GCC Inestment Outlook 2014

In association with:
Gulf Cooperation Council (GCC)

Investment Outlook 2014
Contents
Bridging the Gulf
Integration brings investment
Investment focus
Investment activity
10
Country focus
14
Structure type
17
Feature: Positioning the Region for more FDI
22
About Blakes
24
About Mergermarket
26
Methodology
In the third quarter of 2014, Mergermarket interviewed 75 corporate
executives from the GCC region to gain perspective on the business
communitys outlook for investment activity in the region over
the next 12 to 24 months. Respondents provide insight into the
specific investment trends emerging in the region and offer detailed
forecasts of future activity. All respondents are anonymous and
results are presented in aggregate.
Gulf Cooperation Council (GCC) Investment Outlook 2014
Bridging the Gulf

Foreword
Welcome to the Gulf Cooperation Council (GCC) Investment Outlook 2014, published by Mergermarket, in
conjunction with Dr. Saud Al-Ammari Law Firm in association with Blake, Cassels & Graydon LLP. Many changes
have occurred in the global economy since this report was last published in 2010, and the GCC now stands out in
the emerging markets category with a robust growth forecast and an abundance of opportunities for foreign and
direct investment in the various sectors of the GCC countries, comprised of Bahrain, Kuwait, Saudi Arabia, Oman,
the UAE and Qatar.
The report reveals attitudes and opinions of key dealmakers and
executives in the Gulf region on vital matters such as regulation,
the impact of the opening up of the Tadawul (Saudi Arabias Stock
Exchange) and the reduced dependency on oil & gas.
All of the six economies remain heavily reliant on revenue derived
from hydrocarbons, but diversification efforts are increasingly bearing
fruit, to varied degrees, across the GCC. Forty-five percent of survey
respondents believe that the opening of stock markets to foreign direct
investment will be one of the main drivers for regional growth, while
36% consider increased demand for infrastructure funding to result in
increased investment activity.
The Gulf nations are seeking to leverage their strengths in areas such
as sourcing capital and functioning as a springboard into the growing
consumer markets of the Middle East. Vying to present thei hmselves
as ideal start-up locations for new businesses and expansion targets
for European and Asian retailers, the UAE, Bahrain and Saudi Arabia
have made great strides in improving corporate governance while also
tackling economic reforms and labour challenges.
Having weathered the global economic downturn, these markets
contain growing consumer classes and are equipped with robust legal
infrastructure both of which should entice North American, European
and Asian investors looking to start up or expand businesses.
In addition, survey respondents anticipate an increasing number of
international joint ventures as well-capitalized publicly listed national
companies in sectors such as transportation, telecommunications,
and real estate are expected to develop their presence both
regionally and internationally. Over the next 12 to 24 months, 73%
of respondents expect publicly listed companies to be the most active
investors in the GCC region.
Meanwhile, 62% of respondents said that public-private partnerships
are best suited to fund large industrial and infrastructure projects as
governments are aiming to match capital with foreign expertise and
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technology. Notably, respondents believe that scheduled mega projects

such as Saudi Arabias US$1.1 trillion projects, under way or planned,
or the Dubai Expo 2020 and the FIFA World Cup in Qatar in 2022 will
underpin regional growth not only in the infrastructure sector but also
in sectors as diverse as real estate and tourism and present plenty of
joint venture opportunities. Fifty-one percent of respondents think real
estate will be among the top sectors to target for diversification away
from hydrocarbon-related industries.
The majority of survey respondents in the GCC region also believe that
closer integration between the six countries will be vital to the growth
of the region as a whole. Projects, such as the regional high-speed
rail link and a new causeway between Bahrain and Saudi Arabia
announced in September, are expected to enhance the flow of goods
and labour. Additionally, further economic reforms in the individual
countries are sure to spark investor interest.
In terms of M&A activity, it is perhaps unsurprising that survey
respondents expect most dealmaking over the next 12 to 24 months
to take place in the oil & gas sector. However, real estate, financial
services, infrastructure and retail sectors also figure highly as dynamic
sectors in the M&A market.
Oil & gas revenue still constitutes the majority of GDP in the GCC.
But, as governments step up their efforts in their perennial quest
to diversify their economies and channel funds to jumpstart other
sectors, the rewards are solid growth projections and the promise
of foreign direct investment in the region. Developing a competitive
advantage in one or more industries remain a serious challenge for
every GCC country.
We hope you enjoy this report and the in-depth analysis on the above
findings and other specific facets of GCC investment activity, including
deal structures, drivers of M&A activity and financing trends. We think
youll find this survey both useful and informative, and as always, we
welcome your feedback.
Integration brings investment

As the six countries of the GCC aim for sustainable growth through
the diversification of their still heavily oil-reliant economies,
attracting foreign investment remains of key importance. The
regions future will also largely depend on the GCCs ability to
maximize regional cooperation in the areas of transportation,
electricity and oil & gas pipelines, tackling labour challenges and
implementing efficient policies to encourage private-sector activity.
Which of the following factors will be most important

to determining future economic growth in the Gulf
Cooperation Council (GCC)? (Select top two)
GCC economic integration
At 40%, more than one-third of respondents believe the level of

economic integration in the GCC will determine future growth.
Expectations are in place for a full customs union in 2015 that would
enhance the flow of capital, goods and labour and give the GCC a
distinct competitive advantage as a trading block. Closer integration
of the Gulf markets will also assist diversification of the economy
and support the growth of non-oil industries, which 40% of
respondents considered as important as economic integration.
One respondent states that: Diversification and the growth of nonoil industries will help shape a better economic environment for the
GCC region.
GCCs non-oil sectors, specifically the construction and retail-related
segments, will continue to buoy economic activity, the International
Monetary Fund (IMF) said. Private-sector credit and significant
spending on infrastructure are the drivers. On the other hand, the
IMF warned that non-oil revenues, in terms of the overall numbers,
are still limited and recommended looking at alternate sources
including corporate income or value-added taxes. In fact, asset
management firm Alkhabeer Capital recently said that the spending
on the annual budgets of GCC countries is still mostly derived from
revenue that is based on the export of hydrocarbons even though
non-hydrocarbon industries contribution to the regions overall GDP
has already risen considerably. For instance, Alkhabeer said Qatars
and the UAEs non-hydrocarbon revenues have reached over 40% of
the countries total revenue. This is much higher than Saudi Arabia
at 10%. As a comparison, the firm also brought up other resourcerich economies such as Norway where oil-related income comprised
roughly 30% of the governments revenues.
Hence, 31% believed that strong global oil prices remain an
important factor as it determines government spending, and 27%
said domestic economic reform played a vital role for enabling
growth. Only 9% saw geopolitical risk as a determining factor
given the tensions in the wider Middle East region, this is a
particularly optimistic finding and highlights the growing stability in
the GCC.
Respondents estimated a growth rate of between 4% and 9%,
with the majority projecting an average of 5% to 6% growth. This
is slightly above the IMFs estimate of an average of 4.2% GDP
growth for the GCC in 2014. This forecast compares very favourably
with a number of other emerging markets. According to data
from Bloomberg, the GDP growth figure of 4.2% is higher than
powerhouses such as Brazil (2.6%), Mexico (3.7%), Russia (2.5%)
and South Africa (3.05%).
40%
Growth of non-oil industries
40%
Strong oil prices
31%
Economic reform
27%
Availability of finance
20%
Investment opportunities
16%
Demand for exports
13%
Geopolitical risks
9%
US monetary policy
4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Percentage of respondents
There is no doubt that economic integration will bring

