Investment in Asian tigers down 12%

Investment in Asian tigers down 12%

GENEVA (Reuters): Foreign direct investment (FDI) in five Asian countries most hit by the region's crisis fell to US$15.4 billion in 1998 from $17.5 billion the year before, a 12 percent drop, a United Nations agency said on Thursday.

But the UN Conference on Trade and Development (UNCTAD) said FDI inflows had varied considerably from country to country and in 1999 were likely to remain within the range of $10-$17 billion posted by the five "tigers" during the past decade.

The investment climate in Indonesia may need more time to recover, according to the agency.

FDI in the five countries -- Indonesia, Malaysia, the Philippines, South Korea and Thailand -- peaked at $17.5 billion in 1996 and 1997, according to the Geneva-based UNCTAD.

"Newly released data gathered by UNCTAD reveals that, in 1998, the five Asian countries most affected by the crisis experienced an overall decline in FDI of some $2 billion, or 12 percent," it said.

"Inflows into the Republic of Korea and Thailand showed dramatic increases -- almost doubling; inflows into the Philippines remained stable; Malaysia showed a decline; while Indonesia suffered divestment for the first time since 1974."

UNCTAD said that FDI flows to the five countries as a group were "remarkably resilient" when compared with foreign bank lending and foreign portfolio equity investment before and during the financial crisis.

"Barring an unforeseen worsening of the crisis, FDI inflows in 1999 are likely to remain within the range of those during the 1990s ($10 billion to $17 billion), although the performance of individual countries is likely to differ," it added.

While Indonesia's investment climate may need more to recover, Malaysia appeared to be well-positioned.

The value of manufacturing FDI projects approved in Malaysia -- the largest FDI recipient among the five during the 1990s -- posted a 14 percent increase last year, according to UNCTAD.