Asia-Pacific Foreign Investment Brief
The FDI, Trade, and Economic Development Community

China’s cumulative engagement in Asia and the Pacific over the past ten years reached USD 530 billion in 2023, about USD 245 billion in construction contracts, and USD 285 billion in non-financial investments. Six countries saw a 100 per cent drop in China’s engagement in Asia-Pacific compared to 2022, including the Philippines, Mongolia, Myanmar, Papua New Guinea, Tajikistan and Turkey. China’s engagement in Pakistan for the China-Pakistan Economic Corridor (CPEC) dropped by about 74 per cent; China’s engagement in Australia dropped by about 66 per cent (see Figure 5). The countries with the largest growth of China’s engagement were South Korea (+577  per cent), Uzbekistan (+375 per cent), Kazakhstan (+240 per cent) Cambodia (+133 per cent), and Vietnam (+91 per cent). Preliminary data on Chinese engagement through financial investments and contractual cooperation for 2023 in Asia and Pacific show about 94 deals worth USD 37 billion. This compares to USD 29 billion Asia-Pacific engagement in all of 2022—an increase of 25 per cent. Of the 2023 engagement, about USD 20 billion was through investment and USD 17 billion through construction contracts (partly financed by Chinese loans). China’s overall engagement shows a steady development since 2021 from the onset of COVID-19. Deal sizes are getting bigger again, particularly for investments The average deal size for investments remains high in 2023 at about USD 499 million and has more than doubled from a low or USD 195 million in 2021. It has slightly decreased from 2022, when investment deal size in Asia Pacific was about USD  583 million. For construction projects, the deal size in 2023 increased compared to 2022 from USD 285 million to USD 401 million. Asia Pacific construction deal size has remained relatively steady over the past 8 years. (see Figure 3). Similar to the overall BRI, China’s engagement in Asia and the Pacific does not necessarily reflect the stated China overseas engagement strategy of “small yet beautiful projects” propagated through official channels. VIEW REPORT

We are pleased to launch a new United Nations ESCAP #FDI attractiveness and export readiness training program for Sri Lanka-based ICT companies looking to expand internationally, kicking off 13 & 14 May in Colombo, Sri Lanka, supporting the country‘s DIGIECON SRI LANKA 2023 - 2030 roadmap. Apply to the program here by 5 April and join Tom Becker and myself in Colombo: https://lnkd.in/g6saByAx - 🇺🇳 United Nations ESCAP, in collaboration with the Information Communication Technology Agency of Sri Lanka and the BOI Sri Lanka. Details of the program: The program will be based around the delivery of training for up to 15 digital (ICT) firms that are ready to develop into overseas markets. The program will take place over two days in Colombo (13 and 14 May) and will support the development of the company's capacity to implement effective internationalization strategies. Companies will apply to participate in the program with applications to be judged by a working group of United Nations ESCAP, ICTA, BOI Sri Lanka and KW Group Asia-Pacific Advisory, with all companies committing to attend for the two days of the training. Companies must be based in Sri Lanka, export/growth-ready, and in a position to access overseas markets within the next 6 months with the necessary internal resources. Program attendees must be key stakeholders who will actively oversee the implementation. The training will be followed by 4 virtual sessions to refine and evaluate the implementation of the internationalization roadmaps to develop their strategic development into new export markets (2 days in person, plus 3 virtual sessions 2-3 hours each). The training agenda is designed to provide a comprehensive learning experience for Sri Lankan mid-growth, export-ready ICT companies aiming for internationalization through foreign investment and export development. The combination of in-person and virtual sessions allows for both theoretical learning and practical application, through implementation and review with ample opportunities for interaction and feedback. The program will support companies through the development of investor targeting and market development strategies as outcomes and will be followed by 3 virtual sessions where the strategic plans will be refined and developed for implementation. Companies are required to submit the application form, in no more than 200 words per section. Applications are reviewed and assessed by a committee led by UNESCAP, the BOI, ICTA, and KW Group. The deadline for submission is 5 April. Warm Regards, Andrew Keable VIEW APPLICATION FORM

