Indonesia had 3rd highest FDI in Asia last year
Indonesia had 3rd highest FDI in Asia last year
JAKARTA (JP): Foreign direct investment (FDI) inflows to
Indonesia were the third highest in the Asian region last year,
almost doubling to US$8 billion from $4.3 billion in 1995,
according to a new international investment report.
The report published by the United Nations conference on Trade
and Development (UNCTAD) says the amount of inflows follows that
of China and Singapore.
FDI inflows to China were the highest in the region last year,
reaching a record $42.3 billion from $35.8 billion in 1995, says
World Investment Report 1997: Transnational Corporations, Market
Structure and Competition Policy.
Inflows to Singapore, second highest in the region, also
reached a record $9.4 billion last year, up from $6.9 billion in
the previous year.
Malaysia followed Indonesia with $5.3 billion, up from $4.1
billion in 1995.
The report also notes increasing inflows to India. FDI to
India surged by 34 percent to $2.6 billion last year, following a
47 percent rise to $1.9 billion in the previous year.
According to the report, FDI inflows to developing South,
East, and Southeast Asia rose 25 percent last year to a record
US$81 billion.
The report says the amount represents two thirds of all FDI to
developing countries.
At the same time, Asian transnational corporations have become
a major source of outward investment, with FDI outflows rising by
10 percent in 1996 to US$45.7 billion, it says.
This is about 90 percent of total FDI outflows from all
developing countries,
The report says intraregional investment is the principal
single component of FDI for the region.
The report says FDI by major Asian developing economies to
other developing economies in the region reached nearly 40
percent. The portion is larger than that coming from Europe,
Japan or the United States, it says.
"To some extent, this reflects the substantial growth of
leading transnational corporations headquartered in Asia," it
says.
It says about two-thirds of foreign assets of the 50 largest
transnational corporations in developing countries are accounted
for in Asia.
According to the report, UNCTAD's top 50 transnational
corporations list, which includes 34 Asian companies, is
dominated by those from the South Korea, Mexico, Hong Kong and
China.
Among these, Daewoo Corporation of South Korea, in 52nd
position, is the highest-ranking transnational corporation from a
developing country on the list of the world's 100 largest
transnational corporations.
The ranking was based on the corporation's foreign assets.
The report says the world's largest transnational corporations
continue to dominate FDI flows.
"They are boosting their investments into more developing
countries, participating in a rising volume of cross-border
mergers and acquisitions, and entering into an expanding total of
international joint venture agreements," the report says.
Transnational companies from developed countries dominated FDI
flows to developing countries.
Flows of FDI from transnational companies headquartered in
developed countries rose slightly to a new record total of $295
billion from $291 billion in 1995.
FDI inflows to developed countries also rose slightly to $208
billion from $206 billion.
The report states that the United States absorbed two-fifths
of total inflows to developed countries. American transnational
corporations were also by far the largest source of FDI with
outlays of $85 billion, it says.
The report says that market access is the most important
motive, "rather than the opportunity, for example, to engage low-
cost labor".
The selection of locations by leading transnational companies
for foreign investment is driven by considerations of market size
and growth, and earnings prospects.
Factors relating to the overall business environment also
determine the choice of location, it says.
These include political and social stability, the legal
framework, the quality of the work force and infrastructure, and
local availability of goods and services. (das)