Asia gets 44 p.c. more FDI in 2000

GENEVA, JUNE 12. Foreign direct investment (FDI) into developing Asia reached a record level of $141 billion in 2000, according to preliminary estimates released by the United Nations Conference on Trade and Development (UNCTAD) today. The 44 per cent increase over 1999 primarily resulted from an unprecedented FDI boom in Hong Kong, China. FDI flows into China at $41 billion remained relatively stable compared to the $40 billion of the previous year.

The FDI share of total investment in developing Asia is increasing: FDI inflows as a percentage of gross domestic capital formation reached more than 9 per cent by the end of the 1990s, more than twice as high as at the beginning of the decade (figure 2). This share, however, is smaller than in Latin America.

One distinct feature of FDI trend in the region was that the wave of cross-border mergers and acquisitions (M&As) tapered off (although their level remained higher than in 1997-98), while greenfield investment slowly resumed its growth. More specifically, cross-border M&As in South, East and Southeast Asia declined from $28 billion in 1999 to $21 billion in 2000. This reduction reflects both the slowdown in the rate of asset disposals and the lower pressure for corporate restructuring, particularly in the countries hit by the financial crisis of the 1990s (that is, Indonesia, Malaysia, the Philippines, Republic of Korea and Thailand).

The forthcoming "World Investment Report 2001", to be launched by the UNCTAD in September, will further analyse these estimates and provide details at country, region and international levels. The main theme of this year's Report will be FDI and linkages to local enterprises.

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