1997 03 24 Monday No. : 06697
UAE NEEDS TO ACT FASTER TO WOO INVESTMENT
Recent moves by some of the Arab Gulf Co-operation Council, AGCC, states to make their stock markets more open to foreigners are likely to affect the chances of the proposed UAE stock exchange unless suitable and timely modifications are incorporated. According to indications available so far, the UAE stock exchange, now expected to be commissioned some time next year, will be restricted to AGCC nationals, placing an inherent limitation on the size of the potential market capitalisation.
An Economist Intelligence Unit, EIU, report on the AGCC stock markets has rated Bahrain and Oman as the most open to non-nationals. Bahrain allows non-nationals who are residents for more than three years to own up to 1.0% of a local company. Foreigners can own up to 24.0% of a listed company, although they can trade in only four of the 36 listed companies.
Oman has allowed foreigners to invest through mutual funds, under which non-nationals may own up to 65.0% of an Omani company. This can go up in exceptional cases to 100.0%. According to the EIU, the Sultanate is extending the permissible ownership by non-AGCC nationals to 49.0% in any publicly-quoted company.
Saudi Arabia has taken a major stride by providing the opportunity to non-Saudis to participate in the stock market for the first time through the creation of an investment fund for Saudi equities. The Saudi Arabian Investment Fund, SAIF, Ltd., will invest in the shares of Saudi companies and will be listed on the London Stock Exchange. The Saudi move is meant to tap a part of the earnings of foreigners residing in the domestic investment market. Last year alone, an estimated $ 15.0 billion went out in remittances by expatriates, more than seven times the Saudi current account deficit.
All this is bound to put pressure on the UAE stock exchange, whenever it is ready for take-off. Mohammed al Abbar, Director General of the Dubai Department of Economic Development, is on record as saying that the UAE stock market will need a "new element" if it is to be more successful than the "average" markets in the region.
This is particularly so for the success of Dubai's Strategic Plan, revealed last year, which seeks to enhance the emirate's image as a leading business and investment centre in the Gulf by putting in place a suitable legal and policy framework to attract and sustain investment activity. The plan has recognised the need for Dubai to compete with other leading business centres, particularly those located in the competing zones of the Middle East and South East Asia, as the competition for investment funds is getting increasingly intense.
The plan emphasises that a pro-business stand on the part of the Government and strong institutional support for foreign investors and businessmen are key elements of any strategy to attract long-term investment commitments. The investment policy also envisages equity ownership and long-term residency laws, as well as special incentive packages and facilities to attract large investments in high-tech and high-value-added industries and services. The Strategic Plan has already seen a year off towards the 2000 target and many of these issues may not have been addressed as yet. Already Dubai may have lost some investment and business talents to more friendly investment destinations, including Singapore and Canada. From the point of view of the Strategic Plan, this aspect is of particular interest as it lays great stress on human resources development as a key to its success.
"Capital is most shy and withdraws at the first feeling of insecurity," commented a leading foreign investor who stressed the need for a stable and long-term policy framework for attracting long-term investment commitments. The policy framework would cover a wide range of issues from protection of capital to residency laws, as underlined by the Strategic Plan. (The Khaleej Times.)
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ABU DHABI TRADE FIGURES SHOW GROWTH
Trade in the Emirate of Abu Dhabi surged at the beginning of the year, thanks to higher exports and re-exports compared to the previous year. Following the overall growth seen in 1996, statistics for January continued in the same vein with both exports and re-exports doing well and imports dropping considerably.
Exports from Abu Dhabi for the month of January accounted for Dh 54.5 million as against Dh 14.0 million (reflecting a 280.0% increase) registered in the same period last year, partly attributable to the increase in weight which rose from 6.3 million kgs to 12.3 million kgs (a 90.0% increase).
Re-exports also went up in value by 10.0% in the same period from Dh 78.3 million to Dh 87.0 million but the weight dropped by 20.0% from 6.8 million kgs to 4.8 million kgs. As the Emirate becomes more self-reliant, imports have dropped from Dh 1.573 billion to Dh 1.255 billion with several commodities imported showing a decline when compared to the same period last year. Total trade for January this year was Dh 1.397 billion with a total weight of 223.5 million kgs, compared to Dh 1.665 billion and 284.0 million kgs achieved last year.
Kuwait's imports from Abu Dhabi leapfrogged from Dh 1.3 million in January last year to Dh 36.9 million, with an increase of over 2.0 million kgs in weight. Saudi Arabia was next with Dh 5.2 million - a marginal increase on their Dh 4.9 million last January - followed by Oman, Dh 3.7 million up from Dh 2.1 million and Qatar, Dh 2.0 million, down from Dh 3.1 million.
Breaking into the Gulf dominated top five for the first time was Madagascar which imported Dh 1.0 million-worth of commodities ahead of Jordan, the UK, Indonesia, Bahrain and Hong Kong. Other countries imported goods to the value of Dh 1.7 million, with a total weight of Dh 1.7 million kgs.
