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
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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
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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
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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
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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
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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
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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
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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)
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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
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