Increasing Agricultural Productivity:

Encouraging Foreign Direct Investments in the COMCEC Region

Risks of FDI relate to the negative effects of foreign investors putting domestic (small-

scale) farmers out of competition due to superior production techniques and economies

of scale; Secondly, foreign investors might use the arable land for agricultural products

other than food, and therefore disrupt the development for self-sufficiency,



Countries such as Saudi Arabia, Qatar, as well as other GCC States are important sources

for FDI in other COMCEC Member Countries,



To enhance food security, even in times of crisis when international trade is not for

granted, urge the need for large scale outward FDI projects. Water scarcity force these

government to seek for alternative solution outside their own borders,



The potential for agricultural FDI in the COMCEC Member Countries has been measured

based on a country’s

ability

and

suitability

for FDI

Ability refers to the input factors:

land, water, and infrastructure while suitability demonstrates the competitiveness and

attractiveness of the business climate,



Turkey, and Malaysia (from an suitability point of view) and Kazakhstan and Indonesia

from an ability point of view show the highest potential for FDI among the COMCEC

Member Countries,



Continuously improving the country’s business climate in combination with a sound

investment promotion strategy is the way forward to secure sustainable FDI in the

future.

5.2

Policy Measures and Recommendations to Encourage Agricultural FDI

There are several policy measures that can reduce and mitigate the risks of agricultural FDI,

both for the investor and for the host country.

124

They include:



Proper land use planning: Local land use plans need to be prepared and implemented to

help align the interests of communities and investors in a way that is consistent with

sustainable resource use. This helps ensure that the most suitable land is selected for a

given purpose. It can also reduce the danger that highly productive or ecologically

vulnerable land will be diverted to inappropriate uses, and can provide investors with

“critical information on agro-ecological conditions on a given tract of land, and the

status of existing rights to that land.”