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Regional Trends

South, East and South-East Asia

EMBARGO 22 July 201017:00 hrs GMT

UNCTAD, Geneva Division on Investment and Enterprise 22 July 2010

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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)

5

2

8

9

8

9

11

40

60

108

3

3

5

5

6

6

17

35

48

95

0 20 40 60 80 100 120

Taiwan Province of China

Iran, Islamic Republic of

Viet Nam

Indonesia

Korea, Republic of

Thailand

Singapore

India

Hong Kong, China

China

20092008

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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)

6

3

10

- 8

15

19

18

52

51

3

4

6

6

8

11

15

48

52

0.30.4

- 20 - 10 0 10 20 30 40 50 60

Philippines

Indonesia

Thailand

Taiwan Province of China

Singapore

Malaysia

Korea, Republic of

India

China

Hong Kong, China

2009

2008

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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, inwhich 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

10

-

1 000.0

2 000.0

3 000.0

4 000.0

5 000.0

6 000.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

FDI from ASEAN to China FDI from China to ASEAN

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