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UAE records highest-ever foreign direct investment at Dh84 billion

The Emirates become the fourth largest recipient in the world despite 12% decline in FDI inflows globally

Published: Wed 5 Jul 2023, 2:38 PM

Updated: Wed 5 Jul 2023, 10:06 PM

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The UAE recorded its highest-ever foreign direct investment (FDI) inflow in 2022 and surged in global rankings, entering the list of top 20 economies.

According to the annual World Investment Report 2023 released by the United Nations Conference on Trade and Development (UNCTAD), FDI inflows to the UAE stood at $22.7 billion (Dh84 billion) last year, up 10 per cent from $20.6 billion in 2021. The UAE also received the fourth largest number of greenfield projects at 997 – an 84 per cent increase.

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, noted that the UAE achieved record figures despite a decline of 12 per cent in FDI inflows globally.

“The UAE has achieved the highest foreign direct investment (FDI) inflows in its history in 2022, reaching Dh84 billion ($23 billion) despite a 12 per cent decline in global FDI movement, according to the UNCTAD's annual World Investment Report 2023... The report ranks UAE first regionally in attracting FDI inflows and the fourth largest recipient of greenfield investment projects in the world with a total of 997 projects, following US, UK and India, an increase of 80 per cent compared to previous year.”

Sheikh Mohammed added: “We express our appreciation to all regulatory, legislative and service entities who contributed to strengthening the position of the UAE as one of the best international investment hubs. Our aim during the coming year is to achieve more historic milestones.”

UAE in top 20 countries for FDI inflows

In the global rankings of the top 20 countries for FDI inflows, the UAE climbed to 16th spot from 22 in 2021 and was the only country from the Arab world.

During the launch event of the report held in Abu Dhabi, Dr Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, noted that the UAE is the most attractive destination in the GCC, attracting 61 per cent of global FDI coming to the region.

“These results confirm the vision, strategy and policy programme of the UAE leadership to create a dynamic, growth-focused destination,” he said and underlined that the UAE has made a “robust rebound” from the global pandemic.

Dr Al Zeyoudi said that the UAE has emerged as a “hub of economic resilience and prosperity”, attracting top talents from across the globe.

“As we continue to push forward, we are seeking new forms of investments, new sectors that can be developed,” he said and pointed out that the UAE is eyeing fostering high growth sectors such as fintech, agritech, healthcare, e-commerce etc.

The UAE has also made strong investments globally, with FDI outflows to the tune of $24.8 billion compared to $22.5 billion in 2021. The UAE has been ranked in the 15th position in terms of FDI outflows, followed by Saudi Arabia in 17th spot from the region.

Politically stable, a global leader

Ahmed Jasim Al Zaabi, Chairman, Abu Dhabi Department of Economic Development, noted that the UAE's growth has been underpinned by a "stable political environment and flourishing" economic climate.

"A year ago, the UAE stood at the 22nd position in FDI inflows, and today, it is with great pride that I announce our leap to 16th position. The UAE now proudly stands as the world's fourth largest recipient of greenfield projects with nearly a thousand ambitious ventures announced, signifying an outstanding 84 per cent increase."

Two of the largest projects included the building of a neutron therapy hospital, medical university and convention centre in Abu Dhabi by Star Energy (Austria) in a $1.8 billion joint venture with locally based Royal Strategic Partners and MIG Group, and the building of a $1 billion green hydrogen plant at Khalifa Industrial Zone in Abu Dhabi by Korea Electric Power.

The top five recipients by a number of projects are: the US (2,075), the UK (1,230), India (1,008), the UAE (997) and Germany (984).

Al Zaabi underlined that the UAE is ranked at the 15th spot in FDI outflows reaffirming its role as a "global leader of investments" that help other countries to grow, provide jobs to millions of people, and shape a brighter future for everyone. The UAE was in 20th position in 2021.

UNCTAD calls for urgent support

Richard Bolwijn, head of investment research, division on investment and enterprise, UNCTAD, said that the UAE has bucked the global trend in FDI inflows.

“Global foreign direct investment was down 12 per cent. The decline was mainly a result of lower volumes of financial flows and transactions in developed countries.”

The annual UN report highlighted that the slowdown was driven by overlapping crises: the war in Ukraine, high food and energy prices and debt pressures.

As per the report, developing countries face an investment gap of $2.2 trillion annually for the energy transition out of a $4 trillion annual funding gap for the Sustainable Development Goals.

The UNCTAD called for urgent support to developing countries to enable them to attract significantly more investment for their transition to clean energy.

The report showed that much of the growth in international investment in renewable energy, which has nearly tripled since adopting the Paris Agreement in 2015, has been concentrated in developed countries. Developing countries need renewable energy investments of about $1.7 trillion annually but attracted foreign direct investment in clean energy worth only $544 billion in 2022.

UNCTAD Secretary-General Rebeca Grynspan added: “A significant increase in investment in sustainable energy systems in developing countries is crucial for the world to reach climate goals by 2030.”

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