The US’s Milken Institute has announced its Global Opportunity Index (GOI) 2024 report, with Malaysia named as the country with the best overall investment condition among emerging and developing (E&D) nations in Asia. Globally, Malaysia has an overall ranking of 27, ahead of Thailand (37) and China (39), according to the report. Indonesian Investment, Trade and Industry Minister Zafrul Abdul Aziz was quoted by local media as commenting on the achievement that it is a testament to Malaysia’s efforts in enhancing the ease of doing business and addressing key pain points along the investor’s journey. He said that the recognition reflects Malaysia’s volumes of focus on efficient implementation of approved investments, while motivating the country to deliver even better service to help investors make Malaysia their gateway to Asia. Milken Institute said Malaysia, the country with the best investment conditions in the region, performed significantly above the E&D average in financial services and institutional frameworks. In addition to Malaysia, China, the region’s largest economy, scores significantly above the E&D average on financial access and financial size and conditions, the two subcategories included in financial services, it said. “Emerging and developing economies in Asia and Latin America are in the spotlight as policymakers and investors seek to diversify critical supply chains including semiconductors, pharmaceuticals, and clean energy materials and technologies,” said David Talbot, PhD, director at the Milken Institute who leads Geo-Economics research and policy programming for MI Finance. “The GOI is an essential tool for decision-makers who are looking to both attract capital and build resilience amidst the reconfiguration of global trade and investment.” The GOI rankings are available as an interactive website that allows users to personalize their experience based on individual interests using a variety of visual elements, including tables and heatmaps. “The Global Opportunity Index serves as a compass for those navigating the complexities of global investments. The index provides stakeholders with crucial insights to seize opportunities and craft resilient investment strategies. By revealing emerging trends and spotlighting the strengths and challenges of diverse economies, the GOI gives decision-makers a comprehensive global perspective to harness the untapped potential and foster sustainable growth across international markets,” said Laura Deal Lacey, Executive Vice President of MI International at the Milken Institute. VIEW REPORT

The Chinese tech company has pioneered a ‘Scope 3+’ concept that goes beyond conventional value chain emissions reduction and is targeted at empowering businesses on its platforms to go low-carbon. It brings to Malaysia its suite of AI-based sustainability tools. For Malaysian firm UEM Edgenta, greenhouse gas emissions tracking has for a long time been a manual process. The Kuala Lumpur-based asset management and infrastructure company, keen to calculate and report across its Scope 1 to 3 emissions, had been looking to streamline its environment, social and governance (ESG) strategies. It also wanted to simplify its sustainability reporting processes for a compliance exercise that it was undertaking, but found that it lacked the technological capabilities to do so. Hence, last year, when Alibaba Cloud, the digital technology and intelligence backbone of Alibaba Group, expressed interest to work with more companies to adopt its artificial intelligence (AI) sustainability tools and solutions, UEM Edgenta was one of the firms eager to pursue the partnership. It made a huge leap in transforming its business strategy into a technology-driven one, and among the new solutions it adopted was Energy Expert, a software-as-a-service tool for energy consumption and carbon management. UEM Edgenta has since integrated the tool developed by Alibaba Cloud, which is capable of helping enterprises obtain real-time sustainability performance statistics and identify emissions sources, into its own cloud-based data platform. In September last year, the firm launched a set of climate targets and announced its commitment to achieve net-zero greenhouse gas emissions by 2050. A key thrust of its decarbonisation strategy is enhancing energy efficiency of its operations. In China, home to some of the world’s largest technology companies, cloud computing has played a pivotal role in facilitating energy-light digitalisation. Unlike the traditional use of localised hardware and servers for data storage, cloud computing uses web-based infrastructure, eliminating the need to construct sizeable server farms and substantially reducing operational carbon emissions. Industry insiders believe it provides unprecedented opportunities for decarbonisation through the integration of data intelligence and AI technologies. VIEW ARTICLE

Australia will launch Investment Deal Team hubs in Singapore, Jakarta, and Ho Chi Minh City, with additional Deal Team representatives across the ASEAN region. But are regional IPAs and governments prepared with Investor-Ready Projects? Announced by Prime Minister Albanese at the launch of Invested: Southeast Asia Economic Strategy to 2040, the Deal Teams will work with governments and businesses in Southeast Asia to identify and facilitate outbound investment opportunities for Australian investors. They will draw on public and private sector expertise to identify a pipeline of investment-ready projects, provide market intelligence, and advise Australian investors on matters from regulatory approvals to finding local commercial partners. The $70.2 million Deal Teams involve experts from Austrade, the Department of Foreign Affairs and Trade (DFAT), and Export Finance Australia (EFA), and form part of the Government's implementation of Invested: Southeast Asia Economic Strategy to 2040. They will also support businesses to access the newly announced $2 billion Southeast Asia Investment Financing Facility, administered by EFA, and other trade and investment initiatives to facilitate and crowd in Australian private sector investment across Southeast Asia. VIEW ARTICLE