significant benefits to the GCC and the region as a whole.
It now seems only a matter of time as the peoples of the
GCC really want economic integration to happen sooner
rather than later.
Scott Burrell, Managing Partner, Blake, Cassels & Graydon LLP
In addition to the factors stated above, it is also worth noting the

fast-growing and youthful demographic within the region. According
to recent research from the Economist Intelligence Unit (EIU), the
GCC has one of the fastest-growing populations in the world. It is
estimated that by 2020, the population is set to increase by one-third
to 53 million people. More than 45% of these will be between 15 to
64 years of age.
At a time when many developed economies are struggling to cope
with an aging population, these demographics present serious
opportunities for corporates in a variety of sectors, particularly
the technology and consumer industries.
In the GCC region overall, which of the following sectors do you think will see
the most rapid future growth? (Select top two)
Despite efforts to minimize exposure of the Gulf economies to

changing global energy demand patterns and volatile oil prices,
42% of respondents said the oil & gas sector would still see the
most rapid future growth. Respondents were also confident about
the growth of the retail sector (27%), industrials & chemicals sector
(25%) and the real estate (25%) and financial services (24%) sectors.
Oil & gas

42%
Retail
27%
Industrials & Chemicals
Diversification efforts over the past decade are starting to bear fruit
in some GCC countries, where the total contribution of oil & gas
towards the national GDP is slowly making room for rising revenue
from non-oil-related industries. For instance, in Kuwait, real non-oil
GDP growth is expected to reach 3.9% in 2014 versus 2.7% in 2013,
according to an IMF report on GCC economies released in June.
This increase was mainly due to government investment in both
infrastructure and refineries.
25%
Real Estate
25%
Financial Services
24%
Despite the findings, many respondents in the survey acknowledged

that, anecdotally, both the telecom and infrastructure sectors are
also seeing rapid growth. One executive stated: Infrastructure in
healthcare is a sector into which the GCC is diversifying to reduce the
dependency on oil and natural resources output.
Infrastructure-Other
18%
Food & Beverage

9%
Meanwhile another respondent felt that: The telecom sector is growing

with the entry of telecoms businesses from Europe. And, infrastructure
demand is also on the rise, mainly because of the expansion of
businesses who feel they have lesser scope in domestic areas.
Infrastructure-Natural Resources
9%
Infrastructure-Transportation
9%
Foreshadowing the infrastructure boom that is expected to

take place before the arrival of the World Expo in 2020 in Dubai
and the FIFA World Cup 2022 in Qatar, 18% of respondents said
infrastructure will see the most rapid growth. Some respondents
also expected preparation for these events to act as a catalyst for
other sectors, with growth spilling over into higher demand for
labour and materials.
Infrastructure-Healthcare
4%
Telecommunications
4%
The industrials & chemicals sector will mainly grow alongside the
subsectors of building materials and fixtures, considering the need
for new infrastructure. The real estate sector is also expanding
with commercial construction as the need for domestic housing
increases, one respondent said.
Airlines
2%
Tourism
2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
What are the main drivers of investment in the GCC

region overall? (Select top two)
Opening up of stock markets to foreign direct investments

45%
Higher economic growth in GCC compared to other regions
36%
Increased demand for infrastructure funding
36%
Diversification away from oil industry
35%
Reform
29%
The regions rich in natural resources
18%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Overall, 36% of respondents think that the increased demand for

infrastructure funding will be one of the main drivers for investment
in the region. An equal number thinks that higher economic growth
in the GCC, compared to other regions where recovery following the
downturn is slower to emerge, will be a main catalyst for overall
investment in the region.
The food and beverage and retail industry will grow in the GCC
region based on consumer demand, and European firms who are
in need of speedy growth will approach GCC countries as there is
ease in developing a startup, one respondent commented.
This development may be the catalyst for consolidating

the various regional stock exchanges in the GCC and
allows the Tadawul to become the driver of the GCC and
broader regional capital markets as it alone has the
breadth of issuers and potential liquidity to do so among
the regional exchanges.
Tim Sunar, Partner, Blake, Cassels & Graydon LLP
However, the opening up of stock markets to foreign direct

investment is rated even higher, with 45% of respondents
considering this as the main driver for investment. Here the
expectation is that, in 2015, foreign investors will inject fresh
cash into the economy by being allowed to participate in Saudi
Arabias Stock Exchange, Tadawul, which is worth approximately
US$530 billion.
Investment focus
Infrastructure spending is bound to increase in the GCC due partly
to utility demand and Dubais sponsorship of the World Expo 2020.
Which of the following funding sources will be used the most to back
these initiatives? (Select top two)
Private-public partnerships
62%
Revenue from large industrial projects

55%
Capital markets financing (includes projects bonds and Sukuk)

49%
Commercial/regional bank funding

33%
0%
10%
20%
30%
40%
50%
60%
70%
Diversification away from oil also remains a key driver for

35% of respondents. The Gulf economies are seeking to draw
out private sector involvement, in particular to support large
infrastructure spending, for example, for special economic zones
and transportation hubs such as Khalifa Port in Abu Dhabi and the
Port of Duqm in Oman, which bring more relevance to public-private
partnerships (PPPs)in the GCC.
PPPs are an efficient financing tool; as they gather investments
from foreign investors leading to an increase in capital availability.
I think this is the most important factor for the GCC region, which
is looking forward to developing the other sectors, one respondent
said. Another respondent commented: PPPs will be widely used
as a funding source based on resource utility, accountability and
value-generation possibilities.
The combination of regional population growth with the

strategic direction to diversify GCC economies speaks
to the need for a long-term focus for infrastructure
planning and investment. The PPP model offers regional
governments an opportunity to deliver high-quality
infrastructure investments that put the risk of long-term
asset performance with the private sector.
Graham McLeod, Partner, Blake, Cassels & Graydon LLP
Sixty-two percent of respondents believe that PPPs are best suited to

finance projects especially when taking into account that 90% or more
of PPP projects finish on time and on budget. Meanwhile, 55% said
revenue from large industrial projects would be a source of funding,
and 49% pointed to capital markets as a source for financing.
What is the primary advantage of public-private

partnerships (PPPs) as a financing tool in the GCC
region? (Select top two)
Which of the following will be the most active investors

in the GCC region over the next 12 to 24 months?
(Select top two)
Foster positive climate for both domestic and foreign investors
Publicly held companies

