FDI flows to China, India, Myanmar and Viet Nam are likely to see a moderate increase in inflows in 2016
Hindered by the current global and regional economic slowdown, FDI inflows to Asia are expected to decline in 2016 by about 15 per cent, reverting to their 2014 level. Data on cross-border M&A sales and announced greenfield investment projects support the expected decline. For instance, cross-border M&As in the region announced in the first quarter of 2016 were $5 billion, only 40 per cent of the same period in 2015. In addition, the number of greenfield projects announced in 2015 was 5 per cent lower than in 2014. There are indications that intraregional investments are rising: 53 per cent of announced greenfield projects in developing Asia by value in 2015 were intraregional, especially from China, India, the Republic of Korea and Singapore. Among the most important industries driving this intraregional development are infrastructure and electronics. The rise of investments from Singapore to India exemplify this trend.
FDI flows to some Asian economies such as China, India, Myanmar and Viet Nam are likely to see a moderate increase in inflows in 2016. During the first four months of 2016, FDI inflows in nonfinancial sectors in China amounted to $45 billion, 5 per cent up from the same period in 2015. In India, the large increase of announced greenfield investments in manufacturing industries may provide further impetus to FDI into the country. Viet Nam is expected to continue strengthening its position in regional production networks in industries such as electronics, while Myanmar is likely to receive increasing levels of FDI inflows in infrastructure, labour-intensive manufacturing and extractive industries. Announced greenfield projects in Myanmar totalled $11 billion in 2015 and $2 billion in the first quarter of 2016, pointing to sustained FDI inflows in the near future.
In addition, on the basis of greenfield announcements in 2015, a number of other economies may perform better, including Bhutan, the Islamic Republic of Iran and Pakistan.
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