fdi mpcb 11.04.12
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FDI in Financial SectorTRANSCRIPT
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Foreign Direct Investmentin the Financial Sector
ByBhisham Ramkelawon
MPCB
Foreign Direct Investmentin the Financial Sector
ByBhisham Ramkelawon
MPCB
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Road Map for Presentation
Objectives
Factors increasing FDI in Financial Sector
History of FDI in Mauritius
Positive Benefits for the country
Relationship between FDI and Financial Sector
Introduction
Way Forward
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Introduction: Foreign Direct Investment ( FDI)
• FDI plays an important role in stimulating economic for an economy
• It is more productive than domestic investments and shares a positive
relationship between FDI and economic growth
• FDI has several positive effects which include productivity gains,
technology transfers, the introduction of new processes, managerial
skills, and know-how in the domestic market
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Objectives
• Factors motivating FDI in the Financial Sector
• Relationship between FDI and Financial Sector
• Benefits of FDI to the Country
• Way Forward
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• Mauritius, a small island economy of the Indian Ocean, has witnessed an incredible development in the last 30 years.
• Mauritius was transformed from a dependent monocrop economy in the early 1970s to a multi-sector middle-income economy two decades later.
• The driving force of Mauritius’ development has been its exports sectors, namely the sugar sector, tourism and the Export Processing Zone (EPZ).
• Now the relatively dynamic financial sector has also played a crucial role in the development process.
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History of FDI in Mauritius
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History of FDI in Mauritius
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Source : Bank of Mauritius
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Comparative Analysis FDI inflow by Countries
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Source Board of Investment 2011
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Introduction Sector Analysis
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Source : Bank of Mauritius 2011
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Mauritian Economy The Bird View
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Source : AXYS Stockbroking Ltd latest research paper 2012
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Relationship between FDI and Financial Sector
• In late 1980s and 1990s the Mauritian Financial Sector was affected by the process of financial liberation
• This sector now recognised as the fourth pillar in Mauritius with around 0.7 points in GDP in 2010
• Employment now turns around to 12 600 individuals working in this sector
• With increase investment and need for non bank financial institutions lead to an increase of Insurance and Offshore Companies
• Positive relationship between financial sector and economic growth
• Financial sector now acts as a financier of productive investments and accelerator of economic growth
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Relationship between GDP and Growth of Finance Sector
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Source : AXYS Stockbroking Ltd
Key Notes:
• Increase in growth of this sector from year 2008 to 2011
• Overall GDP of this sector amounts to 11.0 %
Source : AXYS Stockbroking Ltd
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Factors increasing FDI in the Financial Sector
• Entry of Multinational Banks in Mauritius taking advantage of Spill over of local banks in this sector
• Multinational Companies taking advantage of Favourable Government Policies to encourage Investment in this sector
• Presence of Factor conditions (Macro environment factors Political and Social Factors and Human Capital) in the country
• A culture of doing business in Mauritius which has increased wide range of international firms to invest in this sector
• Results an increase in offshore and international banks coming to invest in Mauritius
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Positive benefits for Host Country
• FDI is directly linked with countries that are financially developed and institutionally strong
• Creates demand condition for investors to come and do business
• Inflow of capital and investment in the country
• Domestic financial sector plays a vital role in ensuring international flow and encourage economic growth
• Increase the image of the Host Country (Mauritius) internationally in the market
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Way Forward
• Financial Sector still plays a vital role in making the country attractive to FDI both in short run and long run
• This sector should play an integral part of the strategy to attract FDI inflows
• Continuous development and international promotion of this sector worldwide
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Thank You
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