UAE's new Ministry of Investment devising unified strategy to boost FDI

The UAE’s newly established Ministry of Investment is striving to bring investment policies of individual emirates together into a unified strategy that will help the Arab world’s second-largest economy boost its inward and outward investment flows, a senior official said.

The ministry, set up in July, is also mandated to help the UAE's companies grow beyond the country's borders to capture far bigger markets and establish a global presence, Mohamed Alsuwaidi, Minister of Investment, told the Milken Institute Middle East and Africa summit in Abu Dhabi.

“Each of the emirates has historically its own strategy, so what is the UAE strategy as opposed to the local government strategies and how can we bring them together into a single unified strategy? That's really what we're going to focus on going forward,” he told delegates on Thursday.

The ministry is not going to be a “regulatory policymaker” in the country, but instead a catalyst for boosting investment as well as local companies' growth, Mr Alsuwaidi, who is also managing director and chief executive of Abu Dhabi’s holding company ADQ, said.

“What we are going to be is an advocate for our companies who today have thrived in our market, in a way have dominated with their presence. The question is: how can they grow [further]?” the minister said.

While the ministry aims to help UAE companies expand internationally, it will not be involved in any asset management or allocation decisions.

“So when Adia [Abu Dhabi Investment Authority], Mubadala [Investment Company] or a Dubai sovereign fund or others say I want to put [capital] into private equity, we're not going to be influencing that,” the minister said.

“What we will be doing is helping our local homegrown companies, whether private or public, to actually open up [in] new markets.”

To expand and take “our businesses to the next level that's really our aspiration”, he said.

“We've already done that a couple of times with Taqa where they operate power plants internationally; you're seeing Adnoc going international and investing in gas as well. You see it in our healthcare [sector] where Pure Health, which is going public in the coming weeks, recently acquired a business in the UK,” Mr Alsuwaidi said.

The UAE also presents a compelling opportunity for inbound investments as the country’s economy has been growing 7 per cent on average over the past decade, with the non-oil economy accounting for about 80 per cent of its gross domestic product.

There’s an influx of foreign capital into the Dubai International Financial Centre and the Abu Dhabi Global Market and the minister expects foreign capital to continue flowing into the UAE's financial sector.

The privatisation drive in the country, where state-owned enterprises have sold part of their holdings to the public, has also opened up new avenues of investment.

Industry is another sector where the UAE presents enormous opportunities, Mr Alsuwaidi said.

“You've seen the Ministry of Industry … has been very vocal about some of the industries, whether it's around downstream oil and gas, around the petrochemical [sector], in plastics and recycling, or whether it's getting into materials for export, there's going to be, in my view, a lot of opportunities, and we're going to try to make this opportunity as attractive to an investor as possible,” the minister said.

The UAE has also set an ambitious target to attract Dh550 billion ($150 billion) in foreign investment by 2031 and rank among the top 10 countries globally in terms of attracting FDI, as part of its diversification strategy.

It has unveiled several initiatives and policies – from allowing 100 per cent foreign ownership of companies to more flexible visa programmes – to help attract more capital and talent to the country.

The UAE recorded its highest FDI inflow last year at $23 billion, up 10 per cent annually, according to the World Investment Report 2023 issued by the UN Conference on Trade and Development.

The country was ranked first in the Arab world and 16th globally in terms of FDI inflows – up from 22nd last year.

It received the fourth-largest number of greenfield projects at 997, an 84 per cent annual increase.

Meanwhile, the UAE was ranked 15th globally in terms of FDI outflows at $25 billion last year, an increase of about 9 per cent on the previous year, Unctad said.

Mubadala, a major global investor which invests on behalf of the Abu Dhabi government, continues to see the US market as one of the major destinations despite increased FDI scrutiny by US regulators, Waleed Al Muhairi, deputy group chief executive, told delegates at another session at the event on Thursday.

The sovereign investor, with close to $280 billion in assets, has $100 billion invested in the world's top economy, which constitutes about 42 per cent of the company's entire asset base, he said.

The US remains Mubadala's biggest market and it is likely to remain so in the next five years.

"Right now, from where I sit, the United States still represents the best risk-reward," Mr Al Muhairi said.

"So for us, the United States ... is still the best destination for capital."

Within Asia, Mubadala continues to invest in India, building on the third-largest Asian economy's historical ties with the UAE.

There are also opportunities on the ground in China despite an "undeniable" slowdown in its economy and Mubadala is still deploying capital in the world's second-biggest economy, "albeit a little bit more cautiously", Mr Al Muhairi added.

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