The UAE is the most attractive Arab country for the inflow of foreign capital accounting for nearly a third of all foreign direct investment (FDI) in 2005, according to official statistics.

FDI inflow into the UAE hit a record $10 billion last year, a staggering 34 per cent of the $29.6 billion which poured into the Middle East in 2005, according to figures from the Inter-Arab Investment Guarantee Corporation (IAIGC), an affiliate of the Arab League.

IAIGC said the 2005 Arab FDI accounted for a record 3.3 per cent of the total foreign investment channel-led worldwide.
The ratio between the Arab FDI to the foreign investment worldwide grew to 3.3 per cent last year for the first time, it said in a report.
The 2005 figure was much higher than the 2004 Arab FDI of around $19.8 billion, which accounted for nearly 2.7 per cent of the world's total foreign capital.

The UAE was again the largest recipient of foreign investment in the Arab world, attracting $8.4 billion. The increase in 2005 also boosted the Arab FDI to a record 10.8 per cent of the total FDI in developing nations from around 8.2 per cent in 2004, according to the Kuwaiti-based IAIGC. In 2005, Egypt ranked second to the UAE, attracting around $4.1 billion while Saudi Arabia came third, with nearly $3.5 billion.

The report attributed the sharp rise in FDI in the UAE and other Arab countries to the surge in oil prices,
improvement of investment laws, and opening up of more sectors to foreign investors.