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Regional Cooperation and Integration Division
Economic Research and Regional Cooperation Department
21 July 2020 | RCI-POD No. 6 FDI in the time of COVID-19
Asian Development Bank
TRENDS IN FOREIGN DIRECT
INVESTMENT IN ASIARolando Avendano
2
Key Messages
• The COVID-19 crisis is having strong potentially long-term effects on FDI flows globally
• In developing Asia, FDI flows may decrease between 30% and 45% in 2020, surpassing thefall during the global financial crisis.
• Delays in the implementation of investment projects, and long-term adjustments from MNEsto secure production resilience will both impact the region’s investment potential.
• Asian economies are expected to endure a more difficult scenario than industrialized ones,where services FDI, such as health care, technology, telecommunications, is coping betterduring the pandemic.
• FDI could also play an important role in supporting Asia during the economic recovery.Actions taken today by policy makers will impact the level and quality of foreign investmentin the future.
3
Inward FDI to Asia already declining in 2019
Inward Foreign Direct Investment in Asia, by Mode of Entry
a. Number of FDI projects in Asia (thousands) b. Value of FDI in Asia ($ billion)
FDI = foreign direct investment, GF = greenfield, M&A = merger and acquisition, ROW = rest of the world.
Note: Estimates for 2020 cover January to April for greenfield FDI and January to May for M&As.
Sources: ADB calculations using data from Bureau van Dijk. Zephyr M&A Database; and Financial Times. fDi Markets (both accessed June 2020).
0
100
200
300
400
500
600
700
2003 2005 2007 2009 2011 2013 2015 2017 2019
ROW to Asia GF FDI value Intra-Asia GF FDI value
ROW to Asia M&A deal value Intra-Asia M&A deal value
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2003 2005 2007 2009 2011 2013 2015 2017 2019
ROW to Asia GF FDI projects Intra-Asia GF FDI projects
ROW to Asia M&A deals Intra-Asia M&A deals
4
Losses in manufacturing and services in 2019
Total Inward Foreign Direct Investment to Asia, by Sector ($ billion)
0
50
100
150
200
250
300
350
400
450
2003 2005 2007 2009 2011 2013 2015 2017 2019
Manufacturing Primary Services
a. Greenfield FDI b. M&A
0
50
100
150
200
250
300
350
400
450
2003 2005 2007 2009 2011 2013 2015 2017 2019
Manufacturing Primary Services
5
Employment linked to FDI declined in 2019
Inward Greenfield FDI Job Creation in Asia, by Source
a. Total b. Per sector
0
10
20
30
40
50
60
70
0
0.6
1.2
1.8
2003 2005 2007 2009 2011 2013 2015 2017 2019
Sh
are
, %
Mil
lio
n
Asia (left) ROW (left) Asia's share (%, right)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
2003 2005 2007 2009 2011 2013 2015 2017 2019
Manufacturing Primary Services
Sources: ADB calculations using data from Financial Times. fDi Markets (both accessed June 2020).
FDI early estimates 2020
7
Signs of deterioration in greenfield investment in 2020
Inward Greenfield Investment to Asia Pacific by subregion–First Quarter estimates
a. Greenfield FDI—First Quarter Estimates, 2003–2020 ($ billion)
0.0
20.0
40.0
60.0
80.0
100.0
120.0
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
ASEAN East Asia South Asia Central Asia Oceania Pacific
b. Greenfield Projects—First Quarter Estimates, 2003–2020
0
200
400
600
800
1,000
1,200
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
ASEAN East Asia South Asia Central Asia Oceania Pacific
Note: Estimates for 2020 cover January to April for greenfield FDI and January to May for M&As.
Sources: ADB calculations using data from Bureau van Dijk. Zephyr M&A Database; and Financial Times. fDi Markets (both accessed July 2020).
