The Silk Road between Asia and the Middle East was, until the 13th century, among the world's most important trade routes. Trade and investment are once again flowing between these regions after 700 years when merchants looked instead mainly to Europe and the Americas. Now it's up to governments in both Asia and the Middle East to create a more hospitable investment climate that will allow this new Silk Road to achieve its potential.

While Asia's thirst for Middle Eastern oil is well understood, less often recognized is the increasing flow of direct and portfolio investment. Thus Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, used a recent state visit to Pakistan to announce a multibillion-dollar package of infrastructure, property, and other investments. Prominent Saudi investors led by Prince Alwaleed bin Talal are paying $2 billion for a stake in China's second-largest state-owned bank. Bahrain's Gulf Finance House wants to invest up to $1 billion in Singapore's financial, health, tourism, and leisure industries.

The traffic along the new Silk Road is not one way. A seven-company alliance known as the Singapore Specialist Construction Consortium is pursuing Middle Eastern construction projects. Dubai is already home to Chinamex Mart, a...