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Islamic Finance

Indonesia top Muslim-majority country for foreign direct investments in 2018 – U.N. agency

Indonesia was the top Muslim-majority country to receive foreign direct investments in 2018, according to a report from the United Nations Conference on Trade and Development (UNCTAD).

Southeast Asia’s biggest economy attracted $22 billion in FDI last year, up 6.8 percent from 2017, according to the UNCTAD report.

Neighbouring Malaysia suffered a drop, from $9.4 billion in 2017 to $8.1 billion last year.

The United States again leads as the biggest recipient of FDI, although inflows dropped from $277 billion in 2017 to $252 billion in 2018.

Overall, FDI flows continued their slide in 2018, falling by 13 percent to $1.3 trillion.

UNCTAD said the third consecutive year in decline of FDI flows was mainly due to large-scale repatriations of accumulated foreign earnings by United States multinational enterprises in the first two quarters of 2018, following tax reforms introduced in the U.S. at the end of 2017.

INDONESIA $22 billion
TURKEY $13 billion
UAE $10 billion
MALAYSIA $8.1 billion
EGYPT $6.8 billion
MOROCCO $3.6 billion
SAUDI ARABIA $3.2 billion
LEBANON $2.9 billion
NIGERIA $2 billion
BAHRAIN $1.5 billion
ALGERIA $1.5 billion
SUDAN $1.1 billion
TUNISIA $1 billion
Data source: UNCTAD


Asia was once again the world’s largest FDI recipient, absorbing 39 percent of inflows last year, up from 33 percent in 2017.

Total flows into Asia rose by 4 percent to $512 billion in 2018.  

Inflows to East Asia rose by 4 percent to $280 billion, Southeast Asia received 3 percent more than 2017 to $149 billion, South Asia saw a 4 percent rise to $54 billion, and inflows into West Asia grew by 3 percent to $29 billion.

West Asia includes Muslim-majority Middle Eastern economies such as Saudi Arabia, United Arab Emirates and Lebanon, as well as Turkey.

These four countries represent approximately 90 percent of FDI in West Asia, with Turkey the largest recipient enjoying a 13 percent rise to $13 billion.

Inflows into the UAE remained largely unchanged in 2018 at $10 billion, with investments targeting a diverse range of sectors, from oil and gas to digital technologies.

FDI flows to Saudi Arabia rose from $1.4 billion in 2017 to $3.2 billion in 2018.

Lebanon received $2.9 billion in FDI, up from $2.5 billion in 2017.

Bahrain was another winner, seeing a 6 percent rise to $1.5 billion, mainly due to growing interest in manufacturing activities. According to UNCTAD, U.S. food group Mondelez, and Italy’s Ariston Thermo set up manufacturing facilities in Bahrain International Investment Park in 2018.


While Asia received the largest share of FDI in 2018, Africa’s inflow growth was a far higher 11 percent after successive declines in 2016 and 2017.

The continent received $46 billion in FDI last year.

Inflows to Muslim-majority North Africa increased by 7 percent to $14 billion.

Egypt was the largest FDI recipient in the sub-region, although inflows dipped by 8 percent to $6.8 billion. Foreign investment in Egypt was skewed towards the oil and gas industry. The country signed at least 12 exploration and production agreements with international companies in 2018.

Morocco’s FDI inflows rose by 36 percent to $3.6 billion as the country continues to benefit from relatively stable economic performance and a diversified economy drawing investment in finance, renewable energy, infrastructure and the automotive industry.

Algeria’s FDI flows went up by 22 percent to $1.5 billion, primarily in oil and gas as well as automotive.

Sudan attracted $1.1 billion last year, up 7 percent from 2017. Investments into the country were aimed primarily towards oil and gas exploration and agriculture.

Tunisia saw an 18 percent rise to $1 billion, with the highest share going to the industrial sector, followed by energy and services.

Elsewhere in Muslim-focused Africa, Nigeria suffered a plunge for the second consecutive year as inward FDI dropped 43 percent to $2 billion. UNCTAD says foreign investors may have adopted a cautious approach and withheld planned investments in light of the risk of instability associated with the country’s elect9ions and disputes between the government and some large multinational companies.


Saudi Arabia and UAE were the top Muslim countries investing abroad.

Saudi Arabia’s investments almost tripled from $7 billion in 2017 to $21.2 billion last year, with money going mainly into technology, finance and infrastructure activities.

UAE’s increase in investments abroad grew a more modest 7% to $15 billion from $14 billion in 2017.

In fact, outward FDI from West Asia reached a historic high of $49 billion last year, with multinationals from Saudi Arabia, UAE and Turkey mainly responsible for the jump.

Turkish companies are increasingly investing in Africa.

Japan was the largest investor abroad in 2018, putting up $143 billion, followed by China’s $130 billion and France’s $102 billion.


UNCTAD sees the outlook for Southeast Asia, home to large Islamic economies Indonesia and Malaysia, as promising for 2019 as countries in the region continue to introduce measures to improve the investment environment.

The digital economy, as well as industrial activities such as automotive, electronics, services, retail trade, and real and industrial estate, are expected to remain particularly attractive to foreign investors.

FDI prospects for West Asia are moderately positive, according to UNCTAD, which sees Saudi Arabia’s Vision 2030, which includes plans to open up the economy and diversify away from hydrocarbons, as a facilitator for investments.

New foreign ownership rules in the biggest Gulf economies will help boost FDI.

Saudi Arabia started allowing 100 percent foreign ownership in the transport, recruitment, audiovisual and real estate industries, UAE now permits 100 percent foreign ownership in certain industries, and Qatar’s new FDI law also paves the way for full foreign ownership in all industries, with a few exceptions.  

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