Gulf companies tackle regulations
Less prominent states benefit
Among the flashiest deals announced during US President Donald Trump’s visit to the Gulf in mid-May was Emirates Global Aluminium’s $4 billion investment pledge to build the first new smelter in the US in 45 years in Oklahoma.
The tentative agreement, EGA said in a press release, is subject to the parties finalising “state and local investment incentives and tax credit arrangements,” among other terms.
This language underscores how even lower profile US states compete fiercely to secure large greenfield investment, where a company sets up from scratch in a foreign country, as well as the ability of large, sophisticated GCC players to harness the maze of benefits and obligations on offer across the 50 jurisdictions.
“The United States is such a massive, diverse market and there absolutely can be significant differences from state to state with respect to the business environment that affect investment decisions,” says Steve Lutes, vice president for the Middle East at the US Chamber of Commerce.
“You will find varying tax policies and regulations and oftentimes companies will consider other important factors, like whether the local workforce and ecosystem aligns with their business interests,” Lutes says.
Data is scant about exactly which US states receive the most FDI from the six members of the Gulf Cooperation Council.
Anecdotally, it is reasonable to presume that their inflows by and large follow those of other countries into tech-savvy California, real estate-rich New York and entrepreneur-friendly Florida.
In February Saudi authorities said they would open the second InvestSaudi US office in Miami.
But one should not overlook the work that governors, state representatives and even mayors from across the country put into attracting foreign investors, including sought-after, cash-rich ones from the Gulf.
Over the past four weeks New Jersey governor Phil Murphy led a state delegation to Saudi Arabia, the UAE and Bahrain; UAE diplomats from Washington travelled to Utah to meet officials and businessmen in aerospace, defence and life sciences; and five American mayors, including Quinton Lucas of Kansas City, participated in an investment conference in Doha.
These are just a few examples of a busy schedule of bilateral meetings at all levels of government.
“There are sometimes engagements with the GCC at a state and city level,” says Justin Alexander, director of consultancy Khalij Economics.
“There are often visits by members of Congress, sometimes on national level issues, but also promoting their states.”
FDIs into less prominent US states can go further in terms of impact on the local economy than those in more crowded destinations.
Oklahoma governor Kevin Stitt said EGA’s $4 billion commitment marked a “monumental day” for the state and will have a “generational impact”.
According to high-level US commerce department figures, the UAE was one of four countries, along with Spain, Bermuda and South Korea, tied in second place for the most announced greenfield investments into Alaska from 2014 to 2024.
Over approximately the same period, the Emirates also comprised 13 percent of total FDI into Vermont, second only to Canada and Switzerland, and 11 percent of flows to Wyoming, tied for second place after Canada along with Australia and Pakistan.
The commerce department data does not list the specific projects in question, but one can guess their contours.
Alaska is a resource-rich state that has attracted, and continues to attract, Gulf interest to develop its energy endowment.
A 2020 report from the UAE Embassy in Washington vaguely states that the US “financial services industry” has benefited from Emirati investment in Wyoming since 2004.
Much like Delaware, this Western state has especially friendly incorporation laws and attracts foreign and domestic investors alike through privacy-focused limited liability companies, trusts and other legal entities.
As for Vermont, perhaps best known for the beauty of its many ski resorts, Mubadala-backed chip maker GlobalFoundries has operated a major plant in Essex Junction since it acquired it from IBM in 2015, and is the largest private employer in the state.
Navigating state by state
According to Alexander, Gulf investors have proven especially adept at navigating state-by-state opportunities.
They often rank among the largest and most sophisticated players in the world, they tend to employ many American professionals from across the US and even their GCC employees often have personal ties to areas well beyond the big American metros.
“I’m in Missouri and I’ve met people from all countries in the Gulf that have studied here,” Alexander says.
“There are lots of personal connections between individuals in the Gulf and different US states, and a surprising amount of knowledge of more peripheral states like Missouri or Oklahoma or Nebraska across the GCC.”
