According to preliminary estimates released by UNCTAD today, foreign direct investment (FDI) into developing Asia(1) reached a record level of $141 billion in 2000 (figure 1). The 44 per cent increase over 1999 primarily resulted from an unprecedented FDI boom in Hong Kong, China. FDI flows into China, at $41 billion, remained relatively stable compared to the $40 billion of the previous year.
The FDI share of total investment in developing Asia is increasing: FDI inflows as a percentage of gross domestic capital formation reached more than 9% by the end of the 1990s, more than twice as high as at the beginning of the decade (figure 2). This share, however, is smaller than in Latin America.
One distinct feature of FDI trend in the region was that the wave of cross-border mergers and acquisitions (M&As) tapered off (although their level remained higher than in 1997-1998), while greenfield investment slowly resumed its growth. More specifically, cross-border M&As in South, East and South-East Asia declined from $28 billion in 1999 to $21 billion in 2000. This reduction reflects both the slow-down in the rate of asset disposals and the lower pressure for corporate restructuring, particularly in the countries hit by the financial crisis of the 1990s (i.e., Indonesia, Malaysia, the Philippines, Republic of Korea and Thailand).
The forthcoming "World Investment Report 2001", to be launched by UNCTAD in September, will further analyze these estimates and provide details at country, region and international levels. The main theme of this year´s Report will be FDI and linkages to local enterprises.
