UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD)

CONFRENCE DES NATIONS UNIES POUR LE COMMERCE ET LE DVELOPPEMENT (CNUCED)

PRESS RELEASE
EMBARGO The contents of this press release and the related Report must not be quoted or summarized in the print, broadcast or electronic media before 26 July 2011, 17:00 GMT (1 PM New York, 19:00 Geneva, 22:30 Delhi, 02:00 27 July 2010 Tokyo)

UNCTAD/PRESS/PR/2011/030 Original: English

New records set for foreign direct investment in and out of developing Asia, UNCTAD report reveals
Geneva, 26 July 2011 Developing Asia (excluding West Asia) set new records for FDI inflows and outflows in 2010, UNCTADs World Investment Report 20111 (WIR11) announces. The report, subtitled Non-equity modes of international production and development, was released today. In 2010, FDI inflows to South, East, and South-East Asia rose 25 per cent to $300 billion, nearly one fourth of the global total, the annual report says. However, the performance of the three subregions and their major economies varied significantly (figure 1):

FDI to the member countries of the Association of Southeast Asian Nations more than doubled, reaching $79 billion in 2010. Proactive policy efforts at the country level contributed to the good performance of the group, and seem likely to continue to do so, the report says. Some ASEAN countries, for example, Indonesia and Viet Nam, have gained ground as low-cost production locations, especially for low-end manufacturing, while the regions least developed countries (the Lao Peoples Democratic Republic and Cambodia) received increasing inflows, particularly from neighbouring countries.

FDI to East Asia rose to $188 billion, thanks to double-digit growth in inflows to China and Hong Kong (China). Inflows to China climbed by 11 per cent to $106 billion. China continues to experience rising wages and production costs, so that the trend in widespread offshoring of labour-intensive manufacturing to the country has slowed and FDI inflows are shifting towards services. As FDI in real estate booms, the influx of hot money has been a concern for Chinas policymakers, the report notes.

* Contacts: UNCTAD Communications and Information Unit, +41 22 917 5828, +41 79 502 43 11, unctadpress@unctad.org, http://www.unctad.org/press
1

The World Investment Report 2011: Non-equity Modes of International Production and Development (WIR11) (Sales No. E.11.II.D.2, ISBN-13: 978-92-1-112828-4) may be obtained from United Publications Sales and Marketing Office at the address mentioned below or from United Nations sales agents throughout the world. Price: US$ 95 (50% discount for residents of developing countries, and 75% discount for residents of least developed countries). This price is for a copy of the printed Report and an accompanying CD-ROM. Customers who would prefer to purchase the Report or the CD-ROM separately, or obtain quotations for large quantities should consult the sales offices. Orders or queries should be sent to: United Publications Sales and Marketing Office, 300 E 42nd Street, 9th Floor, IN-919J New York, NY 10017, United States. tel.: +1 212 963 8302, fax: +1 212 963 3489, e-mail: publications@un.org https://unp.un.org.

UNCTAD/PRESS/PR/2011/030 Page 2

FDI to South Asia declined to $31 billion, reflecting a 32 per cent slide in inflows to India and a 14 per cent drop in flows to Pakistan. By contrast, inflows to Bangladesh, a rising low-cost production location, increased by nearly 30 per cent to $910 million. FDI outflows from developing Asia grew by 20 per cent to about $230 billion in 2010, driven by increased investment coming out of China, Hong Kong (China), the Republic of Korea, Singapore and Taiwan Province of China (figure 1). Outflows from the regions two largest FDI sources Hong Kong (China) and China increased by more than $10 billion each and reached historic highs of $76 billion and $68 billion, respectively. In 2010, China exceeded Japan for the first time in outward FDI, as well as in gross domestic product. The regions share in global FDI outflows has jumped from below 10 per cent before 2008 to around 17 per cent over the past two years. Companies from developing Asia have been actively taking over companies in the developed world, including through a number of very large acquisitions (table 1). However, they are facing increasing political obstacles, as illustrated by the failed attempts by Huawei (China) to take over 3Com and 3Leaf in the United States. The significance of electronics in outward FDI from developing Asia reflects the international competitiveness of Asian companies in this industry, particularly the contract manufacturers, such as Foxconn (Taiwan Province of China) and Flextronics (Singapore). They have become a dominant force at the production stage of the global electronics value chain (see UNCTAD/PRESS/PR/2011/033). Both inflows to and outflows from developing Asia are expected to continue to grow, the report predicts. Countries in the region have made considerable progress in their regional economic integration efforts. The report says that this will translate into a more favourable investment climate for intraregional FDI.

UNCTAD/PRESS/PR/2011/030 Page 3 Figure 1. Top 10 recipients and sources of FDI flows in developing Asia, 2009, 2010 (Billions of dollars) FDI Inflows
China Hong Kong, China Singapore India Indonesia Malaysia Viet Nam Korea, Republic of Thailand Iran, Islamic Republic of 0
1 5 5 9 8 7 8 6 5 4 3 13 15 24 36 39 52 69 95 106

2010 2009

20

40

60

80

100

120

FDI outflows
Hong Kong, China China Singapore Korea, Republic of Malaysia India Taiwan Province of China Thailand Indonesia Viet Nam
3 2 0.9 0.1 6 5 4 8 13 13 11 16 20 18 19 17 57 64 68 76

2010 2009

10

20

30

40

50

60

70

80

Source: UNCTAD, World Investment Report 2011. Note: Countries ranked on the basis of the magnitude of 2010 FDI flows.

UNCTAD/PRESS/PR/2011/030 Page 4 Table 1. Selected M&A mega-deals in manufacturing undertaken by firms from South, East and South-East Asia in developed countries, 20072011
Acquiring company Target company Industry Transaction value ($ million) Tata Steel (India) Hindalco Industries Ltd Doosan (Republic of Korea) Flextronics (Singapore) Tata Motors Ltd China National Agrochemical Corus Group (United Kingdom) Novelis Inc Ingersoll-Rand Co. (United States) Solectron Corp. (United States) Jaguar Cars Ltd Elkem AS Steel Aluminum Construction equipment Electronics Motor vehicles Aluminum Chemical products Steel Food and beverages Motor vehicles 11791 5789 4900 3675 2300 2179 1701 1603 1176 1500 2007 2007 2007 2007 2008 2011 2011 2007 2007 2010 Year

Wanhua Polyurethanes (China) BorsodChem Zrt (Hungary) Essar Steel Holdings (India) United Spirits (India) Geely Holding Group (China) Algoma Steel Inc. (Canada) Whyte & Mackay (United Kingdom) Volvo (Sweden)

Source: UNCTAD, World Investment Report 2011. Abbreviations: M&A merger and acquisition

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