JAKARTA: Combined foreign direct investment (FDI) inflows to East and Southeast Asia grew by 10 percent in 2014 to reach to a historical high of US$381 billion, despite a slowdown in economic growth, a newly published United Nations (UN) investment report reveals.
The UN Conference on Trade and Development (UNCTAD) World Investment Report 2015 released on Thursday reveals that by sub-region, inflows to East Asia rose by 12 percent to $248 billion, while those to Southeast Asia experienced a 5 percent increase, to $133 billion.
UN secretary-general Ban Ki-moon highlighted the significance of this year’s report, particularly as 2015 will see the UN’s global development agenda enter a critical new phase.
“This report is particularly timely in light of the Third International Conference on Financing for Development in Addis Ababa, and the many vital discussions underscoring the importance of FDI, international investment policy making and fiscal regimes to the implementation of the new development agenda and progress toward the future sustainable development goals,” he said.
Indonesia recorded FDI inflows rising by 20 percent to about $23 billion, driven by a significant increase in equity investment. Inflows to Singapore, the dominant recipient in Southeast Asia, rose by only 4 percent to $68 billion.
The performance of other Southeast Asian economies differed significantly. Vietnam, as an important location for low-cost production by foreign companies in the sub-region, saw its inflows increase 3 percent to $9.2 billion in 2014.
“As a result of cost advantages, efficiency-seeking FDI in manufacturing to low-income countries in ASEAN increased, sometimes driven by large projects, such as an announced investment of $600 million by the Taekwang and Huchems Group [Republic of Korea] in Myanmar,” the report said.
FDI inflows to China reached $129 billion in 2014, an increase of about 4 percent, the report says. This was mainly driven by an increase in FDI to the services sector, while FDI fell in manufacturing, especially in industries that are sensitive to rising labor costs.
Inflows to Hong Kong rose by 39 percent to an annual amount of $103 billion thanks to a surge in equity investment associated with some large cross-border mergers and acquisitions.
