Foreign investment in S’pore up 61.3% last year: report
And investment out of S’pore up 71.3% to US$8.6b
By CHUANG PECK MING
WHILE direct investment flowing into China dipped in 2006, the first time in three years for the emerging economic giant, investments which headed for Singapore soared 61.3 per cent to US$24.2 billion from the year before.
The increase was the highest in Asia after Taiwan (356.9 per cent) and India (152.9 per cent), according to estimates by Japan’s External Trade Organisation.
China, which saw incoming direct investments slide 1.3 per cent to US$78.1 billion - the last time they fell was in 2003, by 4.5 per cent - still captured the biggest chunk of the investments flowing into Asia last year. Hong Kong (US$42.9 billion) had the second biggest share, followed by Singapore.
Investments flowing out of Singapore in 2006 saw an even bigger hike - up 71.3 per cent from the previous year to US$8.6 billion. In comparison, investment flowing out of China rose 57.7 per cent to US$17.8 billion. Outward direct investments for East Asia, excluding Japan, jumped 58.7 per cent to US$91.4 billion last year, from US$57.6 billion in 2005.
Inward direct investments in East Asia were 15.9 per cent higher at US$174.4 billion last year, accounting for 12.3 per cent of global investments. Apart from China, South Korea was the only other Asian country where foreign direct investments (FDI) dropped.
‘Factors behind the decline (in China) included rising labour costs and changes in government policy in favour of foreign capital, such as a reduction in VAT rebates, all of which altered the investment environment,’ Jetro says.
India saw inward direct investments multiplied 2.5 times to US$16.9 billion. Worldwide, the US continued to attract the largest share of FDI in 2006. Direct investments into the US rose sharply by 65.7 per cent to US$180.6 billion.
More striking were the US$235 billion in investments flowing out of the US, a sharp reversal from the negative US$7.7 billion the year before. ‘The American Jobs Creation Act of 2004 spurred companies to repatriate profits in 2005, which resulted in a net minus investment in reinvested earnings,’ the report says. ‘No such special factor was in play in 2006.’
According to Jetro estimates, global foreign direct investments (balance of payments and inward FDI basis) increased 25.8 per cent to US$1,422 billion, topping the US$1 trillion mark for a second straight year. The figure was US$1,130 billion in 2005.
Source : Business Times - 14 Aug 2007
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