Bahrain attracts $942m FDI
MANAMA: Bahrain attracted nearly $1 billion in foreign direct investment (FDI) last year, marking the third successive year of record inflows, shows a new report.
The latest World Investment Report (WIR 2020) from the UN Conference of Trade and Development (Unctad) found that $942 million of FDI entered the country in 2019, and Bahrain surpassed the global average performance with FDI accounting for 2.45 per cent of national GDP last year.
The annual report charts global investment flows, analyses trade trends and examines government policies that seek to expand world trade.
This is the third consecutive year that Bahrain has attracted FDI in the region of $1bn, most notably bucking global trends in 2018 at a time when global flows had sunk to their lowest level since the global financial crisis.
According to Unctad, FDI inflows to Bahrain were $1.515bn in 2018, 6.7pc higher than $1.42bn in 2017. Information and communications technology (ICT) accounted for 54pc of the FDI, followed by tourism, logistic and financial sectors.
The main reason for the decline in FDI from 2018 levels was the country’s investment profile, which centres on light manufacturing and services, which are more sensitive to global and regional economic headwinds, said the main UN body dealing with trade, investment and development issues.
However, the report noted that the Bahrain government is striving to enhance FDI flows by promoting non-traditional industries such as healthcare and the digital economy.
Last year saw a number of milestones for the country, including the launch of the region’s first Amazon Web Services (AWS) hyperscale data centre, and being named the fourth most improved economy in the world in the latest World Bank Ease of Doing Business report.
Among key reforms brought in last year is that the kingdom now allows full foreign ownership in companies involved in oil and gas drilling activities.
The Economic Development Board (EDB), Bahrain’s main investment promotion agency, attracted 134 new companies to the country, which is expected to result in a total investment value of $835m and create more than 6,000 jobs in the local market over the next three years.
Commenting on the achievement, EDB chief executive Khalid Humaidan said: “Our core mandate is to support direct investment which facilitates economic diversification and leads to sustainable growth, ultimately creating employment opportunities in the market.”
Globally, WIR 2020 found that FDI flows totalled $1.540 trillion, representing 1.76 per cent of global GDP.
Projecting a bleak outlook for this year, the report said global flows of FDI will be under severe pressure as a result of the Covid-19 pandemic.
These vital resources are expected to fall sharply from 2019 levels of $1.5trn, dropping well below the trough reached during the global financial crisis and undoing the already lacklustre 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.
“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.
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.
Source: http://www.gdnonline.com/Details/825948/Bahrain-attracts-$942m-FDI
