FDI flows to Asean down 20% in 2016

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The Association of Southeast Asian Nations (Asean) saw foreign direct investments (FDI) fall by 20 percent to $97 billion last year due to a general decline in flows worldwide and also to developing economies.

Smaller inflows for Indonesia and Singapore were primarily responsible for the drop from $120 billion in 2015, the “Asean Investment Report 2017” showed.

The report was launched by the Asean Secretariat and the United Nations Conference on Trade and Development during the ongoing Asean Business and Investment Summit.

“Inflows to Indonesia and Singapore together declined by about $22 billion, which significantly depressed FDI in the region,” the report states.

The decline was also attributed to significant acquisitions by Indonesian and Singaporean companies of foreign assets in their home countries.

Despite the decline, the report noted some “bright spots” as inflows from a number of major source countries rose.

FDI flows from the European Union rose by 46 percent to $30.5 billion; those from China went up 44 percent to $ 9.2 billion; from the Republic of Korea, 3 percent to $ 6 billion; and from Australia, 77 percent to $ 3.4 billion.

“Significant FDI from the Netherlands, Ireland, Luxembourg, Denmark, Spain and France helped pushed up the investment in Asean from the EU economies,” the report states.

Intra-ASEAN investment likewise rose to a record $24 billion last year due to the growing financial strength and significant cash holdings of corporates in the region and their increasing drive to internationalize.

Singapore, Malaysia and Thailand dominated intra-ASEAN investment, focusing on different industries.
“ASEAN companies were the largest investors in real estate activities, reflecting the growing demand for real estate and growth in the region, in particular in the CMLV (Cambodia, the Lao People’s Democratic Republic, Myanmar and Vietnam) countries,” the report states.

This year’s report also looked at economic zone development in Asean, examining the roles of different players and the development and contribution such zones to industrial agglomeration and enhancing competitiveness.
“With the right environment, economic zones can play a catalytic role in facilitating investments and supporting industrial clusters development,” the report states.

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