Machinery, sound recorders, reproducers and parts was by far the largest export commodity category, accounting for 66.5% of the total exports and worth Dh 36.2 million. Foodstuffs, beverages, spirits and tobacco - Dh 5.0 million or 9.2% - was next followed by mineral products at Dh 3.2 million or 6.0%, plastics, rubber and articles thereof at Dh 2.8 million or 5.2%, base metals and articles of base metal at Dh 2.6million or 4.8% and vegetable products at Dh 2.2 million or 4.1 %.
Saudi Arabia regained its spot at the top of the re-export list once more and accounted for Dh 25.2 million, an increase over Dh 8.7 million, followed by Germany, Dh 22.3 million, also up from Dh 1.9 million. Qatar at Dh 6.3 million, Kuwait at Dh 3.2 million, the Netherlands at 3.1 million, India at Dh 2.7 million, Pakistan at Dh 2.2 million, Egypt at Dh 2.1 million, Turkmenistan at Dh 2.1 million and Sudan were the other major re-export destinations for good from Abu Dhabi. Other countries brought up the total with Dh 15.7 million.
Vehicles of transport were the main commodity of re-exports, accounting for Dh 33.0 million or 37.9% of the total value, followed by machinery, sound recorders, reproducers and parts at Dh 29.0 million or 33.4%. Collector's pieces, antiques and works of art followed at Dh 13.2 million or 15.3%, plastics rubber and articles thereof: Dh 2.2 million or 2.6%; base metals and articles of base metals: Dh 1.9 million or 2.2%; and livestock and their products: Dh 1.7 million or 2.1% were the other main re-export items.
Saudi Arabia was the top exporter to Abu Dhabi in January, accounting for Dh 195.5 million, an increase of 10.0% over the statistics of Dh 175.9 million achieved in the same period last year. The US with Dh 184.2 million, Germany with Dh 163.8 million, the UK with Dh 122.7 million and Japan with Dh 122.0 million make up the top five.
The other notable exporters to this emirate were Italy with Dh 70.7 million, France with Dh 49.5 million, India with Dh 34.7 million, the Netherlands with Dh 23.1 million and South Korea with Dh 19.8 million. The other countries' category accounted for another Dh 269.1 million to bring up the total.
Next in line were vehicles of transport, at Dh 206.7 million or 16.5%, and base metals and articles of base metals at Dh 116.7 million or 9.3% of the total. Vegetable products at Dh 90.0 million or 7.2%, products of the chemical or allied industries at Dh 66.1 million or 5.3% and plastics, rubber and articles thereof at Dh 59.1 million or 4.7% were some of the main commodities imported.
Merchant shipping was once again used extensively as the most popular form of transport, accounting for a total of Dh 779.0 million with 98.1 million kgs, while transport by road accounted for a further Dh 353.3 million and 120.5 kgs. Air cargo carried 2.7 million kgs to a value of Dh 262.5 million and dhows ferried imports, re-exports and exports to the value of Dh 2.1 million with a weight of 2.0 million kgs to and from the Emirate of Abu Dhabi. (The Emirates News)
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ASIAN, WESTERN LEADERS INVITED TO GULF ECONOMIC CONFERENCE
Malaysian Prime Minister Mahathir Mohammed and other Asian and Western leaders have been invited to a Gulf economic conference next month, organisers said yesterday. The April 7 -9 conference in Bahrain will cover several economic topics concerning the six Arab Gulf Co-operative Council, AGCC, states, including reforms, capital markets and attempts to diversify their oil-reliant economies, the Gulf Economic Forum, GEF, said in a brochure received here.
Entitled 'AGCC Strategies and Global Relationships at the Turn of the Century', the conference is expected to attract hundreds of officials from the Gulf, Asia, Africa, Europe and the United States. Apart from Premier Mahathir, participants include Governor of the Bank of England Eddie George, Bahraini Minister of Finance and National Economy Ibrahim Abdul Karim, Arab League Secretary General Esmat Abdel Meguid, Palestinian Minister of Education Hanan Ashrawi, Former US Trade Secretary Mickey Kantor and former South African Foreign Minister Pik Botha.
Key issues to be debated include privatisation, stock markets, fund management, economic liberalisation, information technology, diversification from oil-based economies, Islamic banking, mergers and acquisition, and credit rating agencies and their impact in the AGCC. This is the fifth annual conference to be organised by the GEF and more than 800 delegates from 24 countries attended the 1996 meeting.
The conference coincides with reforms by AGCC states which are seeking to ease reliance on unpredictable oil export earnings. The six AGCC members - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE - produce around 18.0% of the global crude supplies and oil exports generate more than 66.0% of their income. They also sit atop 45.0% of the world's total proven oil reserves. (The Agence France Presse, AFP)
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