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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. BANGKOK 2011. About the presentation.

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BANGKOK 2011

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  1. “FDI Trends, Opportunities, and Implications” FDI in LDCs, Landlocked Economiesand Economies in Transition in the Asia and the Pacific Bangkok, Thailand, 1 December 2011 DR HENRY LOEWENDAHL fDi Intelligence, Financial Times Ltd BANGKOK 2011

  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. Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the PacificINTRODUCTION TO FDI

  4. Introduction to FDITypes of FDI to promote Type of FDI by sector and benefits % IPAs targeting FDI by type Source: WAVTEQ Ltd study for Quebec Ministry of Development, Economy, Innovation and Export, 2010

  5. Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the PacificFDI TRENDS IN THE 16 COUNTRIES

  6. FDI trends in 16 countriesOfficial FDI flows • $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 Source: fDi Intelligence, based on UNCTAD data

  7. FDI trends in 16 countriesGreenfield FDI projects • 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) Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. *to 18 November 2011

  8. FDI trends in 16 countriesGreenfield FDI job creation • 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 Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. *to October 2011

  9. GFDI trends by country2003 to mid-November 2011 Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Jobs and capital investment data to October 2011

  10. GFDI trends by source region2003 to mid-November 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 Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Jobs and capital investment data to October 2011

  11. GFDI trends by source country2003-September 2011 – PROJECTS • 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 FDI projects in the 16 countries by source country (origin of the investment) Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.

  12. GFDI trends by country2003-September 2011- JOBS • 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 FDI job created in the 16 countries by source country (origin of the investment) Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.

  13. GFDI trends by sector2003-September 2011 • Fastest growing sectors in 2011 in the 16 countries are: financial services, textiles, food & tobacco, & chemicals Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.

  14. Location determinantsGFDI 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 Investment motives (% of companies citing factor in the 16 countries) Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Based on sample of 154 FDI projects

  15. Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the PacificFDI PERFORMANCE OF THE 16 COUNTRIES

  16. Global share of 16 countriesPopulation, 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. Country performancePopulation, GDP, and FDI Share in GDP, population and FDI of the 16 countries* • 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 Source: fDi Intelligence, Financial Times Ltd. *GDP 2010, Population 2010/2011, FDI flows 2008-10, FDI projects and jobs 2008-Sept 2011

  18. Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the PacificFDI OPPORTUNITIES

  19. 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 Source: fDi Intelligence FDI Forecasting Model

  20. Global sector forecast Greenfield FDI projects, 2010-2015 Forecast growth in GFDI projects (sectors with above average growth) Source: fDi Intelligence FDI Forecasting Model

  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. FDI opportunitiesFirms with current expansion plans Source: fDi Markets ‘Investor Signals’, fDi Intelligence, Financial Times Ltd

  23. Foreign direct investment in LDCs, Landlocked Economies and Economies in Transition in Asia and the PacificIMPLICATIONS

  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. 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

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