Competition for FDI will frame the GCC trade and investment landscape in 2024

With oil prices currently sitting approximately 25 percent off their 2023 high, this comes into even sharper relief as a stark reminder of the income volatility that comes with being a petro-economy.

As was argued at COP, oil & gas will continue to fund the non-oil future in order to provide the capital for the green transition and to buy time for essential next-generation renewable technologies to improve and scale to a point where they can safely replace hydrocarbons.

The process is well underway and we expect the region to develop as a global leader in this area, with projects like NEOM and Expo City Dubai showing both the art and the limits of what is truly possible.

This time last year many of the major legislative changes that the UAE had made in the 12-24 months previously with regards to immigration, visas and residency were just starting to bed in and we’re now seeing the impact of those in full effect with, it seems, a never ending influx of people, capital and companies coming to take advantage of country’s geographical, regulatory and cultural positioning.

The UAE’s continued pursuit of bilateral free trade deals (and/or CEPAs) only further reinforces this by providing improved and lower cost access to new markets across the world, and this also becomes a further competitive edge for the country too, in its competition for regional FDI hegemony.

And let’s be clear, it is a competition. FDI attraction is a full contact sport in the Middle East and Saudi’s ‘Regional HQ’ initiative has raised the stakes immeasurably in this regard, first with the stick of compulsion (no more government contracts for non-registered companies) and more recently with the carrot of incentive (special tax mitigations for RHQ companies). However, I wonder whether 2024 might be the year that peace breaks out here?

Saudi’s play is simple, clear and understandable: They want to keep as much of their significant public sector spending in the country as possible, and also build a knowledge-based economy that provides quality employment opportunities for Saudi nationals.

The UAE has different drivers as a much smaller country and is anyway, perhaps, 20-30 years further ahead on its own journey to becoming a regional trade and business hub serving the wider MENA region.

I don’t think it’s wishful thinking or myopic to see these two positions as being, actually, complementary. Yes of course, there may be arguments over how different offices are badged between the two countries and their nominal corporate pecking order (if you remember the early 2000s BBC TV series ‘The Office’, recall the interminable argument between Gareth and David Brent ref ‘Assistant Regional Manager’ vs ‘Assistant to the Regional Manager’) but why not look at this as two parts of the whole?

The UAE is your fulcrum to service and access international markets across EMEA and Saudi is your GCC domestic market of real substance to double down on – it need not be zero sum!

The GCC always has the power to surprise, confound and intrigue, and expect 2024 to be no different. Maybe the endgames of the region’s two largest economic actors aren’t actually all that contradictory after all and, in tandem, they can continue to fuel the GCC‘s broader economy despite their very different approaches.