44%
73%
Assist in increasing private sectors role GCC regions development

38%
State-owned enterprises
47%
Encourage competition by bringing in foreign talent and expertise

35%
Family businesses
Government keeps partial control over projects or assets

29%
42%
Aid in injecting overseas financing to target growth segments

27%
Small and medium-sized enterprises

36%
Help GCC countries rely less on their natural resources

27%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Forty-four percent of respondents consider PPPs as a financing

tool conducive to creating a positive climate for both domestic and
foreign investors, and 38% said PPPs assist in increasing the private
sectors role in the regions development.
Borne of certain fiscal realities in western economies, the

emphasis has shifted in next generation PPP jurisdictions
such as Canada: what started as an economic necessity
is now viewed as a more effective investment vehicle to
maximize the publics return on infrastructure investment
through shifting the burden of on-time, on-budget delivery
of projects to the private sector.
0%
10%
20%
30%
40%
50%
60%
70%
80%
The majority of respondents (73%) said publicly held companies

would be the most active investors over the next 12 to 24 months,
as government support has traditionally underlined the take-off of
many of the successful regional heavyweight public players in
transportation, industrials & chemicals such as the continued
expansion of Saudi Arabias Jubail industrial complex by SABIC,
TMT and real estate. In comparison, 47% believe state-owned
enterprises will be most active. Saudi Arabia is planning to implement
projects worth US$1.1 trillion, and aims to attract investment in
airport upgrades, manufacturing, power generation and offshore
oil, gas as well as value-added downstream processing to meet
growing consumer demand. The Saudi Arabian General Investment
Authority (SAGIA) estimates more than US$100 billion in investment
opportunities in sea ports, air transport, rail, road and logistics
infrastructure over the next decade.
Notably, inbound tourism has also increased, partly as a result of new
infrastructure in support of the pilgrimages to Mecca, resulting in an
approximately 80% increase in the volume of spending over the past
four years to an estimated US$27 billion in 2014.
In which of the following industries are the GCC countries

diversifying into as they reduce their reliance on oil and
their natural resources?
Which of the following GCC countries will rely the least

on oil-based revenue in the next 12 to 24 months? (Rank
where 1=most reliant and 6=least reliant)
Real Estate
UAE
51%
4.16
Retail
35%
Financial Services
Saudi Arabia
3.91
31%
Qatar
20%
3.65
16%
15%
Telecommunications
13%
Bahrain
3.45
Kuwait
3.02
11%
Oman
2.80
Food & Beverage

9%
0%
10%
20%
30%
40%
50%
60%
Overall, 51% of respondents considered real estate as the most

popular target for diversification. The Bahraini government, for
example, is targeting major funds toward transport, utilities and
housing projects, with more than 5,000 units to be completed over
the next three years.
Meanwhile, 35% said the GCC region was diversifying into the retail
sector in order to reduce reliance on oil & gas.
One respondent noted: The real estate and telecommunications
sectors are seeing an increase in demand as market needs are
increasing as expats settle down to start new business ventures
or take on existing businesses. Another respondent added:
Businesses in the GCC region will focus on diversification into the
retail and real estate sectors, and established companies will try
to connect with businesses in the European region for ventures to
make improvements.
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Mean average
The UAE and Saudi Arabia were deemed by respondents as the

economies that will be least reliant on their oil revenues over the
next 12 to 24 months, as both countries have actively invested in
other sectors such as financial services, real estate, telecom and
consumer goods, in addition to offering taxation benefits to investors
and business located in these countries.
Specifically in Saudi Arabia, SAGIA has said that the governments
priority sectors emphasize investments that encourage job creation
and facilitate the aim to transfer both technology and knowledge.
As an example, the countrys information and communications
technology sector is considered the biggest in the Middle East
because of the liberalization of the market as well as public
spending on projects that support the sector.
In September, Virgin Mobile Middle East and Africa introduced its
services in the Kingdom as the Saudi telecom regulatory authority
has introduced new measures to foster competitiveness in the sector.
The spike in non-hydrocarbon revenues has resulted

from the GCC countries diversification efforts.
Governments have made sizeable infrastructure
investments, particularly in the real estate and
telecommunication sectors, that have driven
economic growth and private sector involvement.
Michael Quigley, Partner, Blake, Cassels & Graydon LLP
Investment activity
Which of the following GCC countries have seen the
biggest impact from economic reform on investment
activity? (Rank where 1=least impact and 6=most impact)
Please rate the following areas in terms of which have

experienced the most reform: (Rank where 1=least
reform and 7=most reform)
UAE
Corporate governance
4.58
5.13
Credit/lending standards
Saudi Arabia
4.96
3.80
Foreign investment regulation
Qatar
4.89
3.75
Arbitration
3.87
Bahrain
3.31
Bankruptcy regulation
3.60
Oman
Labour market changes/reforms
2.84
3.29
Kuwait
Other
2.73
0
1.00
4
Mean average
Mean average
Respondents also credited economic reforms in the UAE as having

increased its attractiveness as a strategic location to start up
businesses and act as a gateway for expansion into the wider GCC
region, which includes the availability of local talent. UAE has seen
a revolution in the past few years where a variety of businesses have
set up a base, driven demand and created value for invested capital
and policies have been put in place and followed which are making
activities easier, one respondent said.
one of the worlds top spenders in education the government has

not only allocated US$56 billion in its 2014 budget to the education
ministry, but King Abdullah in May approved a five-year plan worth
US$21 billion to further develop the countrys education sector.
The governments Nitaqat Law for Saudization, which helps Saudi
nationals be hired for private-sector jobs before expatriates, has
also helped the government limit its social spending and helped
in its diversification efforts.
Within the GCC region, according to 36.4% of respondents, Kuwait and

Oman have been least impacted by economic reform on investment
activities, while the UAE has experienced the most, followed by Saudi
Arabia. One respondent pointed out that: Saudi Arabia has seen
the biggest impact from economic reform on investment activity; as
the country has been receiving extensive investments from foreign
institutional investors and private equity. This market has become one
of the fastest growing in the global economy.
The government has also made notable efforts to stimulate

investments through initiatives that bolster the small and mediumsized enterprise (SME) sector. These efforts include the creation of
the Saudi Industrial Development Fund (SIDF) as a way to encourage
commercial bank lending to SMEs. As a result, SME investment in
the country is expected to grow to over US$70 billion by the end of
2015. Another government strategy to increase investments into
the country is to enact measures that make it easier for foreign
companies to invest in Saudi Arabia including amending existing
laws that hinder investor interest.
According to the IMF, real growth in Saudi Arabia is predicted to stay

