UNCTAD'S investment RANKINGS

UNCTAD'S investment RANKINGS

The Nation

Kingdom the 12th most attractive China, India top list; Vietnam 6th

Thailand is ranked 12th among the most attractive economies for foreign direct investment (FDI), trailing Vietnam in sixth place, according to Unctad's World Investment Prospects Survey 2007-2009 released yesterday. In particular, South and East Asia will be increasingly attractive destinations for FDI, with China and India mentioned as the top two most favoured destinations by the transnational corporations (TNCs) surveyed. Among other countries ranked in the top 20 were Malaysia, Indonesia, Singapore and Japan. According to the survey, FDI flows are expected to increase over the next three years despite concerns about global financial instability and protectionism in some countries. The survey polled 192 respondents among the largest TNCs in the world. More than two-thirds of these companies said they planned to increase their FDI expenditure each year from 2007 through 2009. FDI is expected to increase across practically all sectors and countries due to continued world economic growth, high profitability and the availability of external finance. Greenfield investments (the establishment of affiliates in foreign countries) will be more commonly used as an entry mode into developing economies, while investment in developed countries will more frequently take the form of mergers and acquisitions, the survey said. Access to large and growing markets will be by far the main driver of FDI growth - this factor was mentioned as a major investment determinant by more than half of TNC respondents - followed by access to resources (17 per cent of respondents), especially skilled labour. Access to low-cost labour was a factor cited by 9 per cent of the TNCs surveyed. On the other hand, geopolitical and financial instability were mentioned as the major uncertainties that could potentially hinder their FDI expansion. Also mentioned as a factor was a possible increase in protectionism. More than 80 per cent of respondents mentioned these three risks as "important" or "very important". Further internationalisation is expected to affect a wide range of corporate functions - almost half of the respondents said they planned further overseas expansion of research-and-development operations. A rising number of companies will consider investing in locations away from their home regions. Emerging markets, notably in Asia and Europe, are expected to receive more attention than before. North America and Western Europe remain at the top of the priority list for investors. The United States is the third most favoured location in the world. Two Western European countries - the United Kingdom and Germany - rank in the top 10, closely followed by France. Poland is another rising destination in Europe. Eastern Europe and Commonwealth of Independent States countries are also the focus of a growing preference by investors. Russia features among the top five FDI destinations; it was mentioned by one-fifth of the TNCs surveyed. In Latin America, Brazil and Mexico ranked among the top 10 most favoured locations for FDI. West Asia and Africa are expected to attract less interest despite investment niches in extractive industries and the recent growth of FDI in North Africa. The World Investment Prospects Survey 2007-2009 is the most recent of a series of surveys on FDI prospects. Unctad - the United Nations Conference on Trade and Development - has carried out similar surveys since 1995.