US investment growth in Singapore lags Asia
By CHUANG PECK MING
(SINGAPORE) There were some surprises on the US-Singapore foreign direct investment scene in 2007. Unlike in past years, US investment in Singapore in 2007 grew more slowly than that in China, India and Thailand - though Singapore remained the second-largest Asian destination behind Japan.
The reverse was true for investment in the opposite direction - Singapore’s cumulative investment in the US doubled last year to more than US$10 billion in book value, according to the latest figures from the US Department of Commerce.
Cumulative US investment in Singapore still dwarfed Singapore’s investment in the US. But in 2007, US investment in Singapore rose only 11 per cent to US$82.62 billion from 2006 - lower than the average 12 per cent for Asian countries as a whole.
Most US investment in Singapore - US$51.69 billion - was tied up in holding companies. The next biggest chunk - 16.6 per cent - went into manufacturing.
US multinationals seemed more eager last year to pump money into countries with bigger markets - such as Malaysia. They boosted investment across the Causeway by 25 per cent - the third-largest increase in the region - to a cumulative US$15.69 billion.
The biggest jump in US investment in Asia last year was in India. Driven mainly by acquisitions in the information sector, US investment in the rising economic giant surged 48 per cent from a year earlier.
US investment in Asia’s other emerging giant, China, rose 21 per cent, thanks to re-invested earnings in manufacturing, especially computers and electronic products and chemicals. US investment in Thailand soared 37 per cent, largely in petroleum refining, banking and mining.
US investment in Japan - the largest destination in Asia - grew 10 per cent from 2006 to US$101.61 billion last year.
Cumulative US investment in the Asia-Pacific region increased US$48.5 billion in 2007 to US$453.96 billion.
According to the Department of Commerce, the increase was spread over several industries, with the biggest jumps in holding companies, manufacturing - especially, computers and electronic products - and information.
At 12 per cent, the growth of US investment in Asia lagged the global average of 14 per cent last year, which was significantly more than the 10 per cent hike in 2006 and the biggest increase since 1999.
Europe, which attracts most US investment, experienced the fastest growth in regional terms last year - up 16 per cent to a cumulative US$1.55 trillion.
Fuelled by reconstruction work in Iraq, US investment in the Middle East jumped 15 per cent to US$29.37 billion.
Foreign investment in the US rose 14 per cent to a cumulative US$2.09 trillion, against US investment of US$2.79 trillion abroad, according to the Department of Commerce.
‘The pick-up in growth (from 13 per cent in 2006) in inward direct investment reflected both larger net equity capital flows into the US and a shift from negative to positive valuation adjustments,’ the department says in a report.
Singapore’s investment in the US surged 90 per cent last year, far higher than the global average and the overall increase for Asian investment, which expanded 18 per cent to a cumulative US$319.83 billion.
‘In percentage terms, there was a large increase in the position of Singapore, which was largely attributable to acquisitions and establishments of affiliates,’ the Department of Commerce says.
Among Asian nations, Singapore was the fourth- largest investor in the US in 2007 - after Japan, Australia and South Korea.
Source : Business Times - 29 July 2008
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