Speaking at the Dubai International Financial Centre on Tuesday, Deputy Secretary of the US Department of Treasury Robert M. Kimmitt said, “the rise in protectionist sentiment (is) epitomised in rhetoric questioning the benefits of cross-border investment”.
Neither the United States, nor the UAE, nor the rest of the world can afford to turn inward. Instead we must rely on increased interaction with each other to help drive our economies forward and make the benefits of foreign investment to all countries”, he commented. He added that foreign direct investment in the US from the Middle East and North Africa was over $7 billion in 2007 an increase of over 130 per cent from 2001. He said the benefits from foreign investment were clear saying foreign firms employ 5.3 million US workers or about 4.6 per cent of the private sector labour force. Workers in foreign-owned firms generate 19 per cent of US exports, 14 per cent of R&D spending, 11 per cent of capital investment and 13 per cent of corporate tax revenue.
Kimmitt who is on the second leg of a five-nation tour of the Gulf confirmed he was meeting with a number of sovereign wealth funds, “I am taking the time to meet with sovereign wealth funds (SWFs) and other investors looking for opportunities in the United States to make clear we are open to investment that is done on a commercial not political basis and that does not raise security concerns”. SWFs recently adopted a voluntary set of principles known as the ‘Santiago Principles’ aimed at fostering greater transparency amongst members. The International Working Group of Sovereign Wealth Funds was facilitated by the International Monetary Fund and co-chaired by the Abu Dhabi Investment Authority thought to be the largest SWF with assets of between $500-875 billion according to the US based Peterson Institute for International Economics.
A number of proposed SWF investments are before the Committee on Foreign Investment, Kimmitt stated without elaborating. “We are going to treat them on a non-discriminatory basis as we would any investor coming to the Unites States”.
Kimmitt added that following the issues raised by DP World two and a half years ago the US had taken steps to implement reforms in the Committee on Foreign Investment in the United States (CFIUS). The US and UAE last year suspended negotiations on a Free Trade Agreement.
Investor confidence in US financial markets still remains fragile, “we are clearly going through a difficult period at a time of slowing growth and we have difficult quarters ahead of us – I remain optimistic about the long-term strengths of the United States economy” he added?. Kimmitt also stated that Iran “continues to employ deceptive practices to mask its illicit activities which makes it more difficult for a business partner to know the true beneficiary of a transaction o service with an Iranian entity”. He also acknowledged measures taken by Gulf regulators to protect their financial systems from abuse.
