Qatar’s outward FDI increases to $8.02bn

July 17, 2014 - 5:52:17 am

By Satish Kanady

DOHA: Qatar’s outward foreign direct investment (FDI) flow surged to a huge $8.02bn last year, accounting for 14 percent of the country’s gross fixed capital formation or GFCF compared to 3.4 percent a year ago. Qatar’s FDI outflow stood $1.8bn, or 3.4 percent, of GFCF in 2012. GFCF is a measure of the investment value of a country’s acquisitions of new or existing fixed assets.

Separately, Qatar’s outward FDI stocks also jumped during 2013. The outward FDI stocks jumped to $28bn, compared to $20bn recorded a year ago. But the inward FDI stocks dropped marginally to $29bn from $30bn.The inward FDI flows also shrank minus $840m of GFCF compared to the previous year’s $327m, a factsheet on ‘world investment’ released by United Nations Conference on Trade and Development’s (UNCTAD) has revealed. 

UNCTAD’s “World Investment Report 2014” noted FDI outflows from West Asia soared by 64 per cent to $3bn in 2013, boosted by rising flows from the GCC countries, which enjoy a high level of foreign exchange reserves derived from their accumulation of surpluses from export earnings. 

Although each of these countries augmented its investment abroad, the quadrupling of outflows from Qatar and the 159 per cent growth in flows from Kuwait explain most of the increase. Given the high levels of their foreign exchange reserves and the relatively small sizes of their economies, GCC countries are likely to continue to increase their direct investment abroad.

In contrast, FDI flows to West Asia decreased in 2013 by 9 per cent, to $44bn, the fifth consecutive decline since 2009 and a return to the level they had in 2005. Persistent tensions in the region continued to hold off foreign direct investors in 2013. Since 2009, FDI flows to Qatar and Saudi Arabia have maintained a downward trend. During this period, flows to a number of other countries have started to recover, although that recovery has been bumpy in some cases. 

The document noted Sovereign wealth Fund (SWF) continues to grow, spread geographically, but their FDI is still small. Assets under management of more than 70 major SWFs approached $6.4 trillion based in countries around the world, including in sub-Saharan Africa. 

SWFs are also expanding their investment in real estate markets in developed countries. For example, in early 2014, the Abu Dhabi Investment Authority and Singapore’s GIC purchased an office building in New York for $1.3bn, and China’s CIC spent £800m for an office area in London. In December 2013, GIC and Kuwait’s government real estate company bought office buildings in London for £1.7bn. 

In an effort to source funds widely and attract private investment for public investment, some SWFs are engaged in public offerings. For example, in 2013, 

Doha Global Investment Company, backed by the Qatari SWF, decided to launch an IPO. The IPO will offer shares only to Qatari nationals and private Qatari companies, thereby sharing some of the benefits of Qatari sovereign investments directly with the country’s citizens and companies, the UNCTAD document noted. The Peninsula