Asia-Pacific becomes largest destination, source of FDI globally

04 Dec 2019 / 13:00 H.

KUALA LUMPUR: For the first time, the Asia-Pacific region has become the largest destination and source of foreign direct investment (FDI) globally, according to a new report launched by the United Nations Economic and Social Commission for Asia and the Pacific (Escap).

Titled ‘Foreign Direct Investment Trends and Outlook in Asia and the Pacific’, the study found the region is expected to maintain steady inflows and outflows of FDI in 2019 and 2020.

In 2018, Escap said the region attracted 45% of global FDI inflows and was responsible for 52% of global outflows. Developing countries in the region attracted 40 per cent of global FDI inflows and were responsible for 37 per cent of global FDI outflows.

“Despite escalating trade tensions, inflows to China increased from US$134 billion (RM560.2 billion) in 2017 to US$139 billion (RM581.2 billion), making it the largest recipient of FDI inflows to the region for the third consecutive year,“ it said in a statement in conjunction with the report.

The analysis in the study is expected to help policymakers maximise the potential of FDI to contribute to the 2030 Agenda for Sustainable Development and implement sustainable investment promotion strategies for both inward and outward FDI.

Meanwhile, it said despite continuous movement of FDI, sluggish growth in inward greenfield investments may hamper the region’s ability to attract the same levels of investment in 2019 and a decline in investment flows in 2020 is expected if both the uncertainty related to international trade continues and companies consolidate their value chains.

Therefore, investment prospects for the region remain tied to unfolding risks of ongoing global political and economic disturbances.

“As intraregional FDI flows continue to grow in significance, more opportunities will arise for investment cooperation in the name of sustainable development between the sources and recipients of FDI in the region,” said Escap.

During the past decade, the share of intraregional greenfield inflows increased from 40% in 2009 to 53% in 2018.

ASEAN member countries attracted the largest share of intraregional flows in 2018, while countries from the East and North-East Asia subregion were the largest sources of intraregional FDI.

The report is the first brief in a new annual publication series by Escap called Asia-Pacific Trade and Investment Trends.

This will be an annual series that drew on Escap’s expertise in trade and investment analysis to highlight the important trends and forecast their impact in these two areas.

The briefs would help equip policymakers with the necessary information to make timely decisions on trade and investment policies and enable inward and outward FDI cooperation among its member states. — Bernama

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