arabianbusiness.com YouTube channel)