China, Hong Kong and Singapore get biggest FDI inflows in Asia: Report

More direct investments flowed into Asia last year despite a decline globally, with China, Hong Kong and Singapore the biggest recipients, according to the United Nations Conference on Trade and Development (Unctad).

An estimated US$144 billion (S$189 billion) in foreign direct investment (FDI) went into China, while about US$85 billion landed in Hong Kong, Unctad’s latest Investment Trends Monitor report showed. About US$58 billion entered Singapore.

That means China was the second-biggest recipient of FDI inflow in the world last year, with Hong Kong in third place and Singapore eighth. The US remained the biggest.

The quarterly report did not provide comparative figures for individual economies, but based on the numbers in the same report a year ago, FDI pumped into Singapore rose from US$50 billion in 2016 to US$58 billion last year.

The latest report indicated that FDI flowing into Asean, of which Singapore is a member, increased by a third to US$130 billion last year. Singapore accounted for almost half – 45 per cent – of the inflow.

Still, the FDI channelled into Singapore last year remained below the figures for 2014 (US$68 billion) and 2015 (US$65 billion).

The report said: “Developing Asia’s higher FDI inflows were mainly the result of a sharp increase in the value of cross-border mergers and acquisition sales, from US$42 billion in 2016 to US$73 billion in 2017.

“This mainly reflected the cross-border mergers and acquisition activities of foreign companies in Hong Kong, India and Singapore.”

Globally, FDI flows tumbled 16 per cent last year, to an estimated US$1.52 trillion, from a revised US$1.81 trillion in 2016, according to Unctad. “FDI recovery continues to be on a bumpy road,” said Unctad secretary-general Mukhisa Kituyi.

Unctad’s investment division director James Zhan said: “The decline of global FDI flows is in stark contrast to other macroeconomic variables, such as gross domestic product and trade growth, which saw substantial improvements in 2017.”

A slump in FDI flows to developed countries (minus 27 per cent) was the principal factor behind the global decline, the report said.

Both Europe (minus 27 per cent) and North America (minus 33 per cent) saw a strong drop in FDI inflows last year, due mainly to a return to levels of inflows in Britain and the United States after spikes in 2016. The declines were tempered by an 11 per cent growth in FDI flows to other developed economies, especially Australia.

FDIs that went into transition economies in Eastern Europe fell 11 per cent. Inflows were flat in Africa but up 2 per cent in Asia – excluding Japan – and 3 per cent in Latin America. “Developing Asia regained its position as the largest FDI recipient region in the world, followed by the European Union and North America,” the report said.

The report said cross-border mergers and acquisition deals fell 23 per cent to US$666 billion last year, weighed down by a 30 per cent slump in developed economies. But such activities in developing economies rose 44 per cent to US$100 billion.

Unctad expects the pick-up in the global economy and trade to lift global FDI inflows to almost US$1.8 trillion this year but said “elevated political risks and policy uncertainty” could hamper “the scale” and alter the “contours” of the FDI recovery.
Source: The Straits Times