CHAIRMAN'S MESSAGE: 
Ladies and
gentlemen,
Let me begin, by sincerely congratulating
the Lebanese people and president on the
success of Paris 2 Conference.
Thanking the organizers for
inviting me to speak to this conference on
the Investment of Arab Funds in Arab
Countries, I believe that giving this
subject the importance it deserves has
become an inevitable necessity.
As we all know, strong domestic
private investment is one of the most
important components of all economic
development. However, here in the Arab
world, there has been reluctance by local
investors to invest in the economies and
markets of the region.
How do we go about overcoming
this reluctance to invest in our own
markets? It is quite simple, we, that is
all of us, must begin by making conscious
decisions to investigate opportunities in
our own markets, rather than placing our
money in other economies around the world.
Currently, it is estimated
that over 800 billion dollars of our
capital is invested abroad. Were this
money to be brought home to our region, it
would, I believe, generate an economic
renaissance on an unparalleled scale that
would benefit the entire region.
Another enormous boost to regional
investment would be if some of our
governments repatriated the billions of
dollars of undeclared investments they
hold in the West. This would reassure, and
give confidence to their citizen
investors, that our economies are worth
investing in. It would also encourage
greater flows of foreign inward
investment, as international institutional
investors start to be convinced that the
Arab world is a safe environment for their
money.
An important point to make is
that as capital is brought home, and
foreign investment opportunities expand
our economies, jobs will be created. This
is of vital importance, for while some
Arab countries are amongst the richest in
the world, they continue to have millions
of jobless young citizens. This is already
leading to political unrest, as unemployed
and marginalised young people will express
their dissatisfaction with their present
situation. They envisage that their
protest will get them fair income and
proper life.
I have affirmed on many occasions:
If governments ensure their
people have enough to eat, homes, the
certainty that each of them will be able
to earn enough to support his family, and
that they will be treated fairly under the
law, then they will be content with their
rulers, instead of what the West
circulates about the situation in the Arab
countries. I believe that the origin of
every social political unrest is economic.
So, to achieve stability and prosperity of
our region, we, along with our
governments, must play an active and positive
role, by investing in its future.
So why don’t we invest at
home? What is it that makes us place our
money in foreign hands?
In my opinion, our reluctance
stems from a feeling of insecurity in the
mechanisms of regional economic
governance, too much government control
and a deep-rooted wrong feeling that our
investments will be safer and more
profitable in international markets that
show a track record.
Governments in our region are
now aware that without satisfactory
economic reforms to promote private sector
development, and the formulation of
internationally accepted regulatory
processes, with a framework of laws, they
will not be able to attract large inflows
of investment into their economies.
Several Arab countries have
passed new laws, creating new investment
promotion agencies, making changes in
their regulatory environment to encourage
domestic private investment, and seeking
to deregulate their markets. However, they
have in some cases failed to implement
these reforms fully or they have not been
effective.
This is a good start, but
frankly, while there has been progress, in
my view, much more needs to be done to
make markets throughout our region
orderly, transparent, non-discriminatory,
and more liberal. Leveling the playing
field in this way will ensure that the
region’s markets are competitive with
worldwide markets. Privatisation programs
that are being considered in key public
utilities industries, will definitely lead
to creating a broad environment for
investment.
Other measures that would go a long
way improving investors’ confidence,
would be in my view the establishment of a
truly effective Arab common market,
allowing tax holidays and subsidies for
certain industrial sectors to encourage
development and setting up of centres of
excellence that would invest in research
in the fields of science and medicine to
avoid over dependence on Western
technology.
All
these improvements in the investment
climate of Arab nations should, in the
future, help to keep our money at home and
attract investment from abroad. This
increased investment will have a
beneficial spin off. It will see more
expenditure on education, training, job
creation and investment in new industries
that will invigorate and diversify our
national economies. Strong economies
contribute to the creation of more
opportunities for our businesses to
develop successfully, and thus ensure
their profitability.
However,
none of this will be of any use if private
investors like us, still have doubts about
the safety and profitability of
investments made in the region.
Here,
I would argue, that because of the
collapse and volatility of world markets
in recent years, our regional markets
could be viewed as a safe haven for
investors. They have not seen the
instability, or the losses that the major
world markets have suffered and are still
suffering. Also, rates of return can be a
lot higher around the region than with
most international markets.
I say this from my own
experience. Over the last decade, our
Group has invested in twenty major and
medium size projects, of which, only two
were outside the region. These two
investments, both in Europe however, only
make up 5% of the Group’s net worth.
The Group’s net assets in the Arab world
have averaged a growth rate of 44% per
annum, over the last 12 years, and the
group’s operating profit grew by an
average of 36% per annum over the same
period.
The many international
private bankers that approach us with
investment opportunities always paint a
frightening picture of the stability and
profitability of investment in the Middle
East. This influences many regional
investors’ investment decisions.
Had I invested in the West, I
wonder what my assets would look like
today.
It is clear therefore, that
we as investors should have more
confidence in the reforms taking place
around the region, and look to invest
profitably and locally, to benefit the
region. I firmly believe that if we
successfully promote private investment in
our economies, we will enter an era of
unprecedented economic expansion and
thereby encourage and sustain future
growth that is so necessary if we are to
prosper in an integrated global economy
I will conclude by again impressing
upon you the positive benefits of bold
investment within our own economies.
Always remember: “fortune favours the
brave”.
KHALAF
AL HABTOOR
Speech
at the conference Arab Investments in Arab
World
held at the Metropolitan Palace Hotel
Beirut on 19-20 December, 2002
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