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UNITED NATIONS CONFERENCE ON CONFRENCE DES NATIONS UNIES POURTRADE AND DEVELOPMENT LE COMMERCE ET LE DVELOPPEMENT

(UNCTAD) (CNUCED)

PRESS RELEASE

EMBARGO

The contents of this press release and the related Reportmust not be quoted or summarized in the print, broadcast or

electronic media before 26 July 2011, 17:00 GMT

(1 PM New York, 19:00 Geneva, 22:30 Delhi,02:00 27 July 2010 Tokyo)

UNCTAD/PRESS/PR/2011/030Original: English

New records set for foreign direct investment in and outof developing Asia, UNCTAD report reveals

Geneva, 26 July 2011 Developing Asia (excluding West Asia) set new records for FDI inflowsand outflows in 2010, UNCTADs World Investment Report 20111 (WIR11)announces. Thereport, subtitled Non-equity modes of international production and development, was releasedtoday.

In 2010, FDI inflows to South, East, and South-East Asia rose 25 per cent to $300 billion, nearlyone fourth of the global total, the annual report says. However, the performance of the threesubregions and their major economies varied significantly (figure 1):

FDI to the member countries of the Association of Southeast Asian Nations more thandoubled, reaching $79 billion in 2010. Proactive policy efforts at the country level contributed tothe good performance of the group, and seem likely to continue to do so, the report says. SomeASEAN countries, for example, Indonesia and Viet Nam, have gained ground as low-costproduction locations, especially for low-end manufacturing, while the regions least developedcountries (the Lao Peoples Democratic Republic and Cambodia) received increasing inflows,particularly from neighbouring countries.

FDI to East Asia rose to $188 billion, thanks to double-digit growth in inflows to Chinaand Hong Kong (China). Inflows to China climbed by 11 per cent to $106 billion. Chinacontinues to experience rising wages and production costs, so that the trend in widespreadoffshoring of labour-intensive manufacturing to the country has slowed and FDI inflows areshifting towards services. As FDI in real estate booms, the influx of hot money has been aconcern for Chinas policymakers, the report notes.

* Contacts: UNCTAD Communications and Information Unit, +41 22 917 5828, +41 79 502 43 11,unctadpress@unctad.org, http://www.unctad.org/press

1The World Investment Report 2011: Non-equity Modes of International Production and Development(WIR11) (Sales No. E.11.II.D.2, ISBN-13: 978-92-1-112828-4) may be obtained from United Publications Sales andMarketing Office at the address mentioned below or from United Nations sales agents throughout the world. Price:

US$ 95 (50% discount for residents of developing countries, and 75% discount for residents of least developedcountries). This price is for a copy of the printed Report and an accompanying CD-ROM. Customers who wouldprefer to purchase the Report or the CD-ROM separately, or obtain quotations for large quantities should consult thesales offices. Orders or queries should be sent to: United Publications Sales and Marketing Office, 300 E 42ndStreet, 9th Floor, IN-919J New York, NY 10017, United States. tel.: +1 212 963 8302, fax: +1 212 963 3489, e-mail:publications@un.org https://unp.un.org.

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UNCTAD/PRESS/PR/2011/030Page 2

FDI to South Asia declined to $31 billion, reflecting a 32 per cent slide in inflows to Indiaand a 14 per cent drop in flows to Pakistan. By contrast, inflows to Bangladesh, a rising low-costproduction location, increased by nearly 30 per cent to $910 million.

FDI outflows from developing Asia grew by 20 per cent to about $230 billion in 2010, driven byincreased investment coming out of China, Hong Kong (China), the Republic of Korea,Singapore and Taiwan Province of China (figure 1). Outflows from the regions two largest FDIsources Hong Kong (China) and China increased by more than $10 billion each andreached historic highs of $76 billion and $68 billion, respectively. In 2010, China exceededJapan for the first time in outward FDI, as well as in gross domestic product.

The regions share in global FDI outflows has jumped from below 10 per cent before 2008 toaround 17 per cent over the past two years. Companies from developing Asia have beenactively taking over companies in the developed world, including through a number of very largeacquisitions (table 1). However, they are facing increasing political obstacles, as illustrated bythe failed attempts by Huawei (China) to take over 3Com and 3Leaf in the United States.

The significance of electronics in outward FDI from developing Asia reflects the internationalcompetitiveness of Asian companies in this industry, particularly the contract manufacturers,such as Foxconn (Taiwan Province of China) and Flextronics (Singapore). They have become adominant force at the production stage of the global electronics value chain (seeUNCTAD/PRESS/PR/2011/033).

Both inflows to and outflows from developing Asia are expected to continue to grow, the reportpredicts. Countries in the region have made considerable progress in their regional economicintegration efforts. The report says that this will translate into a more favourable investmentclimate for intraregional FDI.

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UNCTAD/PRESS/PR/2011/030Page 3

Figure 1. Top 10 recipients and sources of FDI flows in developing Asia, 2009, 2010(Billions of dollars)

FDI Inflows

3

5

8

5

1

5

36

15

52

95

4

6

7

8

9

13

24

39

69

106

0 20 40 60 80 100 120

Iran, Islamic Republic of

Thailand

Korea, Republic of

Viet Nam

Malaysia

Indonesia

India

Singapore

Hong Kong, China

China

2010

2009

FDI outflows

2

4

6

16

8

17

18

57

64

3

5

11

13

13

19

20

68

76

0.10.9

0 10 20 30 40 50 60 70 80

Viet Nam

Indonesia

Thailand

Taiwan Province of China

India

Malaysia

Korea, Republic of

Singapore

China

Hong Kong, China

2010

2009

Source: UNCTAD, World Investment Report 2011.Note: Countries ranked on the basis of the magnitude of 2010 FDI flows.

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UNCTAD/PRESS/PR/2011/030Page 4

Table 1. Selected M&A mega-deals in manufacturing undertaken by firms from South, East andSouth-East Asia in developed countries, 20072011

Source: UNCTAD, World Investment Report 2011.Abbreviations: M&A merger and acquisition

*** ** ***

Transaction value

($ million)

Tata Steel (India) Corus Group (United Kingdom) Steel 11791 2007

Hindalco Industries Ltd Novelis Inc Aluminum 5789 2007

Doosan (Republic of Korea) Ingersoll-Rand Co. (United States) Construction equipment 4900 2007

Flextronics (Singapore) Solectron Corp. (United States) Electronics 3675 2007

Tata Motors Ltd Jaguar Cars Ltd Motor vehicles 2300 2008

China National Agrochemical Elkem AS Aluminum 2179 2011

Wanhua Polyurethanes (China) BorsodChem Zrt (Hungary) Chemical products 1701 2011

Essar Steel Holdings (India) Algoma Steel Inc. (Canada) Steel 1603 2007

United Spirits (India) Whyte & Mackay (United Kingdom) Food and beverages 1176 2007

Geely Holding Group (China) Volvo (Sweden) Motor vehicles 1500 2010

Acquiring company Target company Industry Year