‘India will be No.1 investment destination for Gulf firms’

November 3rd, 2008 - 7:30 pm ICT by IANS  

KPMGDubai, Nov 3 (IANS) India will emerge as the number one investment destination for investors in the Middle East within five years, followed by the United Arab Emirates (UAE) and China, according to a new survey.In the year ahead, investments from this region will be split among India, the UAE and China, but in five years’ time, the focus will be firmly on India, according to the survey carried out for global consultancy firm KPMG International.

For the next one year, the survey, which covered 50 senior corporate strategists in the six Gulf nations and Egypt, found that the UAE would lead in attracting investment with 26 percent of the respondents saying so, followed by India and Qatar with 22 percent, and Saudi Arabia, Bahrain and China at third place with 14 percent.

However, in five years’ time, India will be the clear leader in attracting investment from the region with 34 percent of the respondents naming the subcontinent, followed by the UAE (22 percent) and China (16 percent).

“These responses suggest that large Middle Eastern corporations are set on becoming more international in their operations, but are taking a cautious, step-by-step approach to investment outside the region,” Abdelhamid Attallah, a partner in KPMG’s Egypt member firm, said while releasing the survey report.

“The worldwide problems with credit do not seem to worry these people very much. Only 13 percent think that this will be a problem for the foreseeable future, and many say that it will affect investment plans for no more than two or three years,” he added.

According to the survey, investors in Saudi Arabia were the most inclined to put their money abroad, mostly in India, China and the US.

In the next one year, however, 80 percent of investments from Kuwaiti firms will be in countries where they already have a presence, which are concentrated in the Gulf.

But in five years, India is again the clear favourite with 40 percent of the Kuwait investors saying it is the country of their choice, though the rest of money will remain in the Middle East.

To a question on which country from outside the region will be the most influential, most of the respondents said China would displace the US in five years’ time.

“On a global scale, between next year and 2013-14, China is expected to displace the US as the most influential country from outside the region, and India will move ahead of both the US and the UK,” Attallah said.

“This shows very clearly that the rise of China and India as global economic powers is expected to be felt here just as strongly as in the rest of the world. For a region that has so long been influenced by European and American business, this may represent a major shift in emphasis,” he added.

In the region, Saudi Arabia is expected to remain the most influential in the next one year, but in five years’ time, both Saudi Arabia and the UAE are likely to share the top spot, the survey found.

Most of the companies surveyed are in the early stages of international expansion with around 46 percent going international for the first time.

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