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Mr. Seetharaman highlighted the Foreign direct investment trends in Middle East and measures taken to encourage Global investor’s and stated that ”Saudi Arabia has attracted nearly $147 billion in foreign direct investment (FDI).The second largest Arab FDI destination is the UAE, which has attracted in excess of $74 billion. In Qatar FDI investment had grown up by 45.7% in 2009 to 25.90 bn in 2009.FDI in Oman has reached US$ 14bn .UAE is working on laws that would relax existing 49 per cent caps on international ownership of firms established in some sectors outside free zones. Laws are planned to improve support for small and medium enterprises and overhaul of insolvency laws. The new tax law in Qatar which came in 2010 has brought down tax rate to 10% and is more favorable for foreign investment. In Qatar the foreign investors’ capital can exceed the 49% limit based on a decision from the Minister of Business and Trade in certain selective sectors. Jordan has begun to encourage international business leaders to invest in the kingdom. The corporate tax rate reduction has made Oman’s rate standing at 12 percent down from 30 percent.”
Mr. Seetharaman provided insight on the fiscal policies in the region. He stated that “Saudi’s budget of 2011 plans to invest $100 billion in education and infrastructure. Qatar will boost budget spending by 19% to QR139.9bn with a budget surplus around QR 22bn.Higher thrust is planned for education, health care and infrastructure. Qatar has projects worth more than $100 billion underway. GCC budgets are in expansion mode in 2011 which will provide more opportunities in various sectors for global investors. In Qatar services sector is a major sector to grow and would account for 40% of output by 2016.After 2012 5% of additional public sector investment spending would be needed to generate 0.5 % temporary acceleration of growth in non-hydrocarbon output. Hence non-hydrocarbon sector in Qatar provides significant opportunities for global investors.”
Mr. Seetharaman highlighted the current scenario of GCC Bond market. He stated that “In 1st Quarter 2011 for GCC bonds was close $20bn with Qatar Govt being the leading issuer amounting to $13.7bn.The other major bond issues in 2011 where from International petroleum Investment company – $4.3B, Mubadala Development company-$1.5B and Emmar properties – $0.5B.The refinancing requirements of regional corporations in the coming years is expected to increase, with debt more than $60bn debt maturing in next 2 years. The soaring high yields in 1st quarter of 2011 due to crisis also provided opportunities.Massive projects and huge Infrastructure development in GCC will create demand for bonds for Global investors. Qatar exchange will allow Bonds / sukuk trading in 2nd quarter of 2011 and global investors may also participate. A vibrant bond market will also support pension fund industry”
Mr. Seetharaman also emphasized on key trends in Qatar exchange.” Qatar Exchange (QE) in which NYSE Euro next has a 20% stake is in the process of licensing banks to undertake brokerage business. QE has increased working hours since Feb 2011.QE aims to introduce delivery-versus-Payment (Dip) which will enhance post –trade processing services in 2011 and increase confidence for international investors.
Mr. Seetharaman also spoke about investment opportunities in GCC equity markets and various industrial sectors for global investors. “The Price earnings and Price Book multiples of Qatar exchange are still attractive when compared to emerging economies. Abu Dhabi and Qatar banks provide good investment opportunities. Petrochemicals are also a good segment to consider for investment apart from banking due to higher capacity utilization in the industry. Health care and Education are new sectors which appear interesting in future. The key factors boosting the GCC healthcare sector’s growth include mandatory medical insurance for employees as well as increasing health awareness. The GCC countries’ increasing collaboration with foreign universities and institutes to open branches in the GCC region has also enhanced efforts to improve higher education. The renewable and non-renewable energy industry is also witnessing foreign investment and collaborations. ”
In his concluding remarks, Mr. Seetharaman said that “In the coming years Middle east will become a significant market for Global investors”
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