UNCTAD: World Investment Report 2017

Following a record high in 2015, combined Foreign Direct Investment (FDI) flows to developing Asia contracted by 15 per cent to $US443 billion in 2016, a first decline since 2013, according to the latest World Investment Report by the United Nations Conference on Trade and Development (UNCTAD).

In 2016, global FDI flows fell by about two per cent. Investment in developing countries declined even more, by 14 per cent. FDI flows to the economies in South-East Asia dropped by 20 per cent, to $US101 billion. Singapore alone recorded a 13 per cent decline in FDI, to $US62 billion, and flows to Malaysia, the second largest recipient in ASEAN in 2016, declined by 11 per cent, to $US10 billion. Thailand and Indonesia also saw their FDI inflows plunge. In contrast, flows to the Philippines increased by more than 60 per cent to a record high of $US8 billion in 2016.

South Asia was the only sub-region in Asia to avoid a contraction in foreign investment thanks to stable flows to India and a rise in flows to Pakistan. FDI to Pakistan alone rose by 56 per cent, pulled mainly by China’s rising investment in infrastructure related to the Belt & Road Initiative.

Despite this, developing Asia remained the second largest FDI recipient in the world, and FDI inflows are expected to increase again by 15 per cent in 2017, according to UNCTAD.

Conversely, FDI outflows from developing Asia rose by seven per cent, mainly because of FDI outflows from China. Other countries saw a drop in their outflows; outflows from Singapore fell by 24 per cent, FDI flows from Indonesia turned negative, and outward FDI from Malaysia fell sharply by 43 per cent.