UNCTAD: Developing economies in Asia received 40% of global foreign investment inflows

Foreign direct investment (FDI) flows to developing countries in Asia increased 19% to a record $619 billion in 2021, shows UNCTAD’s World Investment Report 2022, Report informs.

“It is for the third consecutive time investment flows to Asia increased despite the COVID-19 pandemic that hurt the global FDI by 35% in 2020. Developing economies in Asia received 40% of global foreign investment inflows,” reads the report.

“FDI flows to developing economies in Asia during the pandemic have bucked the global trend and underscored the resilience of developing economies in Asia,” said James Zhan, director of UNCTAD’s investment and enterprise division.

Although the upward trend in 2021 was experienced across most subregions – South Asia was the only exception – just six countries attracted more than 80% of FDI inflows.

China was the main recipient, followed by Hong Kong (China), Singapore, India, the United Arab Emirates and Indonesia.

Investment flows to East Asia increased by 16% to $329 billion.

FDI growth in China picked up pace in 2021, jumping by 21% to $181 billion, after a 6% increase in 2020. It was powered by strong investment in services and high-tech sectors, where the outlook also remains positive for 2022.

International project finance deals in the country reached a record. One of the largest projects was the construction of a $1 billion data center in Shanghai, sponsored by Singapore-based Princeton Digital Group.

FDI flows to Hong Kong, China grew by 4% to $141 billion, mostly accounted for by companies reinvesting their earnings ($108 billion).

South-East Asia saw FDI rise 44% to $175 billion.

South-East Asia resumed its role as an engine of growth for FDI in developing Asia and globally, with increases across most countries in the subregion. The rise was underpinned by strong investment in manufacturing, the digital economy and infrastructure.

Singapore, the subregion’s largest recipient, saw inflows up by 31% to $99 billion, driven by a jump in cross-border mergers and acquisitions (M&As).

The largest deal was the $34 billion merger of US-based Altimeter Growth Corp with Grab, a Singapore-based software publisher.

Announced greenfield projects in the city-state nearly doubled to $13 billion, with a $4 billion project by GlobalFoundries, based in the United Arab Emirates, to build a chipmaking plant in Singapore.