Facilitating business and adapting to evolving investment trends
November 27, 2018 | 7:34 PM
by Mohammed Mahfoodh Al Ardhi Al Ardhi
An aerial view of Khalifa Port is seen in Abu Dhabi. The UAE was the only Arab country among the top 20 global economies that are listed as ‘easiest’ for doing business. Photo - File for illustrative purpose

A close reading of the World Bank's Doing Business 2019 report reveals that the world’s investment map is changing, with new areas becoming more attractive to foreign direct investment (FDI) flows.

This change has come at the expense of some traditional areas that are nearing saturation and increasingly offering limited investment opportunities. However, emerging areas still face some problems related to investment security and the sustainability of economic reforms.

How do Arab countries in general, and the GCC countries in particular, measure up in this evolving global investment map? Are they winners in the overall equation, or is the progress achieved by competing countries globally higher than the economic reforms being achieved in Arab countries? Data from the Doing Business 2019 report shows that Arab economies have implemented 40 new reforms since the beginning of 2018.

In addition, 18 Arab countries have accelerated economic reforms compared to last year. The said reforms have supported SME projects and entrepreneurs, created job opportunities, and encouraged private investments.

The report also reviews the ease of doing business in 190 countries using a variety of indicators that include starting a business, getting construction permits, accessibility to power, property registration, receiving credit, protecting minority investors, paying taxes, cross-border trade, implementing contracts and settling insolvencies.

Ranking 11th in this index, the UAE was the only Arab country among the top 20 global economies that are listed as ‘easiest’ for doing business, while Morocco ranked 2nd among Arab countries and 60th globally, and Bahrain 62nd in the world.

Oman placed 78th on this list. It ranked first among the GCC countries for cross border trade, and second for starting a business activity. In addition, Oman moved up two places in the ownership registration index, ranking 52nd globally compared to 54th last year. Despite this advanced global rank, Oman scored the same points across most of the 11 fields measured by the World Bank’s report.

Regarding the remaining GCC countries, Qatar ranked 83rd, Saudi Arabia 92nd, and Kuwait 97th. From the wider Arab region, Egypt ranked 120th globally and 12th among Arab countries, while Algeria came in 157th globally and 14th among Arab countries.

Notably, Djibouti fared very well, having implemented six major reforms including the single window system to facilitate the start of economic activities, in addition to reducing ownership transfer costs, land registration and governance, and strengthening its capability to receive credit through expanding the scope of assets that may be used as guarantee in facilitating projects.

Other countries from the Arab region must follow suit in the coming years in order to attract business and enhance their rankings on the list. Globally, we are witnessing rapid developments as far as economic reforms are concerned.

While these improvements will have an expected effect on the movement of international investment flows in the long term, major economies such as China, India and Brazil are continuing to make steady progress.

China is one of the top 10 countries implementing reforms this year, rising over 30 places to rank 46th globally, while India has become the best ranked South Asian economy, moving up 23 places to rank 77th globally.

For its part, Brazil has implemented the largest number of reforms in Latin America and the Caribbean region, progressing in four fields. About one-third of the total global number of regulatory reforms for doing business – amounting to 107 reforms - were carried out in African sub-Saharan economies. This marks a historically unprecedented record of reforms in the continent that is today more ready than ever before to receive increased FDI flows. Interestingly, two Eastern European and Central Asian countries have joined the list of the top 10 reforming countries, namely, the Republic of Macedonia, which placed 10th on the list, and Georgia, which rose two places to rank 6th.

The world of investment is changing at an unexpected pace in some emerging countries that are becoming new forces in attracting global investments. For the GCC countries, this is a call to action to step up their efforts in achieving economic diversification and a shift of focus from oil to other industries. To secure our future, we must take the required measures to facilitate business. Competition on a global level is only growing and we need to move ahead decisively in order to stay relevant and survive in the changing investment landscape.

* The author is the Executive Chairman of Investcorp and an International Advisor to the Brookings Institution. All the views and opinions expressed in the article are solely those of the author and do not reflect those of Times of Oman.

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