World Investment Report 2023: FDI in Developing Asia Remains Flat at $662 Billion in 2022

The UNCTAD’s World Investment Report 2023 reveals that foreign direct investment (FDI) inflows to developing Asia remained unchanged at $662 billion in 2022 compared to the previous year. However, the report highlights significant variations among countries in the region.

Here are the key highlights:

1. Concentration of FDI Flows:

• FDI inflows to developing Asia were highly concentrated, with five economies accounting for nearly 80% of the total investment. These economies are India, China, Singapore, Hong Kong, and the United Arab Emirates.

2. India’s FDI Performance:

• The UNCTAD report highlights the significant growth of foreign direct investment (FDI) flows to India and the increasing investments made by Indian companies in other countries, particularly in the renewable energy sector. Here are the key points:
  1. Inward FDI to India:
  • FDI flows to India increased by 10% to reach $49.3 billion, positioning India as the third-largest host country for greenfield project announcements and the second-largest for international project finance deals in South Asia.
  • This growth reflects the attractiveness of India as an investment destination, particularly in the renewable energy sector.
  2. Greenfield Projects by Indian Multinational Enterprises:
  • The report states that greenfield project announcements by Indian multinational enterprises more than tripled, reaching $42 billion.
  • Acme Group and ReNew Power, both focusing on renewable energy, were involved in two of the largest greenfield projects.
  3. Acme Group’s Project in Egypt:
  • Acme Group announced a $13 billion plant in Egypt to produce 2.2 billion tonnes of green hydrogen annually.
  • This investment demonstrates India’s global footprint in renewable energy and its commitment to sustainable development.
  4. ReNew Power’s Project in the Suez Canal Economic Zone:
  • ReNew Power announced an $8 billion green hydrogen plant in the Suez Canal Economic Zone.
  • This project further emphasizes India’s role in promoting renewable energy and the expansion of Indian companies’ investments abroad.

3. Bangladesh’s Growing Investments:

• Bangladesh experienced a 20% growth in overseas investments, reaching $3.5 billion.

4. Singapore’s Record FDI:

• Singapore emerged as the largest recipient of FDI in the Southeast Asia region, recording a new high of $141 billion, representing an 8% increase.

5. Malaysia’s FDI Growth:

• Malaysia also achieved record FDI inflows, with a growth of 39% to reach $17 billion.

6. Vietnam and Indonesia’s FDI Increase:

• Vietnam and Indonesia experienced FDI growth of 14% and 4%, reaching $18 billion and $22 billion, respectively.

7. Decline in FDI to the Philippines:

• FDI to the Philippines decreased by 23% due to divestments in several sectors.

8. China’s FDI Performance:

• FDI inflows to China rose by 5% to $189 billion, mainly driven by investments in manufacturing and high-tech industries, primarily from European multinational enterprises.

9. Hong Kong’s Decreased FDI:

• Hong Kong witnessed a 16% decline in FDI, reaching $118 billion.

10. UAE’s Attraction for Foreign Investments:

• The United Arab Emirates (UAE) experienced a 10% increase in foreign investments, reaching a record high of $23 billion, while FDI in Saudi Arabia declined by 59% to $7.9 billion.

11. FDI Growth in Central Asia:

• FDI to Kazakhstan doubled to $6.1 billion, primarily in extractive industries, while Uzbekistan witnessed an 11% increase, reaching $3 billion.

12. Leading Investors in Asia:

• China and Hong Kong remained the largest investors in Asia, followed by the United States, Japan, and Singapore.

13. FDI Growth in Regional Economic Blocs:

• According to the UNCTAD report, foreign direct investment (FDI) has been on the rise in major regional economic blocs within developing Asia over the past five years. Here are the key highlights:
  1. Association of Southeast Asian Nations (ASEAN):
  • FDI in ASEAN member states increased by an impressive 41% to reach $222 billion. This growth reflects the attractiveness of ASEAN countries for foreign investments.
  2. Regional Comprehensive Economic Partnership (RCEP):
  • The countries participating in the RCEP witnessed a substantial FDI increase of 42% to reach $580 billion. This regional economic partnership has proven to be an attractive destination for foreign investors.
  3. Gulf Cooperation Council (GCC) States:
  • FDI in the GCC states experienced remarkable growth, surpassing 100% to reach $37 billion. This significant increase highlights the economic potential and attractiveness of the Gulf region for foreign investments.
  4. South Asian Association for Regional Cooperation (SAARC) Nations:
  • SAARC nations observed a 20% growth in FDI, reaching $56 billion. This growth demonstrates the increasing interest of foreign investors in South Asian countries.

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