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High operating costs dubbed major hurdle to FDI, says survey

ABU DHABI- The high operating cost of doing business is the chief reason behind the low foreign direct investment (FDI) coming into the UAE and Abu Dhabi, a survey has said.

According to a survey carried out by the Ministry of Economy (MoE) in 2007 to find out the hurdles to investment in the UAE and Abu Dhabi, found high operating costs stems from the rise in rents and inflation, is the main reason blocking foreign investors. This view was held by 72.6 per cent businesses and investors.

The high cost of fuel was second most disturbing hurdle in the way of FDI 65.3 per cent respondents said.

Intensity of foreign competition was ranked third with 63.2 per cent saying that it is a stumbling block.

The scarcity of land and real estates, non availability of offices and residential accommodation and was also a major problematic area for 48.9 per cent people.

The requirement of having a local partner or sponsor was not a critical hurdle in the eyes of 46.4 per cent of respondents.

The complexity of administrative and cumbersome procedures was a serious issue and was ranked fourth in the list of 13 major hurdles discouraging FDI into the country. Around 40.3 per cent people viewed it as something serious.

Shortage of skilled and qualified manpower was viewed as an issue by 38.6 per cent voters, because many businesses find it extremely difficult to find right and skilled staff.

Rigidity of the financial market received 37.8 per cent votes and the inaccessibility of information on investment was least interested issue in the opinion of 37.6 per cent people.

Inadequacy of administrative services was not viewed as a disturbing issue by investors, as 34.6 per cent thought it a threat to FDI.

Other non- specified difficulties, was thought a serious matter for 45.5 per cent investors.