By TIOL News Service

NEW DELHI, JUNE 24, 2014: AS per UNCTAD's latest World Investment Report 2014 released by the Indian Finance Secretary, Dr Arvind Mayaram, in New Delhi, Asia continues to be the world's top recipient region of foreign direct investment (FDI), accounting for nearly 30 per cent of global FDI inflows. Total inflows to developing Asia (excluding West Asia) amounted to 2 billion in 2013, 4 per cent higher than in 2012.

FDI inflows to East Asia rose by 3 per cent to 1 billion in 2013. With inflows at 4 billion, China again ranked second in the world and narrowed the gap with the United States, the country with the largest global inflows.

China's outflows grew faster than its inflows: during 2013, FDI outflows increased by 15 per cent, to an estimated 1 billion. Chinese companies made a number of mega-deals, such as the billion CNOOC-Nexen deal in Canada and the billion Shuanghui-Smithfield deal in the United States – the largest overseas deals undertaken by Chinese firms in the oil and gas and food industries, respectively.

Inflows to the Republic of Korea reached billion, the highest level since the mid-2000s, and those to Taiwan, Province of China rose to billion. Hong Kong, Special Administrative Region of China, – the region's other high-income economy and the second largest FDI recipient in East Asia – experienced only 2 per cent growth in FDI inflows to billion. In March 2014, the Chinese Government decided to move the headquarter of CITIC Group to Hong Kong, Special Administrative Region of China, which is likely to help enhance its competitive advantages for attracting investment from leading transnational companies (TNCs), including those from mainland China.

Inflows to the Association of Southeast Asian Nations (ASEAN) countries rose by 7 per cent in 2013, to 5 billion. The rapid growth of FDI inflows to the regional grouping, from billion in 2009 to 8 billion in 2012, has now slowed, the report shows.

In Singapore, the largest FDI recipient in South-East Asia, a number of mega-deals took place in 2013, driving FDI inflows to a new record of billion. With inflows remaining at around billion in the three years up to 2013, Indonesia's performance in attracting FDI has been stable. In Malaysia, inflows increased by 22 per cent to billion. In Thailand, inflows grew to billion; however, many FDI projects there were shelved due to political instability. FDI performance in ASEAN's low-income economies varied: while inflows to Myanmar increased by 16 per cent to .6 billion, those to Cambodia, the Lao People’s Democratic Republic and Viet Nam remained at almost the same level.

Old challenges and new opportunities facing South Asia: In 2013, FDI inflows to South Asia rose by 10 per cent to billion. The subregion's total amount of cross-border M&A sales surged by 70 per cent, while that of recorded greenfield investments dropped by 38 per cent. Outflows from the region slid by nearly three-fourths, to only billion, owing to the prolonged decrease of outflows from India.

India experienced a 17 per cent increase in FDI inflows in 2013, to billion, but macroeconomic uncertainties remain a major concern for investors. The opening up of multi-brand retail in 2012 has not generated the results that were expected.

Bangladesh continued to experience growth in FDI inflows, with manufacturing accounting for a major part of inflows and contributing significantly to employment creation. The garment industry has been the major beneficiary, but continues to face serious challenges in labour standards and skill development. In Pakistan, inflows surged to .3 billion, and foreign investment is set to grow in industries such as telecommunications.

In addition, the potential establishment of the Bangladesh-China-India-Myanmar Economic Corridor and the China-Pakistan Economic Corridor are likely to accelerate infrastructural development by attracting foreign investment in related countries.