• UNCTAD WORLD INVESTMENT REPORT 2015:

    Multinational firms FDI catalysts

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    FOREIGN direct investment are rising in East and Southeast Asian economies, including the Philippines, and playing a big role in this development are the investments in infrastructure by multinational enterprises, according to a United Nations body.

    In its “World Investment Report 2015,” the United Nations Conference on Trade and Development (Unctad) said the connectivity between countries and economies is intensifying across a number of parameters.

    In particular, infrastructure is a primary component of regional connectivity especially in electricity, telecommunications, transport and water industries, it said.

    “More recently, new initiatives at national, regional and international levels are increasing the prospects for expansion of infrastructure investment and connectivity across the region—and beyond,” the report read.

    International investment in infrastructure has been on the rise, with intra­-regional FDI being a major driving force in East and Southeast Asia, it noted.

    The report showed that inflows to East Asia rose by 12 percent to $248 billion in 2014, and by 5 percent to $133 billion in Southeast Asia.

    FDI net inflows reached an all-time high of $6.3 billion in the Philippines last year, up 65.9 percent from $3.7 billion in 2013.

    Multinational enterprises are major investors in infrastructure and contribute to enhanced regional connectivity, Unctad said.

    Inward FDI stock data of some major economies in the region demonstrate that the overall scale of foreign investment in infrastructure in some economies is quite large, Unctad noted.

    In particular, the report noted that Metro Pacific Investments Corp., an affiliate of Hong Kong-based First Pacific Company Ltd., is one of the leading infrastructure investment firms in the Philippines.

    “With businesses in electricity, rail, road and water, its total assets amounted to $4.5 billion in 2013,” it said.

    An estimated 45 percent of outward investment by Asian multinationals in infrastructure industries targeted their own region, the report noted.
    “Intra-­regional projects accounted for a much higher share in cross-­border mergers and acquisitions than announced in greenfield projects,” it said.

    The report noted that one example of cross-boarder M&As in the Philippines is the transaction involving Angat Hydropower Corp., a subsidiary of Korea Water Resources Corp., which took over a hydroelectric plant in Bulacan province for $440 million late last year.
    The FDI numbers consistently reflect under reporting when it comes to the full extent of multinational participation in infrastructure connectivity, Unctad added.

    “A fuller picture reveals that the contributions of multinationals through non­equity and mixed forms such as build, operate and transfer are significant in the region. In many cases, a public-­private partnership is developed,” it said.

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