1. 1
BANGKOK 2011
“FDI Trends, Opportunities, and
Implications”
FDI in LDCs, Landlocked Economies
and Economies in Transition in the Asia and the Pacific
Bangkok, Thailand, 1 December 2011
DR HENRY LOEWENDAHL
fDi Intelligence, Financial Times Ltd
2. 2
About the presentation
• Focus 16 countries:
• Armenia, Azerbaijan, Bangladesh, Bhutan,
Cambodia, Georgia, Kazakhstan, Kyrgyzstan,
Lao, Mongolia, Myanmar, Nepal, Tajikistan,
Timor, Turkmenistan, Uzbekistan
• Focus on greenfield FDI (GFDI)
• Strong economic development benefits
• Main target of investment promotion agencies
• Data from fDi Markets*
• Presentation covers:
• Introduction to FDI
• FDI trends
• FDI performance
• FDI opportunities
• Implications for the region
*Note that it is not possible to track all FDI. The data from fDi Markets includes most major projects and is a barometer of greenfield FDI
trends. Also note that jobs & capital investment data includes announced projects and estimates.
3. 3
Foreign direct investment in LDCs, Landlocked Economies
and Economies in Transition in Asia and the Pacific
INTRODUCTION TO FDI
4. 4
Introduction to FDI
Types of FDI to promote
Type Key sectors Benefits
Greenfield • Natural resources
• Manufacturing
• HQs
• R&D
• Job creation
• Exports
• Import substitution
• Long term capital
inflows
M&A/
Equity
• Sunrise industries
(e.g. software)
• Sunset industries
(e.g. automotive)
• Capital inflows
• Globalization of
economy
• Safeguarded jobs
Alliances /
Partner-
ships
• R&D-intensive
industries
• Services
outsourcing
• Manufacturing
outsourcing
• Technology &
innovation
• Globalization of
SMEs
• Exports & jobs
(via contracts)
Privatizati
on
• Utilities
• Finance
• Infrastructure
• Capital inflows
• Reduced debt
• Foreign expertise
Type of FDI by sector and benefits
0 50 100
Immigrant/Diaspora
Equity (eg SWFs)
M&A (new)
Alliances & partnerships
Re-investment (following
M&A)
Re-investment (existing
subsidiary)
Joint ventures
Greenfield (new
establishment)
% IPAs targeting FDI by type
Source: WAVTEQ Ltd study for Quebec Ministry of Development, Economy, Innovation and Export, 2010
5. 5
Foreign direct investment in LDCs, Landlocked Economies
and Economies in Transition in Asia and the Pacific
FDI TRENDS IN THE 16 COUNTRIES
6. 6
23.5 23.3
19.7
1.35%
1.97%
1.58%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0
5
10
15
20
25
2008 2009 2010
%
of
global
FDI
flows
$
billion
FDI flows % of global FDI flows
FDI trends in 16 countries
Official FDI flows
Source: fDi Intelligence, based on UNCTAD data
• $20 billion per annum FDI flows to the region
• Kazakhstan accounts for over 50% of the FDI flows (with Turkmenistan, two-thirds)
• Excluding these 2 countries, global share of the region increased to 0.6% in 2010
7. 7
305
259
220
250
1.8% 1.8%
1.5%
1.7%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
0
50
100
150
200
250
300
350
2008 2009 2010 2011*
%
of
global
projects
No.
FDI
projects
No. GFDI projects % of global GFDI projects
FDI trends in 16 countries
Greenfield FDI projects
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. *to 18 November 2011
• Strong growth in number of FDI projects in 2011 (but below 2008 peak)
• Global share of the 16 countries in FDI projects was same as FDI flows in 2010
• Kazakhstan accounted for 20% of projects (compared to 50% of FDI flows)
8. 8
65,149
56,234
38,043
45,292
1.7%
2.2%
1.5%
2.0%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2008 2009 2010 2011*
%
of
global
FDI
jobs
created
No.
FDI
jobs
created
No. GFDI projects % of global GFDI projects
FDI trends in 16 countries
Greenfield FDI job creation
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. *to October 2011
• Strong growth in number of FDI jobs created in 2011 YTD
• Global share of jobs was same in 2010 as FDI flows and projects
• Kazakhstan accounted for 28% of FDI jobs in the 16 countries over the period
9. 9
GFDI trends by country
2003 to mid-November 2011
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Jobs and capital investment data to October 2011
10. 10
GFDI trends by source region
2003 to mid-November 2011
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Jobs and capital investment data to October 2011
• The 16 countries are attracting FDI from all main regions of the world
• Asia-Pacific, Western Europe, and Rest of Europe (primarily Russia and Turkey)
are the main sources of FDI
• North America is less important as a source
11. 11
• Russia has been the leading investor in the 16 countries since 2003 by no. projects
• In 2011 YTD top investors are India/UK/US followed by Russia and Japan
• Fastest growing investors are Vietnam, India, China, Malaysia, and Japan
GFDI trends by source country
2003-September 2011 – PROJECTS
FDI projects in the 16 countries by
source country (origin of the investment)
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.