Foreign direct investment (FDI) has immense potential to accelerate progress towards #GenderEquality, but is this promise being fulfilled? By Heather Taylor-Strauss, economist and FDI lead at the United Nations Economic and Social Commission for Asia and the Pacific In my latest piece for fDi Intelligence, I dive deep into the crucial need for data and evidence to validate FDI's transformative impact on women's empowerment. Gender specialists, FDI authorities, policymakers - this is a must-read as we approach the UN's summit on catalyzing action for #SDG5 later this month in New York. It's time to move beyond assumptions. Rigorous case studies, impact assessments, and gender-focused metrics are essential to channeling FDI as a driving force for: ✨ Closing gender pay gaps ✨ Promoting women's leadership ✨ Providing inclusive opportunities ✨ Advancing gender-responsive policies Read, share your perspectives, and join the call for building and disseminating a compelling evidence base at the FDI project level to leverage the full potential of #FDI for #WomenEmpowerment #InvestmentPromotion #GenderLens #EconomicDevelopment #GlobalGoals And let's also take a moment today - on #internationalwomensday2024 to applaud all those the investment promotion agencies (Investment Fiji Pakistan Board of Investment @Malaysia Development Authority Invest India InvestChile Philippine Board of Investments (BOI)) and FDI practitioners (Stephania Bonilla-Feret Phd ambreen iftikhar Vanessa Séverin Andreas Dressler Michelle Wong Kathryn Rothwell Laura Figón Tom Becker Musarat Ali Dr. Kim J. Zietlow) who are all pioneering and pushing for integrating gender into investment promotion, attraction, and facilitation. Together we are paving the way and encouraging others to #domore! (and of course apologies for all those that I may have missed in the tags!) VIEW ARTICLE

When developing countries borrow money, they have to pay much higher interest rates compared to developed countries. This makes it difficult for them to fund important investments, which undermines debt sustainability & sustainable development. Explore the United Nations' “A World of Debt” report, including a debt dashboard & an interactive map with country-specific data. Public debt can be vital for development. Governments use it to finance their expenditures, to protect and invest in their people, and to pave their way to a better future. However, it can also be a heavy burden, when public debt grows too much or too fast. This is what is happening today across the developing world. Public debt has reached colossal levels, largely due to two factors. Financing needs soared with countries’ efforts to fend off the impact of cascading crises on development. These include the COVID-19 pandemic, the cost-of-living crisis, and climate change. An inequal international financial architecture makes developing countries’ access to financing inadequate and expensive. The weight of debt drags down development. Debt has been translating into a substantial burden for developing countries due to limited access to financing, rising borrowing costs, currency devaluations and sluggish growth. These factors compromise their ability to react to emergencies, tackle climate change and invest in their people and their future. Countries are facing the impossible choice of servicing their debt or serving their people. Today, 3.3 billion people live in countries that spend more on interest payments than on education or health. A world of debt disrupts prosperity for people and the planet. VIEW REPORT

The Significant Investments Review Bill will introduce a new investment management regime for specified entities identified as being critical to national security, says Trade and Industry Minister Gan Kim Yong. The new Bill aims to provide Singapore with an “updated toolkit” to manage threats posed by significant investments into critical entities in an increasingly complex world, says Trade and Industry Minister Gan Kim Yong Entities designated as critical will be required to notify or seek approval from the authorities for ownership or control changes During the debate in parliament, MPs raised concerns over what constitutes national security interests, the wide-ranging powers given to the Trade and Industry Minister in the Bill and the possible impact on foreign investments WHY IS THIS NECESSARY? The need for an updated regulatory toolkit comes amid an increasingly complex world and an uncertain economic environment, said Mr Gan, citing several global financial crises in recent years and the COVID-19 pandemic that led to border restrictions and supply shortages. Geopolitical contestations have also triggered more protectionist measures, while military conflicts have brought about disruptions to critical supplies such as energy and food. “This has led to many countries prioritising domestic and national security considerations, leaning towards ‘near-shoring’, ‘friend-shoring’ and ‘re-shoring’ of supply chains,” he told the House. VIEW ARTICLE

