Qatar's foreign direct investment (FDI) inward stock exceeded $31bn in 2019, according to the latest "World Investment Report 2020" by United Nations Conference on Trade and Development (UNCTAD) released Tuesday.
The report highlighted Qatar’s “creation of an investment promotion agency to attract foreign investment.”
Launched last year, the Investment Promotion Agency (IPA), as part of its mandate to attract more FDI into Qatar, aims to be a single and complete source for investment solutions in the country by attracting FDIs in all of the country’s priority sectors.
The entity has also been tasked to pursue targeted, sector-specific investment promotion agendas and co-ordinate investment promotion and marketing activities with key stakeholders, as well as develop policy advisory.
UNCTAD in its report said, “Qatar permitted, in principle, 100% foreign ownership in all economic sectors except some businesses such as banking and insurance.”
In an earlier report, Nordea Financial Services Group said, “Foreign direct investment flows into Qatar have generally followed an upward trend in the past several years, thanks to the country's political stability, stable currency pegged to the US dollar, high quality infrastructure and one of the lowest corporate tax rates in the world.”
In 2019, FDI flows into developing Asia declined by 5%, to $474bn, although the region remained an important FDI destination, hosting more than 30% of global FDI flows.
West Asia, which includes the GCC region recorded a 7% decline in FDI inflows to $28bn last year, the report said.
West Asia is confronting the dual economic shock of plummeting oil prices and the pandemic, which is expected to result in an economic contraction of 3% to 4%, UNCTAD said citing the latest IMF report.
FDI inflows to the region could drop significantly in 2020, it said.
Major FDI recipient industries such as oil and gas, tourism, aviation and financial services are likely to be acutely affected. There are already significant downward revisions in the projected earnings of major multinational enterprises (MNEs) from the region, a large number of which operate in the most severely affected industries.
The number of announced greenfield investments in Asia in the first quarter of 2020 dropped by 37%. The number of mergers and acquisitions (M&As) fell by 35% in April 2020.
“Lockdown measures and factory stoppages impacted supply chain and factories’ production in the region. Falling corporate earnings, a slump in global and regional demand and economic slowdown have led multinational enterprises (MNEs) to postpone investment plans,” said UNCTAD’s director of investment and enterprise, James Zhan.
The pandemic will precipitate a fall in reinvested earnings of foreign affiliates based in the region, affecting investment. It underscored the vulnerability of these supply chains and the significance of the role of China and other Asian economies as global production hubs.
Outward FDI is also expected to fall as a result of liquidity challenges faced by companies from the region.
A global economic recession will further weigh on inflows to and outflows from the region. Economic growth in Asia is expected to stall to 0%, UNCTAD said.
Global FDI flows will be under severe pressure this year as a result of the Covid-19 pandemic, UNCTAD noted. These vital resources are expected to fall sharply from 2019 levels of $1.5tn, dropping well below the trough reached during the global financial crisis and undoing the already lackluster growth in international investment over the past decade.
Flows to developing countries will be hit especially hard, as export-oriented and commodity-linked investments are among the most seriously affected, the report said.
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