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Regional Trends South, East and South-East Asia

UNCTAD, Geneva Division on Investment and Enterprise 22 July 2010

EMBARGO 22 July 2010 17:00 hrs GMT

1


Key messages: FDI recovery in South, East, and South-East Asia has been earlier and stronger Industrial upgrading through FDI is spreading to more industries and more countries

2


FDI to South, East, and South-East Asia has been less affected by the global financial crisis  Flows to the region dropped a modest 17% to $233 billion in 2009  Its’ relatively better performance has served to reshape the global FDI landscape  The region now accounts for one-fifth of global FDI inflows  The region’s 3 largest recipients – China, Hong Kong (China), and India – now rank second, fourth, and ninth, respectively, in the world

3


Top 10 FDI recipients in South, East and South-East Asia, 2008-2009 (Billions of dollars)

95

China 48

Hong Kong, China 35

India Singapore

11

Thailand

6

Korea, Republic of

6

Indonesia

5

Viet Nam

5

Iran, Islamic Republic of

2

0

60

40

17

2009

9

2008

8 9 8

3

3

Taiwan Province of China

108

5

20

40

60

80

100

120

4


FDI recovery in South, East, and South-East Asia has been earlier and stronger  FDI started to recover as early as in mid-2009 and picked up speed in early 2010  China and India have led the recovery  Hong Kong (China) has also registered improvement since late 2009  Slower recovery in newly industrializing economies (Republic of Korea, Singapore, and Taiwan Province of China)  Inflows to the region are likely to rebound in 2010 and continue to grow in 2011

5


FDI outflows are expected to rebound after dropping slightly in 2009  Outflows from South, East, and South-East Asia dropped by only 8% to $153 billion in 2009.  Those from Hong Kong (China) and China’s non-financial sectors continued to expand  The region’s leading sovereign wealth funds remain on a buying spree, though their investment focus has changed  Recovery in outward FDI is on its ways: rebound expected in 2010

6


Top 10 FDI sources in South, East and South-East Asia, 2008-2009 (Billions of dollars)

Hong Kong, China

51 48

China 15

India 11

Korea, Republic of 8

Malaysia - 8 Singapore

6

Taiwan Province of China

6

Thailand

3

Indonesia

3

- 10

52

18 19

15

2009 2008

10

4

6

0.4 0.3

Philippines - 20

52

0

10

20

30

40

50

60

7


FDI policies: towards greater openness  Majority of policy changes sought to promote inward FDI  Liberalization and deregulations (e.g. China, India, Indonesia and the Republic of Korea)  Streamlining the administrative processes (e.g. India)  Provision of incentives (e.g. China)  A few new restrictions to engage in certain activities were introduced (e.g. India and Indonesia)  Some countries eased conditions for outward FDI  Simplification of foreign exchange regulations (e.g. China, Sri Lanka and Thailand)

8


FDI and industrial upgrading in Asia: new features and opportunities …  In Asia, industrial upgrading has followed a sequential path, in which FDI has played a crucial role  Intraregional FDI (now accounting for as much as half of the region’s total inward FDI stock) has made an increasing contribution to industrial upgrading  Industrial upgrading encompasses more production activities, creating development opportunities for a wider range of countries  Including LDCs such as Cambodia, the Lao People’s Democratic Republic and Myanmar  China plays a multifaceted role

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… as seen in FDI flows between ASEAN and China, 2000–2009 (Millions of dollars)

6 000.0

5 000.0

4 000.0

3 000.0

2 000.0

1000.0

2000

2001

2002

2003

2004

FDI from ASEAN to China

2005

2006

2007

2008

2009

FDI from China to ASEAN

10


WIR (Trends for South-East Asia)