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Doha Time & Temperature

Poor Gulf-India investment flow lamented
3/12/2008 6:44:53
Source ::: The Peninsula
doha • Investments from Gulf States to India and vice versa are negligible; they are just a fraction of what should be, said a senior Indian power company executive here yesterday.

“What we have today not only in the present context of India and the Gulf but globally, it is more of exploitative investments,” said Hinduja National Power Company Chairman, Subir Raha.

“That means the two parties work together but the wealth is created for only one party. Collaborative investment which creates wealth for both sides is what is needed. But I am afraid as of today, in India and Gulf states the collaborative investments are negligible, they are just a fraction of what should be and could be.”

This is surprising given that the socio-economic relationship between these parts of the world have existed for many centuries, Raha told a session on investment generation between Asia and the Gulf States at the ‘Enriching Middle East’s Economic Future’ conference. The poor investment flow between the Gulf and India could be explained partly by the fact that India still put certain restrictions in terms of foreign trade investment.

However, there are a lot of reforms being undertaken and many of tariff barriers have been brought down. But certain areas of financial services are still under severe limitations. On the other hand when it comes to capital investments in infrastructure, such as mining, refining, ores etc…these are not burdened by restrictions. But the difference is that they are long-term investments.

“This may be the reason why we don’t have significant investments from the Gulf into India. On the other hand, whenever major investments are made in the Gulf financing may come from local sources, but the technology investment come usually from the West. And that may be the reasons why Indian participation in Gulf investments is very marginal,” said Raha.

The state of investment flow into Pakistan from the Gulf meanwhile is slightly different with Saudi Arabia and the UAE being the two major investment sources from the Gulf.

Senator Mushahid Hussain Sayed from the Senate of Pakistan who also addressed the session, said: “These investments have been there for a long time but now with the political linkage our relationship is being reinforced by economic relationship.” Following privatization the Karachi Electric Supply Corporation, Pakistan’s biggest power company was taken over by Saudi investors. The state-owned Pakistan Telecommunications Corporation Ltd was also privatized and taken over by Etisalat of UAE.

Massive investments are also being made in such areas as hotels, IT, real estate and banking. “This relationship is now being reinforced by the presence of nearly four million Pakistanis spread across the Gulf region that has lead to an infusion of over $ 6bn in annual remittances from the Pakistani working there,” said Sayed.

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