above 4% in 2014 and 2015. The IMF attributed this healthy growth
rate to both government spending and the private sectors increased
role in Saudi Arabia. The government has been heavily involved
in funding infrastructure projects. Middle East business news
provider MEED figures showed that the announced 2014 pipeline
of projects in Saudi Arabias energy and utilities, transportation
and real estate sectors is worth US$240 billion, the lions share of
which is government funded. It has also been actively spending on
education as well as promoting labour law reform to increase Saudi
Arabian citizens involvement in the private sector. Saudi Arabia is
10
Respondents named corporate governance as the area that has

undergone the most reform, closely followed by credit standards.
Foreign investment regulation has experienced the most reform;
as the governments have liberalized their restrictions and freed the
business transactional flow; GCC regions had high regulations and
barriers to inbound investments in the past which have now been
reformed and abolished, one respondent said.
Which sector will banks be most willing to lend to over

the next 12 to 24 months? (Select one per country)
2%
Bahrain
32%
16%
11%
7%
7%
22%
24%
5%
31%
2%
15%
7%
4%
24%
2%
5% 5%
2%
24%
34%
2%
7%
7%
74%
5%
0%
20%
27%
40%
24%
60%
19%
35%
80%
100%
21%
8%
2%
6%
23%
13%
13% 13%
2%
15% 13%
4% 2%
6%
27%
42%
80%
34%
2%
0%
46%
50%
15%
6% 2%
6%
23%
15%
2%
6%
19%
2%
38%
4%
13% 10%
13% 10% 8%
33%
53%
UAE
25%
4%
12%
6%
12%
Saudi Arabia
5% 4% 7%
80%
8% 10%
2%
15% 10% 8%
Qatar
8% 8%
2%
UAE
24%
17%
12% 10%
2%
2%
Saudi Arabia
15% 13%
Oman
5%
Qatar
23%
Kuwait
5%
2%
Oman
5%
47%
2%
58%
6%
Bahrain
5% 5% 5% 4% 4%
Kuwait 4%
7% 2%
Which sectors will see the most M&A activity for each
GCC country over the next 12 to 24 months?
8%
15% 8% 8%
6%
2%
53%
100%
15% 8%
150%
200%
Key for above two charts:

Financial Services
Mining and Metals
Telecommunications
Tourism
Industrials & Chemicals
Oil & Gas
Retail
Education
Real Estate
Food & Beverage
Airlines
According to respondents, the focus of lending activity still remains

on oil & gas across most of the region, especially in Saudi Arabia
(74%) and Kuwait (58%). Saudi Arabia is the main focus for oil & gas
investment opportunities with around 9.6m barrels per day in the first
five months of 2014, although the country is emphasizing support for
manufacturing and downstream projects, which led to a 5.5% growth
of the non-hydrocarbons economy in 2013, according to the National
Commercial Bank, Al Ahli. Among other significant petrochemicals
projects are the US$20 billion joint venture between Dow Chemicals
and Saudi Aramco and the US$12 billion Yanbu export refinery, a joint
venture between Saudi Aramco and Chinese company Sinopec, both are
expected to contribute to higher export revenues by adding value from
domestic hydrocarbons processing and provide significant employment
and training opportunities.
In Kuwait bank lending in the oil & gas sector is thought to provide
favourable investment opportunities as more advanced technology
is required to extract the countrys heavy oil & sour gas. However,
Kuwait is also considering mega-infrastructure projects such as the
US$10 billion National Railroad and the US$7 billion Kuwait City
Metro, which are currently undergoing feasibility studies.
Meanwhile in Bahrain, respondents thought banks would be most

favourable toward the financial services sector (31%) as Bahrain has
long focused on diversifying the economy away from its declining natural
resources stock into presenting itself as a hub for Islamic finance and a
gateway for businesses into Saudi Arabia and the wider Gulf region.
Bahrain has been growing in the sectors of training, pharmaceuticals
and financial services and the market will respond well to start-ups
based on the systematic rules laid down by the government, one survey
respondent noted. Another said: Bahrain is a location which offers a
great amount of support to businesses to set up regional offices and
distribution centers in most sectors.
In the UAE, banks would be most willing to lend to the real estate
sector (27%), particularly as Dubai prepares for the World Expo. In
addition, respondents said the industrials & chemicals sector could
attract credit (24%) as current projects such as the development of
the ChemaWEyaat chemicals complex in Abu Dhabis Western Region
is set to spark growth in the sector, while respondents were equally
confident (24%) about lending for the retail sector which is expanding
in step with a growing consumer market in the Emirates. The increase
of the UAEs retail sector also comes amid a number of foreign brands
trying to enter the GCC markets, as the emirate is planning to build
another mall the worlds largest.
11
Which of the following countries will see the most foreign

investment activity over the next 12 to 24 months? (Rank
where 1=least activity and 6=most activity)
Which of the following regions will make the most

foreign investment activity into the GCC region in the
next 12 to 24 months? (Rank where 1=least activity and
5=most activity)
UAE
Europe
3.53
4.84
Qatar
Asia
4.33
3.53
Bahrain
3.69
US
2.89
Saudi Arabia
3.36
Latin America
2.76
Kuwait
2.51
Africa
Oman
2.29
2.27
0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Mean average
Mean average
Respondents expect the UAE to receive the most attention from

foreign investors over the coming year. For the GCC region as a whole,
respondents project the largest inflow of investment to come from
Europe and Asia. Respondents noted that trade policies and good
inter-governmental relations with Asia will fuel these investments.
Asian companies will tie up with the large corporates in the GCC
region; as the regulatory gates have been opened up and impact
of taxation on the imports and exports have been reduced, one
respondent said. The UAE is Asias leading trade partner in the GCC,
reaching a value of US$75 billion in 2013.
The GCCs continued promising economic growth

prospects from hydrocarbon sales, and more
importantly, its growing non-oil based industries have
made the region very appealing not only to its historical
trading counterparts in Europe but to high-growth
economies in Asia-Pacific.
The retail sector is growing with European and other Asian businesses
trying to float their products and tap the huge potential the GCC
consumer market can offer to them, another respondent said.
One respondent thought Saudi Arabian markets are among the
fastest growing markets in the world: so the companies that are
underperforming in Europe and US will seek solace in these markets
and will try to acquire and invest more.
12
Which of the following regions will see the most

inbound investment activity from the GCC region in
the next 12 to 24 months? (Rank where 1=least activity
and 5=most activity)
Africa
3.65
Asia
3.31
Europe
3.05
US
2.56
Latin America
2.42
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Mean average
Outbound flows will mostly focus on Africa, according to respondents

expectations. TMT remains a sector that is actively expanding on the
African continent, with one of the recent announcements from March
2014 being the UAEs Etisalat considering a stake in Benins mobile
operator Libercom.
Europe is also under consideration as one respondent noted.
The European continent has businesses that are undervalued
which can be considered as a valuable target and also there is scope
for consolidation activities, which will be a driver for businesses in
the GCC region.
Companies in the GCC have expanded their investment

horizons to specific markets in Asia-Pacific, most
notable of which is Malaysia, the worlds largest Islamic
bond market. The GCCs aviation industry is also
growing by leaps and bounds as Dubai- and Qatar-based
airlines are rapidly gaining market share over European
and American carriers.
Many GCC companies are also continuing their investments in

