Presentation on theme: "1 BANGKOK 2011 “FDI Trends, Opportunities, and Implications” FDI in LDCs, Landlocked Economies and Economies in Transition in the Asia and the Pacific."— Presentation transcript:
1 BANGKOK 2011 “FDI Trends, Opportunities, and Implications” FDI in LDCs, Landlocked Economies and Economies in Transition in the Asia and the Pacific Bangkok, Thailand, 1 December 2011 DR HENRY LOEWENDAHL fDi Intelligence, Financial Times Ltd
2 About the presentation Focus 16 countries: Armenia, Azerbaijan, Bangladesh, Bhutan, Cambodia, Georgia, Kazakhstan, Kyrgyzstan, Lao, Mongolia, Myanmar, Nepal, Tajikistan, Timor, Turkmenistan, Uzbekistan Focus on greenfield FDI (GFDI) Strong economic development benefits Main target of investment promotion agencies Data from fDi Markets* Presentation covers: Introduction to FDI FDI trends FDI performance FDI opportunities Implications for the region *Note that it is not possible to track all FDI. The data from fDi Markets includes most major projects and is a barometer of greenfield FDI trends. Also note that jobs & capital investment data includes announced projects and estimates.
3 Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the Pacific INTRODUCTION TO FDI
4 Introduction to FDI Types of FDI to promote TypeKey sectorsBenefits Greenfield Natural resources Manufacturing HQs R&D Job creation Exports Import substitution Long term capital inflows M&A/ Equity Sunrise industries (e.g. software) Sunset industries (e.g. automotive) Capital inflows Globalization of economy Safeguarded jobs Alliances / Partner- ships R&D-intensive industries Services outsourcing Manufacturing outsourcing Technology & innovation Globalization of SMEs Exports & jobs (via contracts) Privatizati on Utilities Finance Infrastructure Capital inflows Reduced debt Foreign expertise Type of FDI by sector and benefits % IPAs targeting FDI by type Source: WAVTEQ Ltd study for Quebec Ministry of Development, Economy, Innovation and Export, 2010
5 Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the Pacific FDI TRENDS IN THE 16 COUNTRIES
6 FDI trends in 16 countries Official FDI flows Source: fDi Intelligence, based on UNCTAD data $20 billion per annum FDI flows to the region Kazakhstan accounts for over 50% of the FDI flows (with Turkmenistan, two-thirds) Excluding these 2 countries, global share of the region increased to 0.6% in 2010
7 FDI trends in 16 countries Greenfield FDI projects Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. *to 18 November 2011 Strong growth in number of FDI projects in 2011 (but below 2008 peak) Global share of the 16 countries in FDI projects was same as FDI flows in 2010 Kazakhstan accounted for 20% of projects (compared to 50% of FDI flows)
8 FDI trends in 16 countries Greenfield FDI job creation Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. *to October 2011 Strong growth in number of FDI jobs created in 2011 YTD Global share of jobs was same in 2010 as FDI flows and projects Kazakhstan accounted for 28% of FDI jobs in the 16 countries over the period
9 GFDI trends by country 2003 to mid-November 2011 Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Jobs and capital investment data to October 2011
10 GFDI trends by source region 2003 to mid-November 2011 Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Jobs and capital investment data to October 2011 The 16 countries are attracting FDI from all main regions of the world Asia-Pacific, Western Europe, and Rest of Europe (primarily Russia and Turkey) are the main sources of FDI North America is less important as a source
11 Russia has been the leading investor in the 16 countries since 2003 by no. projects In 2011 YTD top investors are India/UK/US followed by Russia and Japan Fastest growing investors are Vietnam, India, China, Malaysia, and Japan GFDI trends by source country 2003-September 2011 – PROJECTS FDI projects in the 16 countries by source country (origin of the investment) Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.
12 Turkey is a much more important investor in job creation as is China and UAE US is less important (US companies have smaller projects due to sector focus) UK, Germany, Singapore and Japan are leading countries in 2011 YTD GFDI trends by country 2003-September JOBS FDI job created in the 16 countries by source country (origin of the investment) Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.
13 Fastest growing sectors in 2011 in the 16 countries are: financial services, textiles, food & tobacco, & chemicals GFDI trends by sector 2003-September 2011 Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.
14 Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Based on sample of 154 FDI projects Investment motives (% of companies citing factor in the 16 countries) Location determinants GFDI in 16 countries (2003-Sept 2011) FDI driven primary by access to the domestic market Access to the regional market and to natural resources also very important The regulatory and business climate is more important than for FDI in the rest of world Low proportion citing costs and skilled workforce indicates limited efficiency-seeking FDI
15 Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the Pacific FDI PERFORMANCE OF THE 16 COUNTRIES
16 Global share of 16 countries Population, GDP, and FDI The 16 countries account for 321 million people with a combined GDP of $530 billion They attracted $66.2 billion FDI flows in the last three years An estimated 200,000 jobs were created by greenfield projects since 2008 Region outperforms the world relative to GDP but underperforms relative to population Share of the 16 countries in world population, GDP, and FDI Source: fDi Intelligence, Financial Times Ltd.
