Catherine Morris (St. Lucia Star) reports on the interest of Middle Eastern investors in sectors such as citizenship, luxury real estate properties, and renewable energy.
The Caribbean has always attracted international investors keen to park their wealth offshore, but the source of those capital inflows has been subject to change as the global economy fluctuates. Governments in the Middle East, especially the United Arab Emirates (UAE), are increasingly looking to the region as a way to diversify their portfolios, protect their funds and secure influence. For the Caribbean, partnering with Arab States can bring much-needed investment in infrastructure, training and technology.
It is impossible to talk about Middle East markets without talking about oil. Economies in the region are heavily tied to the price of this precious commodity and four years of downward-trending crude oil prices have taken their toll. The slump, combined with conflict in Syria, Yemen, Libya and Iraq, has contributed to making the Middle East one of the world’s most poorly performing economies. But there are pockets of growth. In its February 2019 report, PwC predicts that the Middle Eastern economy will pick up this year due to stronger oil prices, fiscal reforms and increased M&A activity as banks in the region consolidate and scale up. Overall, the Middle East’s GDP is expected to grow by 3.6 per cent in 2019, according to PwC.
Driving this are the region’s fastest growing economies – the International Monetary Fund (IMF) has tagged Oman, Kuwait and United Arab Emitrates (UAE) as the strongest players in 2019 and its the latter that’s currently making waves in the Caribbean. November 2018 saw a significant milestone in Middle Eastern-Caribbean relationships when Dubai hosted the first UAE-Caribbean Cooperation Forum. The three-day event, which was organised by the Dubai Chamber of Commerce and Industry, discussed how the two regions might partner on issues such as renewable energy, technical assistance and infrastructure development. More than 400 delegates, drawn from both government and the private sector, attended.
Labelling the event “highly productive”, UAE Representative to the Association of Caribbean States Ambassador Bader Almatrooshi said: “The momentum created by the Forum and the partnerships forged in this context could result in very positive outcomes taking into account that there is a great potential for growth, in light of the UAE’s and the Caribbean region’s respective economies, natural resources and strategic geographical location.”
Areas of investment
Traditionally, investment from the Arab world into the Caribbean has centred around two markets – luxury real estate and citizenship. In 2017, Middle Eastern investors spent US$9.1bn on global commercial real estate, according to international property consultancy firm JLL which predicts that these investors will move away from the traditional niches of hospitality and housing into technology centres, industry and retail. And JLL believes that Arab investors are now becoming more innovative with their property portfolios by moving into exotic destinations such as Latin America and the Caribbean.
Countries with Citizenship by Investment (CBI) programmes like St Lucia have always attracted substantial interest from this part of the world. St Kitts and Nevis has been particularly proactive in chasing this market, hosting a meet and greet with officials in Dubai in January and unveiling plans to open an embassy in Abu Dhabi later this year. And the island’s efforts are paying off – CBI facilitator Naseba reported a three-fold increase in interest in St Kitts-Nevis passports from the Middle East last year.
But a diversified portfolio is a strong portfolio, and Middle Eastern investors are now targetting sectors other than citizenship and property. The UAE, which has the most diversified economy in the Middle East, has been getting creative in its Caribbean approach. On the sidelines of the November summit, Jamaica and the UAE signed a Memorandum of Understanding to foster “bilateral cooperation in the cultural and creative domains.” This MoU paves the way for coordinated cultural events, exchanges, visits and technical cooperation in the fields of publishing, translation, digital content and the arts.
The Caribbean’s burgeoning renewables sector is also an area of interest for UAE investors. In 2017, Reem Al Hashimy, UAE’s Minister of State for International Cooperation launched the UAE Caribbean Renewable Energy Fund which provides US$50 million in funding for green energy projects in 16 Caribbean countries. St Lucia accessed the fund in its second cycle and will launch three projects this year – installation of solar systems at two schools, creation of solar-powered lighting at Hewanorra International Airport and construction of a solar carport and electric vehicle charging stations, also at the airport.
Road upgrades are also due to take place in the north of the island, partly funded by Kuwait. In March, the Prime Minister met with the Kuwaiti Ambassador Mohamed Fadel Khalaf to discuss expansion and redevelopment of St Lucia’s highways and secondary roads, courtesy of the OPEC Fund for International Development and the Kuwait Fund for Arab Economic Development.
Non-oil foreign trade between the UAE and the Caribbean was worth US$382.9m in 2017, a 37 per cent increase from the previous year. With greater market access through partnerships, both economies are hoping to further expand this lucrative trade avenue and Chairman of the Dubai Chamber, H.E Majid Saif Al Ghurair, believes stronger trade is a win-win for both partners: “ We see huge potential for UAE businesses to provide the right level of expertise and investment to fill market gaps within the Caribbean’s services, logistics, agriculture, creative and digital sectors.
“As businesses and governments in the Caribbean look towards the next phase of growth, development and economic diversification it is important for them to broaden their horizons and build partnerships in new markets.”
For its part, the Caribbean is hoping forging ties with the Middle East will help boost tourism and improve its technological capacity – an area in which the region is falling behind as it struggles to keep up with the fourth industrial revolution. Prime Minister Chastanet said: “What the UAE has acheived so far has challenged us to revisit our own expectations for ourselves. We normally look North for solutions, and here we have an incredible success story to the East. We now need to examine how we can leverage that and use this expertise to create the same level of success in the Caribbean.”