Asias financial sector, with Malaysias Islamic finance presenting an
attractive target, and retail markets, which have benefited from the
rapid extension of the GCCs aviation business with new flight routes
into Asia.
13
Country focus
Which of the following countries will see the most
intra-regional investment activity over the next
12 to 24 months? (Rank where 1=least activity and
6=most activity)
Dubai successfully bid to host the World Expo 2020 while

Qatar is set to host the World Cup in 2022. How much do you
think infrastructure development related to these events
will positively impact economic growth in the GCC region?
UAE
Significantly impact
20%
4.33
Somewhat impact
Qatar
4.00
Saudi Arabia
3.73
Bahrain
3.38
Oman
2.91
80%
Kuwait
2.60
0
Mean average
Foreign investors are also closely eyeing Qatar, where the FIFA World
Cup 2022 and the governments economic development program for
2030 will most likely result in increased lending for related sectors
such as infrastructure (35%), transportation (24%) and real estate
(15%), as well as tourism (7%).
Meanwhile, respondents thought the UAE and Qatar would see the
most intra-regional investment activity. This is mostly due to high
growth and availability of capital in the UAE, and the expansion of
sectors, such as airlines, tourism and financial services in Qatar.
Qatar is also expected to present opportunities for expansion to
established GCC companies as demand for services and materials
is set to increase with preparations for the World Cup.
The construction of a rail network linking GCC member

states will soon begin. How much do you think the new
network will positively impact investment activity in the
GCC region?
Significantly impact
19%
Somewhat impact
Respondents described infrastructure development related to the

World Expo 2020 in Dubai and the World Cup in Qatar in 2022 as
game changers that will impact significantly on the GCC regions
economic growth. In addition, the construction of the GCC rail link
will considerably impact on investment activity in the region, 81%
said, while only 19% projected a moderate impact on investment.
81%
14
Saudi Arabias stock market will allow foreign investors

to trade in 2015. What do you expect to happen to the
level of overseas investment into Saudi Arabia as a
result of the opening up of the countrys stock market
to foreigners?
The UAE and Qatar were upgraded to emerging market

status by MSCI. What do you expect to happen to the level
of overseas investment into these two countries as a
result of the upgrade?
2%
5%
Significantly increase
Somewhat increase
Somewhat increase
36%
Remain the same
Remain the same
49%
46%
Opinions were divided over the impact of Saudi Arabias stock

market, Tadawul, which will allow foreigners to trade, starting
sometime in 2015, leading to an eventual entry into the MSCIs
global equity index. Forty-nine percent said overseas investment
would increase significantly as a result, while 46% only saw a
moderate increase of investment as a result, and 5% said there
would be no impact. The level of overseas investments into Saudi
Arabia will significantly increase; the stock exchange, which is now
open to foreign investors, will lay down opportunities for the foreign
companies that are facing crisis in their domestic markets, one
respondent said.
Although less publicized than elsewhere in the region,

Saudi Arabia allows for 100% foreign ownership onshore,
which has been a major driver of foreign investment,
and coupled with the opening up of the Tadawul, will only
make the regions most lucrative market more attractive.
62%
Respondents were lukewarm over the upgrade of the UAE and Qatar
to emerging markets by MSCI and only 36% said investment from
overseas would increase significantly as a result, and 62% said it
would increase moderately.
Saudi Arabias decision to open the Tadawul to foreign

investment demonstrates the continued commitment of
regional governments to legal and structural reforms
that will facilitate the diversification of GCC economies,
create high-value employment opportunities in the
region, and allow local companies to compete on a
global platform.
15
Which of the following factors do you think will be the

biggest impact from new Saudi Arabian labour laws?
(Rank where 1=least impact and 7=most impact)
Reduced number of unskilled foreign workers

5.07
Lower productivity and profits for firms dependent on foreign labour
4.65
Rise in domestic consumer spending
4.09
Less manpower in certain industries
4.02
Generate more jobs for the countrys nationals
3.89
Rise in government spending on training costs and private sector subsidies
3.56
Decrease in foreign remittances
3.11
0
Mean average
As Saudi Arabia grapples with high unemployment figures among its

young population, new labour laws aimed at increasing local content
and visa restrictions for foreign workers are expected to introduce
new dynamics. Respondents said that the greatest impact from
a change in labour laws will be most visible in a reduced number
of unskilled foreign workers in the country and lower productivity
and profits for firms dependent on foreign labour. Positive results
would manifest in an expected rise in consumer spending with the
employment of nationals and the concurrent decrease in the outflow
of remittances.
Fiscal pressures have compelled the Saudi Arabian

government to limit the flow of foreign labour and
boost the number of nationals who work for private
companies. The daunting challenge now is to create
sufficient employment opportunities for the significant
rise in young citizens who are entering the labour force.
If accomplished, this will reduce the burden on the
government, increase consumer consumption and lower
the amount of remittances by foreign workers, all of
which are bound to lift the countrys economy.
16
Structure type
Which of the following deal structures do you expect to
be the most common in the GCC region over the next 12
to 24 months? (Select the top two)
How do you expect the volume of domestic/intra-regional

joint ventures to compare to the volume of international
joint ventures in the GCC region over the next 12 months?
5%
Joint venture
International joint
ventures will
outnumber domestic
joint ventures
65%
Merger of equals
51%
Private equity buyout
45%
49%
46%
Asset sales
36%
Domestic/
intra-regional
joint ventures
will outnumber
international joint
ventures
No material
difference
Other, please specify

2%
0%
10%
20%
30%
40%
50%
60%
70%
The majority of respondents (65.5%) think joint ventures will be

the most common deal structure in the GCC region in the next 12
to 24 months, followed by a merger of equals deals. Private equity
buyouts ranked as third most common deal structure expected by
45% respondents.
Joint ventures continue their predominance as the

preferred deal structure for investment in the GCC,
allowing for bespoke solutions that provide the
necessary transparency and flexibility to suit the
needs of domestic and international investors.
Forty-nine percent of respondents also think that international

joint ventures will outnumber intra-regional ones, compared to
46% who think that domestic joint ventures will be more popular
than international ones over the next 12 months. The expertise
and technology of foreign venture partners is highly valued for GCC
companies, which are well-capitalized but often lack skilled labour
and advanced processes.
17
What are the top two most important factors to non-GCC

entities entering into joint ventures with GCC-based
entities?
What are the top two most important factors to GCCbased entities entering into joint ventures with non-GCCbased entities?
Management structure
Management structure
44%
33%
Legal/enforceability risks
33%
Impact on local economy
Employment requirements for nationals

