Investment in the UAE this year is expected to outstrip last year's total, driven by the resurgent private sector, says the director general of the Ministry of Economy. The volume of investment is forecast to grow by 9 per cent after an increase of 6 per cent last year, said Mohammed al Shihhi. Dr Eckart Woertz, the programme manager of economics at Gulf Research Centre, said the logistics and services industries were likely to be at the forefront of the new investment.
"In the real estate sector I do not expect much new investment, but in other parts of the economy there should be interest," said Dr Woertz. Mr al Shihhi said the private sector accounted for 60 per cent of investment last year. Stimulating investment by business is a priority of the Government as it looks to reduce the economy's reliance on the public sector. Investment accounted for 34.8 per cent of GDP last year, said Mr al Shihhi.
Investment from abroad fell last year because of the global economic slowdown. Foreign direct investment in the UAE dropped to US$8.5 billion (Dh31.21bn) from $13.7bn in 2008, the Arab Investment and Export Credit Guarantee Corporation, based in Kuwait, said in its annual report this week. But the steady increase in the number of business licences for new companies in Abu Dhabi and Dubai this year points to a better performance. In Abu Dhabi, 8 per cent more business licences were issued in the first quarter of this year compared with the same period last year, while in Dubai there was a 63 per cent increase in the number of licences granted in May from the same month last year.
Officials hope a revised foreign ownership law will further stimulate investment. The law, which is in its final draft stage, will relax the requirement for foreign investors to have an Emirati partner to conduct business outside the free zones. However, further economic problems globally could derail hopes of raising investment. tarnold@thenational.ae