FDI flows to Vietnam post sharpest decline in Asia: Financial Times

Foreign direct investment (FDI) in projects in Asia Pacific in 2010 has decreased for the second consecutive year despite the economy of this region witnessing a “V” recovery after the global financial crisis.

However, the FDI Intelligence Department under the Financial Times noted that in 2010, the rate of decline in FDI was slower 6 percent compared with 16 percent in 2009. This data provided the first information on the trends of FDI in 2010, showing that the capital inflow may be less “exciting” than previous predictions and inconsistent with the average economic growth at 8.2 percent of Asia, excluding Japan.

This data was quite a contrast to the more optimistic predictions in July from the United Nations Conference on Trade and Development (UNCTAD) that the capital inflows have begun to recover and be able to accelerate.

UNCTAD estimated that FDI inflows into Asia, excluding Australia and the Pacific region declined 17 percent to $233 billion in 2009, lower than the global decline of 37 percent. According to detailed data from the FDI Intelligence Department, the total investment projects in Asia Pacific reached in 4,136, lower than 4,402 levels by 2009. Also, the total number of projects in 2010 was lower than 21 percent from record levels set in 2008 with 5,261 projects.

Thanks to sustained economic growth and stable political situation, China has attracted 1,314 projects, up 147 over 2009′s projects. Meanwhile, India with economic and political instability gained only 744 projects. Australia has taken over Singapore’s position to become the third best destination of FDI projects in the region with 320 projects, up 66 projects, thanks to positive results of the commodity industries.
Malaysia also reached record levels increasing from 158 to 189 projects, and Japan won a smaller increase, from 163 to 180 projects. Indonesia entered the top 10 with numbers for the first projects it achieved, even considering the total number of projects up by only 8 compared to 2009.

The nation with the most reduced amount of FDI, was Vietnam, from 256 down to only 173 projects. The decline reflected concern about the management of the economy facing high inflation, local currency values were low and financial situation of stress. Similarly, projects in Thailand fell 67 projects to 209 projects by the constant uncertainty about politics. The Philippines has been excluded from the list of top 10 destinations for FDI projects when the amount of FDI projects decreased by 21 to 98 projects despite the economic situation and politics was improved with the new presidential elections in May 5. – DDDN

Tags: invest in Vietnam, Vietnam FDI, Vietnam FDI 2010, Vietnam investment