31%
27%
Local ownership rights and restrictions

27%
Employment laws
26%
Bidding costs
Taxation/economic free-zone laws
27%
20%
Exclusivity issues
26%
Termination date
6%
0%
Local ownership rights and restrictions
20%
30%
40%
50%
As the most important factors for foreign companies to enter

into joint ventures with GCC-based companies, respondents
cited management structure (how ventures are structured and
managed at an executive level and how involved each party is in the
venture) and employment requirements for nationals (local content
requirements), whereas bidding costs were only ranked as thirdmost important.
Legal/enforceability risks
22%
Impact of local economy

20%
Meanwhile, for GCC-based companies, management structure and

legal/enforceability risks were the two most important factors to
consider in joint ventures with foreign entities.
Scope of risk
9%
However, despite these potential concerns, World Bank ratings show

that the commercial environment in five out the six GCC countries
is particularly conducive to companies looking to start and operate
businesses. In the Ease of Doing business ranking, UAE (23), KSA
(26), Bahrain (46), Oman (47) and Qatar (48) are all in the top 50 (out
of 189 countries). Only Kuwait falls outside the top 100, positioned at
number 104.
Taxation laws
7%
Termination date
2%
5%
10%
24%
0%
11%
Scope of risk
7%
Exclusivity issues
10%
15%
20%
25%
30%
35%
18
What do you expect to happen to the overall level of

strategic M&A and private equity activity in the GCC
region over the next 12 months?
Which of the following drivers of M&A activity in the

GCC region do you expect to be strongest over the next
12 months?
6%
Strategic M&A
36%
6%
64%
Attractive valuations
21%
Geographic expansion
7%
Deployment of private
equity dry powder
Improved investment
climate
11%
Private Equity
Attractive targets
2%
51%
19%
47%
13%
Completion of
restructurings
17%
0%
20%
40%
60%
Somewhat increase
80%
Buying power of
sovereign wealth
funds (SWFs)
100%
Government
driven sales
Remain the same
Strategic M&A will increase significantly, according to 36% of

respondents, while 64% thought it will increase moderately over
the coming year. Respondents were more hopeful for an increase in
private equity activity over the next 12 months, with 51% saying it
will increase significantly and 47% saying it will increase somewhat,
and 2% said it will remain at the same level.
As the strongest drivers for M&A in the region, respondents named

attractive valuations (21%), geographic expansion (19%) and the
deployment of private equity dry powder (17%).
Despite the volatile conditions in the Middle East,

sovereign wealth funds and private equity firms remain
quite active in the GCC, drawn by the regions economic
growth, rising consumer demand and government
spending. Given the strong financial markets,
specifically in the UAE and Saudi Arabia, these firms
are leading the way as assets managers that want to
take advantage of high-yield opportunities that the
GCC presents.
19
How likely is each of the following issues to negatively

impact potential M&A activity in the GCC region?
(Rate where 1=unlikely and 5=highly likely)
Which of the following financing sources do you expect to

be used most frequently for M&A transactions in the GCC
region over the next 12 months? (Select the top two)
Lack of regulatory transparency
Company balance sheet

62%
4.11
Political climate
Private equity sponsors
4.09
51%
Corporate governance issues

4.05
Bank loans
Enforceability risks
45%
3.84
Government loans
Government intervention/approval
22%
3.82
Valuation issues
Private wealth
3.71
15%
Economic conditions
3.69
Sharia-compliant financing
5%
Financing issues
3.44
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Mean average
0%
10%
20%
30%
40%
50%
60%
70%
Meanwhile, as the biggest obstacles to potential M&A respondents

cited lack of regulatory transparency, political climate and corporate
governance issues. Respondents were least troubled by potential
financing issues and economic conditions. As the top two financing
methods over the next 12 months, respondents listed company
balance sheets and private equity sponsors, while ranking Shariacompliant finance as the least frequent source for funding.
20
Do you think GCC member states currencies should be

pegged to the US dollar?
No, shift
management of
GCC currencies to a
basket of currencies
Yes, keep peg to the
US dollar
44%
56%
As a common currency for the GCC remains on the agenda, however,

without progress, notably 56% of respondents were still in favour of a
shift from pegging GCC member states currencies to the US dollar
to a basket of currencies, while 44% believed currencies should
remain pegged to the US dollar.
To reduce volatility, we are definitely better off with

pegging GCC member states currencies to a basket
of currencies.
Although the GCCs currency peg to the US dollar

has arguably increased foreign investor demand, the
US Federal Reserves expected interest rate hike will
most likely introduce volatility and consequently slow
economic growth since the GCC has to undergo a similar
rate rise. With the GCCs economies more advanced,
the argument for the use of a multi-currency peg has
become stronger as a stabilizing force against inflation.
21
Positioning the Region

