Barriers and Opportunities for Enhancing Capital Flows

In the COMCEC Member Countries

keeping a strong grip on market abuse and financial fraud. Intensifying that

commitment by ensuring full participation in the reform processes and by committing

resources to regulation and market supervision will be crucial to achieving the

region’s goals of financial development and economic diversification.

Opportunities relating to financial stability and institutional capacity



Policies have been innovative.

Several GCC authorities have been charged with

fostering an investor-friendly environment. Bahrain owes its success in attracting

foreign capital inflows to policy innovation on the part of government authorities that

have demonstrated a commitment to transparent regulation of the financial system.

And Saudi Arabia launched the Saudi Arabian General Investment Authority (SAGIA) in

2000 to “act as a gateway to investment in Saudi Arabia” by creating a pro-business

environment, providing services to investors and fostering investment in key sectors

of the economy such as energy, transportation, and information and communications

technology (ICT).



Unrestricted foreign-currency movement.

In Saudi Arabia, financial policies facilitate

the free flow of private capital; currency can be transferred in and out of the kingdom

without restriction, with limits only on bulk cash.

For its part, Bahrain’s

attractiveness is that the entire country acts as a free zone, with no controls on the

amount of foreign currency allowed to be moved in and out of the country, and no

restrictions on repatriating profits earned from local operations in Bahrain.



Free zones have attracted foreign investors.

Even among high-income countries that

impose tight restrictions on foreign ownership, such as the UAE, the governments have

established a number of free trade zones that offer investment incentives not available

in non-designated areas. These incentives include 100% foreign ownership of

businesses, no minimum capital investment requirements, no personal or corporate

income tax and no restrictions on profits or capital.

M. Bossdorf, C. Engels and S. Weiler, EU GCC Invest Report 2013