12. 12
• Turkey is a much more important investor in job creation as is China and UAE
• US is less important (US companies have smaller projects due to sector focus)
• UK, Germany, Singapore and Japan are leading countries in 2011 YTD
GFDI trends by country
2003-September 2011- JOBS
FDI job created in the 16 countries by
source country (origin of the investment)
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.
13. 13
• Fastest growing sectors in 2011 in the 16 countries are: financial services, textiles, food
& tobacco, & chemicals
GFDI trends by sector
2003-September 2011
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.
14. 14
0% 10% 20% 30% 40% 50% 60%
Other factors
Finance Incentives or Taxes or Funding
Skilled workforce availability
Lower Costs
Regulations or business climate
Natural Resources
Proximity to markets or customers
Domestic Market Growth Potential
Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Based on sample of 154 FDI projects
Investment motives (% of companies citing factor in the 16 countries)
Location determinants
GFDI in 16 countries (2003-Sept 2011)
• FDI driven primary by access to the domestic market
• Access to the regional market and to natural resources also very important
• The regulatory and business climate is more important than for FDI in the rest of world
• Low proportion citing costs and skilled workforce indicates limited efficiency-seeking FDI
15. 15
Foreign direct investment in LDCs, Landlocked Economies
and Economies in Transition in Asia and the Pacific
FDI PERFORMANCE OF THE 16
COUNTRIES
16. 16
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Population
(2010/2011)
GDP (2010) FDI flows (2008-
10)
FDI projects
(2008-Sept 11)
FDI jobs (2008-
sept 11)
Global share of 16 countries
Population, GDP, and FDI
• The 16 countries account for 321 million people with a combined GDP of $530 billion
• They attracted $66.2 billion FDI flows in the last three years
• An estimated 200,000 jobs were created by greenfield projects since 2008
• Region outperforms the world relative to GDP but underperforms relative to population
Share of the 16 countries in world
population, GDP, and FDI
Source: fDi Intelligence, Financial Times Ltd.
17. 17
Country performance
Population, GDP, and FDI
GDP Population FDI flows
FDI
projects
FDI jobs
Georgia 2.2% 1.4% 4.2% 12.7% 13.9%
Kazakhstan 26.1% 5.2% 57.2% 19.1% 27.2%
Mongolia 1.2% 0.9% 4.7% 2.3% 1.2%
Armenia 1.8% 1.0% 3.4% 6.2% 1.3%
Azerbaijan 10.2% 2.8% 1.6% 13.4% 6.7%
Cambodia 2.2% 4.2% 3.2% 13.2% 9.6%
Turkmenistan 5.3% 1.6% 10.9% 3.7% 6.3%
Bhutan 0.3% 0.2% 0.1% 0.7% 0.3%
Kyrgyzstan 0.9% 1.7% 1.1% 1.4% 1.8%
Lao 10.6% 2.0% 1.3% 5.9% 4.2%
Tajikistan 1.1% 2.4% 0.7% 1.5% 2.3%
Timor 0.1% 0.3% 0.6% 0.1% 0.5%
Uzbekistan 7.3% 8.7% 3.4% 6.8% 9.8%
Nepal 3.0% 8.3% 0.1% 2.6% 1.2%
Myanmar 8.1% 15.0% 3.5% 2.3% 2.7%
Bangladesh 19.8% 44.3% 4.1% 8.0% 10.9%
Share in GDP, population and FDI of the 16 countries*
Source: fDi Intelligence, Financial Times Ltd. *GDP 2010, Population
2010/2011, FDI flows 2008-10, FDI projects and jobs 2008-Sept 2011
Comparing GDP and Population
with FDI attracted:
• Best performing: Georgia,
Kazakhstan, Mongolia
• Above average: Armenia,
Azerbaijan, Cambodia, Turkmenistan
• Average performance: Bhutan,
Kyrgyzstan, Lao, Tajikistan, Timor,
Uzbekistan
• Weak performance: Nepal,
Myanmar, Bangladesh
18. 18
Foreign direct investment in LDCs, Landlocked Economies
and Economies in Transition in Asia and the Pacific
FDI OPPORTUNITIES
19. 19
0% 100% 200% 300% 400%
Azerbaijan
Georgia
Uzbekistan
Lao
Bangladesh
Cambodia
Kazakhstan
Mongolia
Growth FDI projects
Growth FDI jobs
Source: fDi Intelligence FDI Forecasting Model
Regional FDI forecasts
Greenfield FDI 2010-2015
• Number of FDI projects per annum forecast to double by 2015
• Job creation to increase from an estimated 29,000 in 2010 to over 50,000 in 2015
• Greenfield FDI in the region to grow much faster than in the rest of the world