17 Country performance Population, GDP, and FDI GDPPopulationFDI flows FDI projects FDI jobs Georgia2.2%1.4%4.2%12.7%13.9% Kazakhstan26.1%5.2%57.2%19.1%27.2% Mongolia1.2%0.9%4.7%2.3%1.2% Armenia1.8%1.0%3.4%6.2%1.3% Azerbaijan10.2%2.8%1.6%13.4%6.7% Cambodia2.2%4.2%3.2%13.2%9.6% Turkmenistan5.3%1.6%10.9%3.7%6.3% Bhutan0.3%0.2%0.1%0.7%0.3% Kyrgyzstan0.9%1.7%1.1%1.4%1.8% Lao10.6%2.0%1.3%5.9%4.2% Tajikistan1.1%2.4%0.7%1.5%2.3% Timor0.1%0.3%0.6%0.1%0.5% Uzbekistan7.3%8.7%3.4%6.8%9.8% Nepal3.0%8.3%0.1%2.6%1.2% Myanmar8.1%15.0%3.5%2.3%2.7% Bangladesh19.8%44.3%4.1%8.0%10.9% Share in GDP, population and FDI of the 16 countries* Source: fDi Intelligence, Financial Times Ltd. *GDP 2010, Population 2010/2011, FDI flows , FDI projects and jobs 2008-Sept 2011 Comparing GDP and Population with FDI attracted: Best performing: Georgia, Kazakhstan, Mongolia Above average: Armenia, Azerbaijan, Cambodia, Turkmenistan Average performance: Bhutan, Kyrgyzstan, Lao, Tajikistan, Timor, Uzbekistan Weak performance: Nepal, Myanmar, Bangladesh
18 Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the Pacific FDI OPPORTUNITIES
19 Source: fDi Intelligence FDI Forecasting Model Regional FDI forecasts Greenfield FDI Number of FDI projects per annum forecast to double by 2015 Job creation to increase from an estimated 29,000 in 2010 to over 50,000 in 2015 Greenfield FDI in the region to grow much faster than in the rest of the world
20 Source: fDi Intelligence FDI Forecasting Model Global sector forecast Greenfield FDI projects, Forecast growth in GFDI projects (sectors with above average growth)
21 FDI opportunities 1.5% of FDI firms globally are currently considering FDI in the 16 countries (similar to share of global FDI projects): India, UK, and US are main source countries currently considering FDI in the region (=nearly one-third of companies) China, Malaysia, Japan, South Korea, and Thailand have the next highest number of companies considering FDI in the region (=over one-third of companies) Coal, Oil & Gas and Financial Services are top 2 sectors companies are considering FDI in (nearly one-quarter of companies) Industrial, Food & Beverages, Real Estate & Hotels, Automotive, Electronics, Renewable Energy, Professional Services, and Textiles are the next main sectors of current investor interest Source: fDi Markets ‘Investor Signals’, fDi Intelligence, Financial Times Ltd
22 FDI opportunities Firms with current expansion plans Company with expansionSource countrySectorTarget countries for greenfield FDIAmount Guangxi LiuGong Mach.ChinaMachineryCambodia Guangzhou FortuniqueChinaPlasticsCambodia, Myanmar Club MediterraneeFranceHotelsCambodia Punjab National BankIndiaBankingBangladesh Vandana LuthraIndiaHealthcareNepal$9m Nestor PharmaceuticalsIndiaPharmaMyanmar Lava InternationalIndiaTelecomBangladesh$15m CiputraIndonesiaReal estateMyanmar, Laos Mizuho FinancialJapanFinanceBurma, Laos and Bangladesh Master AdditivesMalaysiaChemicalsCambodia, MyanmarNA TedexPolandChemicalsGeorgia$5m Woori FinanceSouth KoreaBankingCambodia$50m Hana BankSouth KoreaBankingCambodia, Kazakhstan, Uzbekistan LogitechSwitzerlandElectronicsBangladesh, Nepap Chang HwaTaiwanBankingCambodia, Laos Six SensesThailandHotelsBhutan AvolusUKAirlineCIS ChevronUSAGasBangladesh$1 bn HandsterUSASoftwareCIS PetrovietnamVietnamChemicalsCambodia, Myanmar, Laos Source: fDi Markets ‘Investor Signals’, fDi Intelligence, Financial Times Ltd
23 Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the Pacific IMPLICATIONS
24 Implications for the region The 16 countries have population over 320 million and GDP over $0.5 trillion Relative to GDP they outperform rest of world in attracting FDI Relative to population, they underperform, implying weakness in attracting job creating FDI especially in manufacturing & export services GFDI projects in region forecast to double in 2015 compared to 2010 Russia, US, UK, Turkey, Germany, India, China, Japan, and South Korea like to be the major and fastest growing sources of FDI in the 16 countries Coal, Oil & Gas and Financial Services to remain most important sectors Textiles, Metals, Food & Drink, Industrial Machinery, Real Estate & Hotels, Building & Construction Materials and increasingly Chemicals, Automotive, Electronics, and Renewable Energy to offer growing FDI opportunities Current country performance indicates future potential: Georgia, Kazakhstan & Mongolia are the best performing to date in attracting FDI Nepal, Myanmar, and Bangladesh have potential to attract much more FDI
25 CONTACTS Dr Henry Loewendahl Senior Advisor, Representing fDi Intelligence, Financial Times Ltd Managing Director, WAVTEQ Ltd Skype/MSN: hloewendahl Linkedin: Henry Loewendahl M: +44(0) W: W: