DUBAI, Dec 28: A financial expert believes around $1 trillion of Arab funds that are invested in the West or outside the Arab world in form of securities, bank deposits and other financial instruments, would need sufficient investment avenues if it returns to the region due to the aggravating situation in the major financial markets.

A leading Arab banker has emphasized the need to equip the financial system of the region to “absorb the funds coming back from the West” and has urged the regional Arab governments to privatize their successful businesses.

“The already poor and the further worsening financial market situation in the West and Japan is prompting these funds to come back. But the most important question before them is the quality of the legal system here and opportunities to invest these funds in a viable way,” Gulf News quoted Abdulaziz Al Ghurair, CEO of Mashreqbank as saying.

The UAE alone is said to have more than Dh500 billion invested in the Western financial market while Saudi Arabia and Kuwait also have large investments in form of financial instruments.

Mr Al Ghurair praised the Dubai International Financial Centre (DIFC) as a step in the right direction that would “help address these issues to a large extent.”

DIFC is to establish a regional stock exchange that is expected to list major companies from the region and around the world. According to Gulf News, the DIFC is hoping some public sector companies would also list a portion of their shares in the exchange.

The Mashreqbank chief believes family owned companies would consider the benefits of going public. “In the coming five years, I am sure some of the top groups will sell part of equity to the public,” he told the English language Dubai newspaper.

According to Abdulaziz Al Ghurair the return of the funds “parked outside” will strengthen the Arab world economically and politically.