Jul. 23 – There has been more intra-regional investment happening in Asia due to a decline in in foreign direct investment from developed countries, says the United Nations Conference on Trade and Development (UNCTAD) during the release of its World Investment Report 2010 yesterday.
“FDI in South Asia, East Asia and Southeast Asia has already started to rebound and is likely to pick up speed as the region plays a leading role in the global economy recovery,” said the UNCTAD report. It cited that intra-regional FDI accounted for as much as half of the region’s inward FDI activity.
Twenty five percent of foreign direct investment to the African continent from 1987 to 2005 came from China, Malaysia and India. According to the report, FDI inflows to the region declined by 17 percent to US$233 billion in 2009, reflecting a decline in cross-border M&A.
Total outflows from the region declined by eight percent to US$153 billion, with cross-border M&A purchases dropping by 44 percent, said the report.
UNCTAD predicts that FDI inflows will be slow to resume to pre-crisis levels in Asia’s newly industrializing economies Hong Kong, South Korea, Singapore and Taiwan.
Intra-regional investment will be good for the region as it encourages technology diffusion and enhances competitiveness. “In addition, this process of sequential upgrading has expanded beyond industries such as electronics, and more high-tech products have been involved,” the report said.
