Foreign investment in up 1% in 1999: UN

Foreign investment in up 1% in 1999: UN

GENEVA (Reuters): Foreign direct investment (FDI) in developing Asian countries rose 1 percent last year despite fears of a large drop after the region's financial crisis, United Nations analysts said on Wednesday.

In a report by the UN trade and development agency UNCTAD, they said investment prospects for Asia remained bright against a background of economic recovery, widespread liberalization and economic restructuring -- and China's expected entry into the World Trade Organization.

The report said preliminary estimates showed 1999 FDI flows into Asia totaled some US$91 billion, though some countries did much better than others.

China, throughout the 1990s the top FDI recipient in the region, saw a drop of nearly eight percent to a total of just over $40 billion, said the report -- to be presented in fuller form at UNCTAD's four-yearly summit in Bangkok next month.

Among the five countries most affected by the 1997 crisis, South Korea saw a boom in FDI of nearly 55 percent to a total of $8.5 billion, while Malaysia held steady at $3.8 billion against $3.7 billion in 1998.

UNCTAD said flows to Thailand, where the crisis began, were down 15 percent in 1999 to a total of $5.8 billion.

But this was due partly to the flattening of a wave of massive recapitalization in the troubled banking sector which reached exceptional highs in 1998, the agency said.

Investment in the Philippines fell to $900 million from $1.7 billion in 1998, and was also lower in Indonesia, for which the report gave no figures.

Singapore saw an increase of 20 percent to $8.7 billion, while Hong Kong received $8.2 billion against $7.8 billion in 1998. Both economies were largely spared the worst effects of the financial crisis.