Thereby accounting for the lion’s share of AED 11,840 billion or 38%, followed by the water and electricity sector accounting for AED 6.157 billion, i.e. 20%, then the financial brokerage and insurance activity sector accounting for AED 4.565 billion or 15%, while the restaurant and hospitality sector contributed a tiny 0.14% (AED 45 million) of FDI for the year under review, according to a report released today by the Statistics Center - Abu Dhabi (SCAD).
The report defined FDI as all investment projects being developed by foreign investors as the sole owners or in partnership with local investors, often in the form of international companies that contribute to the transfer of modern technology, expertise and best practices in development of management and the opening of new markets.
The report noted that FDI has gained increasing importance over the past few years of, becoming one of the most important sources of finance in developing countries, especially in light of the increasing volume of external indebtedness and the decline in international lending, after having played an important role in financing investment in developing countries during the seventies. FDI has now emerged as an alternative to loans.
It is worth mentioning here that carrying out statistical field surveys is considered to be one of the central areas of SCAD’s strategic business objectives and strategy, as well as an integral part of its active participation in supporting Abu Dhabi’s development vision in the development and organization of the overall statistical work in the emirate of Abu Dhabi.
Commenting on the issue, Abu Baker Al-Amoudi - Director Statistics Sector at Statistics Center – Abu Dhabi said the Emirate of Abu Dhabi is “experiencing a distinct, qualitative development in foreign direct investment and has become a hub for the activities of giant international companies looking forward to grow at the regional and global scales amidst the strong economic environment enjoyed by the Emirate of Abu Dhabi, which translates Abu Dhabi Government’s commitment to achieving its vision to assume leading position among the best five governments in the world, and to build a globally competitive economy through sustainable growth and continued efforts to provide an ideal investment climate for local and international investors driven by an optimal working environment, and diverse investment opportunities”.
He noted that major global developments and transformations in recent years, especially on the economic front, had presented formidable challenges and limited choices to developing countries. “The most distinct features of this phase consisted in the acceleration of the phenomenon of globalization, which was the logical consequence of the period of economic liberalization, adoption of market economy over the last two decades, the dismantling of barriers between countries, the mutual opening up of world economies, and the emergence of major international conventions and economic blocs and organizations,” he added.
The report revealed that foreign FDI from GCC states had reached AED 257 million or 0.8%, representing the smallest proportion of FDI in Abu Dhabi classified by groups of countries. Investments from the rest of the Arab countries amounted to AED 2,160 billion, which makes up 6.9% of the total FDI, while Asian countries invested AED 2.699 billion (8.6%). FDI from European countries amounted to AED 11.816 billion, representing 37.6%, the largest percentage of total FDI for the year in question. As for North and South America, FDI came solely from Canada, USA and Panama and amounted to AED 2300 million (7.3% of the total), while FDI from other countries reached AED 12.234 billion and accounted for 38.9% of total FDI, which included investments of all countries in the real estate sector.
Classified by countries of origin, investments from the United Kingdom were estimated at AED 7.454 billion, which constitutes 23.7%, the highest percentage among the countries investing in the Emirate of Abu Dhabi. Followed by Austria, which invested AED 1.585 billion (5.04%). Japan and Libya invested AED 1,451 billion and AED 1,116 billion or 4.61% and 3.55% of FDI for 2007, respectively, while Australia invested AED 2.3 million, which constitutes only 0.01%, the lowest percentage for a single country. Investments by other countries, including the real estate sector amounted to AED 12.231 billion or 38.87% of the total FDI in the Emirate of Abu Dhabi, the report stated.
According to income payments of foreign investment enterprises, classified by economic activity, manufacturing industries topped the list with payments amounting to 20.61% as of payments or AED 3,016 billion, followed by the extractive industries (mining and quarrying), whose payments amounted to AED 2,436 billion (16.64%), then water and electricity at AED 2.262 billion or 15.45%. The transport and communications sector posted a negative value of AED 381 million, while the value of payments by other sectors totaled AED 5.519 billion or 37.7% of income payments from foreign investment institutions in the Emirate of Abu Dhabi, the report indicated.
It further noted that the purchase of goods and services in enterprises was distributed between direct imports and local purchases, with the mining and quarrying activity accounting for largest proportion of purchases (AED 16.344 billion or 49.4% of total). On the other hand local purchases of the mining and quarrying sector made up 93% of the total, followed by the construction industry, which placed purchases at AED 7.587 billion or 22.9% of the total purchases of FDI enterprises. The local purchases of this sector accounted for 37.1% of the local purchases of FDI enterprises. The manufacturing and the water and electricity sectors placed purchases worth AED 2,182 and AED 2,839 billion at (6.6% and 8.6% of total FDI purchases), respectively. The local purchases of these sectors accounted for 36.6% and 96.5%, respectively of the total purchases of each sector. The lowest proportion of purchases was in the financial intermediation and insurance sector, at AED 114.1 million, which makes up only 0.3% of the total purchases of the total purchases procured by FDI enterprises. However, 100% of the purchases of the said sector were ordered from the local market.
The total purchases of FDI enterprises were AED 33,090 billion, of which 76.1% were local purchases. The survey also showed that the total sales of goods and services of FDI enterprises had amounted to AED 223,206 billion of which 90.5% were local sales, led by the mining and quarrying sector, which secured 83% (or AED 185,171 billion) of the total FDI sales, of which 93.1% were domestic sales, followed by the construction industry, whose sales amounted to AED 19.051 billion or 8.5% of the total sales of FDI enterprises, 80.7% of which were marketed locally. Next were the manufacturing industries and electricity and water sectors, which achieved sales worth AED 4,786 and AED 4,309 billion, i.e. 2.1 % and 1.9% of total sales of FDI enterprises, respectively. The local sales the two sectors were 12.2% and 100% respectively. The lowest percentage of sales by FDI enterprises was recorded by the financial intermediation and insurance sector, which accounted for only 0.2%, with 97.9% of the sales of this sector marketed locally.
The report noted that manpower employed by FDI enterprises in the Emirate of Abu Dhabi reached 77,985 employees, the largest employer being the construction sector, which engaged 50,461 workers or 65% of the total FDI manpower, followed by the mining and quarrying sector with 11,382 workers (15% of the total), while the manufacturing industries sector employed 3,800 workers, making up 5% the total manpower employed FDI enterprises.
It added that the compensation of the staff of FDI enterprises had reached a AED 6.425 billion, the largest percentage of which (56% or AED 3.597 billion) went to the employees of mining and quarrying industries, suggesting the high rates of compensation paid to workers in this sector. On the other hand the total compensations for the workers in the construction and contracting sector amounted to only AED 930.1 million, or 14% of the total, although the sector employs 65% of the total FDI enterprises manpower, while the employees of the mining and quarrying sector account for only 15% of the total. The lowest rate of compensation was observed in the wholesale and retail trade sector, which accounted for 1% (or AED 77.9 million) of the total compensation in FDI enterprises.
The report revealed that the payment of dividends in FDI enterprises amounted to AED 2.419 billion of which the mining and quarrying industry accounted for 40.56% (or AED 981,091 million), while the water and electricity sector paid dividends worth AED 632,985 million, which makes 26.17%. The lowest dividends payment was observed in the manufacturing industries sector at AED 0,345 million of the total FDI dividends payments. Interest payments for FDI enterprises AED 269 million, mostly in the water and electricity sector, which accounted 95% or AED 254,949 million of FDI interest payments, while the in the case of mining, wholesale and retail trade, restaurants and hotels, transport, storage and communications there were no interest payment during the year under review.
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