for more FDI
By Dr. Saud Al-Ammari
The Gulf Cooperation Council (GCC) region1 is one of the worlds most
prominent economic zones. For example, the Kingdom of Saudi Arabia
is the Arab Worlds largest economy, one of the worlds 20 largest
economies and the worlds third fastest growing economy. Several
decades ago, the regions countries realized that their economies
were facing a dire challenge by being single-sourced and massively
oil-dependent. In the 1970s, even before the creation of the GCC, each
country took its own steps, at its own pace, towards diversifying the
economy and building up on its previous experiences of opening up to
Foreign Direct Investments (FDI). Saudi Arabia, for example, launched
the Royal Commission for Jubail and Yanbu which successfully
established what became two of the largest fully integrated industrial
cities in the world. At the same time, the Kingdom instructed its oil
giant, Saudi Aramco, to build the Master Gas System, which continues
to grow and supply fuel and feedstock to the Kingdoms prominent
petrochemical industry. The Kingdom also launched its Saudi Basic
Industries Company (SABIC), which by attracting FDI and creating joint
ventures became a world petrochemical industry giant. The creation of
the GCC in 1981 provided an even greater opportunity for each country
to grow by taking advantage of economic integration.
With oil prices fluctuating, sometimes sharply, and the world economy
shaken and appearing vulnerable at times, in the East and West, the cusp
of the 21st century witnessed further steps of economic diversification
and more focus on attracting FDI in the GCC region. The results of such
steps were more visible in Dubai of the United Arab Emirates, in Qatar
and in Saudi Arabia. Despite the fact that FDI contribution to the overall
GDP in the GCC countries hovers around 5%, it is being encouraged and
welcomed for a whole lot of different, yet strategically important reasons.
In addition to FDI helping in the area of economic diversification, the GCC
countries are actively promoting it because it helps in creating new
businesses in new economic sectors, it facilitates transfer of technology
and know-how and it provides opportunities for job creation and
development of human capital. The latter in particular is extremely vital for
the GCC as some 60% of the population is below 25 years of age and are
or about to be job market ready.
In 2000, Saudi Arabia took a major step in encouraging and welcoming
FDI by establishing the Saudi Arabian General Investment Authority
(SAGIA). SAGIA built on the Kingdoms record of previous successes
in FDI attraction and work on further improving, simplifying and
facilitating the related regulations and procedures to make sure that
almost all sectors would be open to foreign ownership. Currently,
Saudi Arabia is the only country in the region that allows 100% foreign
ownership of an investment in almost all activities. Other Gulf States
also adopted similar open investment regimes and pursued additional
changes that provided a greater incentive for strategic investors to
establish long-term presence.
The six GCC States undertook reforms that made it easier to start
businesses and enforce contracts, building on tax regimes already highly
attractive to foreign investors. In addition, they have all improved their
legal systems, introduced new arbitration laws, established world class
arbitration centers, created anti-corruption commissions and ensured
fair and transparent mechanisms are in place to enforce awards and
judgments. Since then, Gulf States have risen inexorably up the World
Banks Ease of Doing business ranks, the UAE taking the lead with a global
ranking of 23 while Saudi Arabia ranked 26 in 2013.
The results of these efforts were reflected in numbers. FDI in the six
GCC states grew from US$6.1 billion in 2003 to US$60.1 billion in 2008,
a tenfold increase. However, in recent years, the rate of FDI into the
GCC has subsided from US$28 billion in 2012 to US$24 billion last
year, a fall of nearly 15%. The GCCs share of world FDI has dropped
to 1.6%, compared to a high of 4.2% five years ago. Only Bahrain and
the UAE have achieved four consecutive years of rising FDI inflows as
investors returned to the property, manufacturing and services sectors.
Some of the decline can be explained by the lower risk appetite of
foreign corporations in the wake of the global financial crisis, and the
drying up of credit. Yet, a part of the decline may be explained by a shift
in how Gulf governments think about foreign investment.
Assessing the Impact
Since the mid-2000s, the surge in oil prices has largely replenished
state finances, removing some of the pressure and haste under
which the initial opening to foreign investors was considered. This
gave the GCC States, and their relevant organizations, more time
and space to mull over the approach to foreign investments. A new
model became more prevalent and was adopted by investment
authorities in the GCC countries, where organizations like SAGIA
emphasized that interested foreign investors considering Saudi entry
have to show serious intent to provide added value to the economy.
This can come in the form of technology transfer, job creation, or
establishing Saudi Arabia on a regional or global supply chain.
Adoption of this recent and sensible line of thinking did not come
abruptly. Figures show some startling facts about the concentration
of FDI. In Saudi Arabia for example, 90% of FDI came from 3% of the
licences, almost 40% of the licences are concentrated in very low
quality activities confirming the notion that it is more of a residency
and work permit convenience rather than a true investment.
In Saudi Arabia, the concentration of FDI in one or two mega projects,
such as Japans Sumitomo Chemicals joint venture with Saudi Aramco
to build a multi-billion-dollar petrochemical plant on the Red Sea
Coast, or Sadara, the joint venture between Saudi Aramco and the
Dow Chemical in Jubail, the largest complex of its kind in the world,
is expected because of the exceptional size of such projects which
are intended to capture, for the Kingdom, the value-added from its
pivotal position on the global hydrocarbons industry. Yet, while such
ventures with global blue chip companies have drawn billions of
dollars worth of investment into the kingdoms chemicals sector, they
are expected, and from the looks of it are working towards further
contributing to the national economy by supporting and jump-starting
important sectors such as downstream industries, manufacturing
by facilitating transfer of technology and, probably most importantly,
by creating viable and sustainable jobs for nationals. Other major
recent entries, like confectionery giant Mars establishment of a US$60
million manufacturing facility in King Abdullah Economic City (KAEC)
near Rabigh, north of Jeddah, may make sense as a marketing and a
1 Includes the Kingdom of Bahrain, the State of Kuwait, the State of Qatar, the Sultanate of Oman, the United Arab Emirates and the Kingdom of Saudi Arabia.
22
Saud Al-Ammari
Chair, Saudi Arabia and Middle East
Dr. Saud Al-Ammari Law Firm in association
with Blake, Cassels & Graydon LLP
Telephone: +966-13-847-5050
Email: saud.ammari@blakes.com
job-creating opportunity but may not necessarily create a new area of
expertise which adds to the competitive advantage for the Kingdom.
the investors. It is in this context that the recent Saudi investment

modifications should be viewed.
Competitive Advantage
There now appears to be some divergence among the GCC States from
what were once homogenous hydrocarbon-based economies. However,
at a broader level, the GCC has still not nurtured the emergence
of a competitive industry or cluster. Most are individual disjointed
investments that do not create a competitive advantage. Today, when
you ask the question of what industry did any GCC State develop as
a competitive advantage, the answer is regrettably nothing to report.
Diversification means industry and manufacturing, sectors which the
GCC is trying to develop. That will not happen unless an optimum
environment is in place for diversification, including financial and
regulatory initiatives. So, while the six GCC States are clearly on their
journey to a post-oil future, creating a competitive advantage in one or
more industries remains the most challenging undertaking for each
GCC State. The race to the post-oil future is definitely on. How each
country embraces a new economic, political and investment world
order will determine who gets there first.
The idea of clustered investments is also taking root. In King Abdullah

Economic City (KAEC), for example, contracts were signed this year for
three companies setting up in the citys Industrial Valley, which seek
to capture opportunities in light manufacturing. A Saudi-German joint
venture is establishing a plant to produce high-quality paints, while
another is investing in a plant to manufacture aluminum windows
and doors to service residential and commercial buildings. In Qatar,
there has been a sustained effort to find a place in the global auto
supply chain, having signed a memorandum of understanding in
2010 with German automakers Volkswagen and Porsche to set up
an R&D facility in the Gulf State. The Qataris saw scope to turn the
country into an international hub for the manufacture of innovative
automotive components.
On the Right Fast Track

The Kingdom of Saudi Arabia is serious about creating an investment
climate that is more geared to attracting investors with something
additional to offer the Kingdom. In May of this year, SAGIA,the foreign
investment facilitating arm of Saudi Arabia, unveiled a fast-track
process which has assured applying investors a response in six days,
and involves only a few required documents. This system offers a
faster application process if the investment involves a public company
investing directly, or at least using the intellectual property of a public
company. The aim is to attract firms committed to spreading the value
chain across specifically targeted sectors such as transportation,
healthcare, education and technology that are bringing in further
associated investments.
FDI: A Two-Way Street
At a deeper level, these changes reflect a wider paradigm shift that can
be regarded as a second generation of the FDI effort, a kind of Gulf FDI
2.0. While the first generation outreach was all about letting the world
know the Gulf was open for business, there is now an increased recognition
that more needs to be offered to attract and sustain quality investors.
For Saudi Arabia, at the heart of making sure the investments are
creating the desired positive impact is the Kingdoms efforts to
develop investment plans for its key economic sectors, with the aim of
creating integrated competitive investments across the value chain. In
addition to the traditional oil and gas and petrochemical downstream
sectors, healthcare, transportation, information and communications
technology, and education are all witnessing major transformations.
With more than two trillion Saudi Riyals of capital expenditures, these
sectors are ripe to emerge as truly competitive sectors and not merely
sectors that are dependent on government spending. They represent
themselves as great opportunities for long-term savvy investors.
Putting this into a larger Gulf Region perspective, this means moving
towards a menu of products, rather than repeating the mantra that
they are great places to do business; offering structured packages
to investors which can vary according to sector and according to
With such clusters, there is a greater opportunity to build a wider

