Mergers, acquisitions valued at $4.3b last year

Mergers, acquisitions valued at $4.3b last year

JAKARTA (JP): Indonesia booked a dramatic increase in the
value of mergers and acquisitions to $4.3 billion last year,
according to the latest world investment report published by the
United Nations Conference on Trade and Development (UNCTAD) on
Tuesday.

The annual report says that 80 percent of the merger and
acquisition ended with foreigners as the majority stakeholders.
At the same time, Indonesian companies have purchased over $2.4
billion through merger and acquisition overseas, it says.

As with other crisis-hit countries in the region such as South
Korea, Thailand, the Philippines and Malaysia, cross-border
mergers and acquisitions would continue to dominate the flow of
foreign direct investment (FDI) this year.

"The value of cross-border mergers and acquisitions in
Indonesia has reached over $1 billion during the first half of
this year," it added.

Currency depreciations have increased the attractiveness of
the affected Asian economies to foreign investors by lowering the
production costs, says World Investment Report 1998: Trends and
Determinants issued by UNCTAD.

The report says overall FDI flows in the five Asian economies
most affected by the crisis remained at a level similar to that
of 1996.

There were moderate decreases in FDI flows to Indonesia,
Malaysia and the Philippines and no change in South Korea, while
those to Thailand increased by over a half, although Thailand was
the first Asian country to be stricken by the crisis.

The report also said FDI inflows to Indonesia were the third
highest in the Asian region last year and reached US$ 5.35
billion, dropping from $6.19 billion in 1996. 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 $45.3 billion from $40.8 billion in 1996,
it said.

Inflows to Singapore, second highest in the region, also
reached a record $10 billion last year, up from $9.4 billion in
the previous year.

Malaysia followed Indonesia with $3.75 billion, a fall from
$4.6 billion in 1995.

The report also notes increasing inflows to Thailand. FDI to
Thailand surged by 58.7 percent to $3.6 billion last year from
$2.2 billion in the previous year.

According to the report, FDI inflows to developing South,
East, and Southeast Asia rose 8 percent last year to a record
US$87 billion, led primarily by increased flows to China.

The report says the amount represents 57 percent of all FDI to
developing countries.

The report stated FDI flows into Asia and the Pacific this
year may at best remain the same as in 1997, largely due to the
Asian financial crisis.

This would be the first time since 1985 that FDI flows into
this region did not rise.

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 $359
billion from $283 billion in 1995.

FDI inflows to developed countries also rose slightly to $233
billion from $195 billion.

In commenting on the report, Hadi Soesastro, Director of
Studies of the Centre for the Strategic and International Studies
(CSIS) said that FDI to Indonesia was expected to drop almost by
50 percent this year to around $3 billion due to the uncertainty
in the country's political, economy and social stability. (gis)