20. 20
0% 50% 100% 150% 200% 250% 300%
Hotels & Tourism
Metals
Automotive Components
Chemicals
Leisure & Entertainment
Electronic Components
Real Estate
Medical Devices
Industrial Machinery
Building & Constr. Materials
Food, Beverages & tobacco
Consumer Electronics
Space & Defence
Healthcare
Minerals
Coal, Oil and Natural Gas
Wood Products
Renewable Energy
Source: fDi Intelligence FDI Forecasting Model
Global sector forecast
Greenfield FDI projects, 2010-2015
Forecast growth in GFDI projects (sectors with above average growth)
21. 21
FDI opportunities
• 1.5% of FDI firms globally are currently considering FDI in the 16
countries (similar to share of global FDI projects):
• India, UK, and US are main source countries currently considering
FDI in the region (=nearly one-third of companies)
• China, Malaysia, Japan, South Korea, and Thailand have the
next highest number of companies considering FDI in the region
(=over one-third of companies)
• Coal, Oil & Gas and Financial Services are top 2 sectors
companies are considering FDI in (nearly one-quarter of
companies)
• Industrial, Food & Beverages, Real Estate & Hotels,
Automotive, Electronics, Renewable Energy, Professional
Services, and Textiles are the next main sectors of current
investor interest
Source: fDi Markets ‘Investor Signals’, fDi Intelligence, Financial Times Ltd
22. 22
FDI opportunities
Firms with current expansion plans
Company with expansion Source country Sector Target countries for greenfield FDI Amount
Guangxi LiuGong Mach. China Machinery Cambodia
Guangzhou Fortunique China Plastics Cambodia, Myanmar
Club Mediterranee France Hotels Cambodia
Punjab National Bank India Banking Bangladesh
Vandana Luthra India Healthcare Nepal $9m
Nestor Pharmaceuticals India Pharma Myanmar
Lava International India Telecom Bangladesh $15m
Ciputra Indonesia Real estate Myanmar, Laos
Mizuho Financial Japan Finance Burma, Laos and Bangladesh
Master Additives Malaysia Chemicals Cambodia, Myanmar NA
Tedex Poland Chemicals Georgia $5m
Woori Finance South Korea Banking Cambodia $50m
Hana Bank South Korea Banking Cambodia, Kazakhstan, Uzbekistan
Logitech Switzerland Electronics Bangladesh, Nepap
Chang Hwa Taiwan Banking Cambodia, Laos
Six Senses Thailand Hotels Bhutan
Avolus UK Airline CIS
Chevron USA Gas Bangladesh $1 bn
Handster USA Software CIS
Petrovietnam Vietnam Chemicals Cambodia, Myanmar, Laos
Source: fDi Markets ‘Investor Signals’, fDi Intelligence, Financial Times Ltd
23. 23
Foreign direct investment in LDCs, Landlocked Economies
and Economies in Transition in Asia and the Pacific
IMPLICATIONS
24. 24
Implications for the region
• The 16 countries have population over 320 million and GDP over $0.5 trillion
• Relative to GDP they outperform rest of world in attracting FDI
• Relative to population, they underperform, implying weakness in attracting job creating
FDI especially in manufacturing & export services
• GFDI projects in region forecast to double in 2015 compared to 2010
• Russia, US, UK, Turkey, Germany, India, China, Japan, and South Korea like to be the
major and fastest growing sources of FDI in the 16 countries
• Coal, Oil & Gas and Financial Services to remain most important sectors
• Textiles, Metals, Food & Drink, Industrial Machinery, Real Estate & Hotels, Building &
Construction Materials and increasingly Chemicals, Automotive, Electronics, and
Renewable Energy to offer growing FDI opportunities
• Current country performance indicates future potential:
• Georgia, Kazakhstan & Mongolia are the best performing to date in attracting FDI
• Nepal, Myanmar, and Bangladesh have potential to attract much more FDI
25. 25
CONTACTS
Dr Henry Loewendahl
Senior Advisor, Representing fDi Intelligence, Financial Times Ltd
Managing Director, WAVTEQ Ltd
E-mail: henry.loewendahl@wavteq.com
Skype/MSN: hloewendahl
Linkedin: Henry Loewendahl
M: +44(0) 792 474 6365
W: www.fdiintelligence.com
W: www.wavteq.com