ecosystem for the local generation of ideas. This has already
started in certain sectors, such as financial services, logistics,
and transportation. Tapping FDI to accelerate the transition to a
knowledge-based economy is now gaining traction as a theme,
leading to the creation of products and services that are indigenous
to the region but catalyzed by foreign investors.
Leaping the Hurdles
Although clusters present a more distinct paradigm in which foreign
investment entries can be structured, foreign companies still have
sizeable challenges to overcome in the Gulf. Overcoming certain negative
perceptions about the region the difficult environment, lifestyle
constraints and the need to employ unskilled and unsuited local workers
may be a leap too far for some less forward-thinking investors. For
larger organizations, such as Dow and ExxonMobil, which have a core
business tied closely to hydrocarbons, Saudi Arabia, and the rest of
the GCC countries, is a more attractive proposition. Whats more, the
GCC States are far more stable than other locations in the region and
the economic fundamentals remain appealing.
Companies mulling successful entries into the GCC will need to adopt
a mindset that matches the evolutionary change in Gulf attitudes
to FDI. Back in the early 2000s, the impetus was to establish a
presence on the ground, and to go after the lowest hanging fruit.
The entries then were more about understanding the market and
making contacts. That stage has ended. Now, companies have a better
understanding of what they can and cant achieve, and what is the best
way to approach the market and make it profitable.
There is, generally, a greater willingness by foreign investors to
lay down roots and invest in local talent. Such commitment has
proven to be effective and a major ingredient for success for foreign
investors who came to the region many decades ago. Companies
that are able to engage local businesses and seek a partnership
approach, rather than one driven by the need to make money and
take it home, may find a warmer reception in the GCC today. Visionary
and bold investors should know that the days of quick wins may be
over but long-term triumphs could lay ahead for the patient, dedicated
and progressive.
23
About Blakes
Blake, Cassels & Graydon LLP (Blakes) proudly serves many of the
worlds leading businesses and organizations. The Firm has built a
reputation as both a leader in the business community and in the
legal profession.
In addition to offices in Canada, the United States, the United
Kingdom and China, Blakes has an office in Manama, Bahrain, as
well as an office in Al-Khobar, Saudi Arabia, through its affiliation
with Dr. Saud Al-Ammari Law Firm. From these offices, we focus on
clients with interests in the Gulf Cooperation Council region and the
wider Middle East and North Africa region.
Our integrated office network provides clients with access to
the Firms full spectrum of capabilities in virtually every area of
business law. Whether an issue is local or multi-jurisdictional,
practice-area specific or interdisciplinary, Blakes handles
transactions of all sizes and levels of complexity. It is our culture
and philosophy to work closely with clients to understand all of
their legal needs and to keep them apprised of legal developments
that may affect them. We provide relevant legal services expertly,
promptly and in a cost-effective manner to assist clients in
achieving their business objectives.
More information on Blakes is available by visiting the Firms website
at www.blakes.com or by following us on Twitter @BlakesLaw.
For further information about this report and investment

in the GCC region, please contact:
Saud Al-Ammari
Chair, Saudi Arabia and Middle East
saud.ammari@blakes.com
Al-Khobar: +966 13 847 5050 x9321
Bahrain: +973 1715 1500
Scott J. Burrell
Managing Partner, Middle East Offices
scott.burrell@blakes.com
Bahrain: +973 1715 1507
Al-Khobar: +966 13 847 5050 x9323
For further information about Blakes, please contact:
Brock Gibson
Chair
brock.gibson@blakes.com
Calgary: +1 403 260 9610
Robert Granatstein
Firm Managing Partner
robert.granatstein@blakes.com
Toronto: +1 416 863 2748
Mathieu Rompr
Director, Communications and Marketing
mathieu.rompre@blakes.com
Montreal: +1 514 982 5085
www.blakes.com
24
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GCC Inestment Outlook 2014

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GCC Inestment Outlook 2014

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Gulf Cooperation Council (GCC)

Integration brings investment

Feature: Positioning the Region for more FDI

Gulf Cooperation Council (GCC) Investment Outlook 2014

Bridging the Gulf

technology. Notably, respondents believe that scheduled mega projects

Gulf Cooperation Council (GCC) Investment Outlook 2014

Integration brings investment

Which of the following factors will be most important

GCC economic integration

At 40%, more than one-third of respondents believe the level of

There is no doubt that economic integration will bring

In addition to the factors stated above, it is also worth noting the

Gulf Cooperation Council (GCC) Investment Outlook 2014

Despite efforts to minimize exposure of the Gulf economies to

Oil & gas

Despite the findings, many respondents in the survey acknowledged

Food & Beverage

Meanwhile another respondent felt that: The telecom sector is growing

Foreshadowing the infrastructure boom that is expected to

Gulf Cooperation Council (GCC) Investment Outlook 2014

What are the main drivers of investment in the GCC

Opening up of stock markets to foreign direct investments

Overall, 36% of respondents think that the increased demand for

This development may be the catalyst for consolidating

However, the opening up of stock markets to foreign direct

Gulf Cooperation Council (GCC) Investment Outlook 2014

Revenue from large industrial projects

Capital markets financing (includes projects bonds and Sukuk)

Commercial/regional bank funding

Diversification away from oil also remains a key driver for

The combination of regional population growth with the

Sixty-two percent of respondents believe that PPPs are best suited to

Gulf Cooperation Council (GCC) Investment Outlook 2014

What is the primary advantage of public-private

Which of the following will be the most active investors

Foster positive climate for both domestic and foreign investors

Publicly held companies

Assist in increasing private sectors role GCC regions development

Encourage competition by bringing in foreign talent and expertise

Government keeps partial control over projects or assets

Aid in injecting overseas financing to target growth segments

Small and medium-sized enterprises

Help GCC countries rely less on their natural resources

Forty-four percent of respondents consider PPPs as a financing

Borne of certain fiscal realities in western economies, the

The majority of respondents (73%) said publicly held companies

Gulf Cooperation Council (GCC) Investment Outlook 2014

In which of the following industries are the GCC countries

Which of the following GCC countries will rely the least

Food & Beverage

Overall, 51% of respondents considered real estate as the most

The UAE and Saudi Arabia were deemed by respondents as the

The spike in non-hydrocarbon revenues has resulted

Gulf Cooperation Council (GCC) Investment Outlook 2014

Please rate the following areas in terms of which have

Labour market changes/reforms

Respondents also credited economic reforms in the UAE as having