UNCTAD has just released its latest Investment Policy Monitor (No. 27).  It discusses trends in outward foreign direct investment (OFDI) policies. Overall, the Monitor shows that policies to facilitate outward FDI are becoming more widespread, but so are policies that restrict outward FDI. The number of countries that facilitate outward investment to promote sustainable development is still limited. Highlights include: OFDI promotion initiatives are common among developed countries, present in 79 per cent of them, reflecting their role as traditional sources of FDI. Support for companies that invest abroad typically serves two main objectives. First, the growth and internationalization of domestic businesses, particularly SMEs. Second, the promotion of international cooperation and development efforts. An increasing number of developing countries are also supporting their firms in investing overseas (14 per cent), in line with their expanding role as sources of FDI. Supporting the internationalization of domestic firms and securing access to new markets, resources and technologies are the main objectives of these policies. Sustainability considerations and the potential benefits to the host country’s development increasingly feature among the qualifying criteria for OFDI policy support, particularly among developed countries. However, despite international commitments in the context of the SDGs, only 18 developed and 5 developing economies have adopted OFDI promotion schemes targeted at promoting investment specifically in developing countries. Nearly half of the world's economies impose restrictions on OFDI, including most developing countries and least developed countries (LDCs). In these countries, restrictions traditionally aim at preventing balance of payment difficulties and to ensure that investments abroad do not adversely affect the home country's economic priorities. OFDI restrictions have surged across economies at all levels of development in the last decade. Efforts to comply with anti-money laundering standards and concerns over the potential national and economic security risks posed by OFDI contributed to the rise. As OFDI restrictions become more widespread, the complexity of applicable rules and regulatory discretion may reduce predictability and increase the administrative burden for home country authorities and investors. VIEW ARTICLE

It is more urgent than ever for governments to attract foreign investment. Excellent interview by Alex Irwin-Hunt, FDI Intelligence 1️⃣ Huge accumulation of public debt, particularly in developing countries, has made it more difficult for governments to invest – thus also weighing on economic growth. Foreign direct investment (#FDI) is a way for countries to bring in more capital without the need to borrow more. 2️⃣ The fragmentation of global trade and investment networks has a net negative impact on the global economy. Indeed, global trade of goods declined by 2.2% in 2023, compared to a year earlier. Distortions and trade restrictive policies are weighing on the global economy. 3️⃣ Competition for foreign investment is fiercer than ever. Incentives and other concessions have become increasingly used by governments, especially in Europe and North America. Developing countries must undertake reforms to improve institutions and policies in their bid to attract FDI. VIEW ARTICLE

With almost half of the world’s population residing in countries holding executive or legislative elections in 2024, it’s set to be the busiest election year ever recorded. This visualization uses collated 2024 global elections data from our 2024 Global Forecast Series as well as from Time, while country populations are taken from Worldometer as of January 2024. VIEW ARTICLE

Southeast Asian startups' salaries for new hires in business development and sales have risen by as much as 20%, according to an annual report published Thursday, reflecting young companies' urgent need to generate cash amid a tougher funding environment. Meanwhile, engineering roles saw the biggest decline in salaries, impacted by ongoing tech layoffs and cost-cutting measures. Average salaries for business development and sales increased more than those for four other key roles -- engineering, marketing, data and product development -- in 2023, up by an average of 2% from a year earlier, according to the Singapore-based staffing platform Glints and the venture capital firm Monk's Hill Ventures. The annual report analyzed more than 10,000 data points from Glints' job postings for startup roles in Singapore, Indonesia and Vietnam, as well as interviews with over 70 early-stage startups in the region. According to the study, engineering roles saw the biggest decline in salaries, impacted by ongoing tech layoffs and cost-cutting measures. These factors led to an increased supply of available tech talent, putting downward pressure on salaries. Salaries for engineers fell 2% last year, with junior roles seeing the sharpest decline of 6%. "The past year's challenges in a tightened market have highlighted a greater need for adaptability and resilience," Glints CEO Oswald Yeo said in a statement. VIEW ARTICLE