GCC Nations Need to Strengthen Investor Protection and Financial Transparency to Attract More Investment, Milken Institute Report Finds
As Gulf Cooperation Council (GCC) nations ramp up efforts to attract investment and diversify their economies, member states lag in critical areas that handicap their progress, according to the 2020 Milken Institute Global Opportunity Index.
UAE, Qatar, Bahrain top gulf nations in annual @MilkenInstitute Global Opportunity Index. @GCC governments need to strengthen investor protection, transparency to attract more investment, authors caution. #investment #UAE #Qatar
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The Global Opportunity Index (GOI), published annually by the Milken Institute, considers economic and financial factors that influence foreign investment activities, as well as business, legal, and regulatory policies that governments use to drive investment.
It is a pivotal year for the GCC. Saudi Arabia assumes the presidency of the G20 and Dubai hosts Expo 2020, highlighting the region’s growing economic development.
Claude Lopez, Ph.D., and Joseph Bendix, authors of the report, examined regional trends and data that compare GCC nations to upper-middle-income countries. They found that GCC countries rank favorably in several areas, including the cost of opening a business, the burden of labor regulation and taxes, the age and health of the working population, among others.
However, serious deficiencies exist in policies that offer protection for investors—including the recovery and resolution process—and transparency regarding the quality and quantity of information available.
The authors studied the data in the context of public efforts by GCC countries to adopt economic plans addressing barriers to future development, such as Saudi Vision 2030 or Bahrain’s Economic Vision 2030.
“The over-arching goal of these national plans is to diversify the economy away from oil by modernizing the legislative framework and enhancing the business environment of the region,” the authors write, noting, “The credibility of these economic roadmaps, especially in the eyes of international investors, lies in their implementation.”
Rank of GCC countries in the 2020 Global Opportunity Index
United Arab Emirates (26 overall)
Qatar (38)
Bahrain (42)
Oman (53)
Kuwait (58)
Saudi Arabia (66)
The GOI assesses 146 countries in five categories, including 1) Business Perception; 2) Financial Services; 3) Institutional Framework; 4) Economic Fundamentals; and 5) International Standards and Policy.
In their analysis, the authors note significant progress made to date and the growing prominence of GCC countries among investors. For example, they point to the inclusion of Kuwait, Qatar, Saudi Arabia, and the UAE in the main emerging market indices.
“This trend will help spotlight the region to global investors and funds,” they write. “However, the inclusion in these global indices means extra scrutiny from investors and new challenges … especially information disclosure. The delays in Aramco’s IPO illustrate the importance of these components when dealing with international investors.”
Dr. Lopez is available for interviews on these and other topics related to international economics. She may be contacted directly at [email protected]
These issues will also be discussed at the upcoming Milken Institute Middle East and Africa Summit, set for February 11-12, 2020, in Abu Dhabi.
The complete Global Opportunity Index, along with the report, Global Opportunity Index 2020: Focus on the GCC Countries, is available online at http://globalopportunityindex.org
About the Milken Institute
The Milken Institute is a nonprofit, nonpartisan think tank determined to increase global prosperity by advancing collaborative solutions that widen access to capital, create jobs, and improve health. We do this through independent, data-driven research, action-oriented meetings, and realistic policy initiatives. For more information, visit www.milkeninstitute.org