8
…and also M&As
0
50
100
150
200
250
300
350
400
450
500
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
Asia EU Africa Middle-East
North America Latin America Rest of the World
0.0
20.0
40.0
60.0
80.0
100.0
120.0
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
ASEAN East Asia South Asia Central Asia Oceania Pacific
Source: Bureau van Dijk. Zephyr M&A Database.
a. Global b. Asia
Inward M&A investment to Asia–First Quarter estimates, 2003-20 (billion)
9
Asia’s outward investment also shows signs of slowing down
a. Greenfield
Outward FDI from Asia Pacific – First Quarter estimates, 2003-20 ($ billion)
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
ASEAN East Asia South Asia Central Asia Oceania Pacific
Source: For greenfield, Financial Times and fDi Markets. For M&A, Bureau van Dijk. Zephyr M&A Database.
b. M&A
0.0
20.0
40.0
60.0
80.0
100.0
120.0
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
ASEAN East Asia South Asia Central Asia Oceania Pacific
10
Asia’s policy measures to support FDI
FDI Policy measures
Investment incentives-Tax relief-Conversion of prod. line
Support to supply chains-Financial instrum.-Fiscal support
Investment facilitation-E-tools
-Admin. burdenInvestment promotion-Online services
-COVID-19 informat.
Screening foreign FDI-Controls on Strategic industries
State participat.
-Acquisition equity-Embedding FDI
Internat.Initiatives-G20-APEC
International Investment Agreements
Source: Based on UNCTAD (2020), OECD.(2020), ADB (2020).
Thank you!https://aric.adb.org/
Annex
13
Top Asia’s investments Jan-May 2020 - Greenfield
Source: Financial Times and fDi Markets.
Greenfield
Inward
Parent company Source country Destination country SectorCapital investment (USD
million)
Royal Dutch Shell Plc Netherlands Australia Coal, oil & gas 6,400
ChemOne Singapore Malaysia Chemicals 3,380
Air Products and Chemicals United States Indonesia Chemicals 2,000
IMR Metallurgical resources AG Switzerland India Metals 1,622
Nippon Telegraph & Telephone (NTT) Japan India Communications 1,500
Toyota Motor Japan PRC China Automotive OEM 1,200
ACWA Power International Saudi Arabia Uzbekistan Coal, oil & gas 1,200
China General Technology Group PRC China Myanmar Coal, oil & gas 1,149
Outward
Parent company Source country Destination country SectorCapital investment (USD
million)
Taiwan Semiconductor Manuf. (TSMC) Taipei,China United States Semiconductors12,000
ChemOne Singapore Malaysia Chemicals 3,380
Nippon Telegraph & Telephone (NTT) Japan India Communications 1,500
Marubeni Japan UAE Coal, oil & gas 1,444
Toyota Motor Japan PRC China Automotive OEM 1,200
China General Technology Group PRC China Myanmar Coal, oil & gas 1,149
China General Technology Group PRC China Myanmar Coal, oil & gas 1,149
China General Technology Group PRC China Myanmar Coal, oil & gas 1,149
Royal Golden Eagle (RGE Group) Singapore Indonesia Textiles 1,100
Prime Metro Power Holdings Corporation Philippines Iraq Coal, oil & gas 1,059
14
Top Asia’s investments Jan-May 2020 – M&A
M&A
InwardTarget Company Name Partner Reporter Sector Deal Value ($ mn)
GLAXOSMITHKLINE CONSUMER United Kingdom India Food & Beverages 4,204
BANK PERMATA TBK, PT Thailand Indonesia Financial services 2,279
HINDUSTAN UNILEVER LTD France India Chemicals 1,670
SIEMENS LTD Germany India Electronic components 1,123
NINTENDO CO., LTD United States of America Japan Consumer products 1,114
FRASERS COMMERCIAL TRUST Australia Singapore Real estate 1,106
BEIJING ZIROOM INFORMATION TECHN. Japan China Communications 1,000
VIETCOMBANK CARDIF LIFE Hong Kong Vietnam Financial services 1,000
ADANI GAS LTD France India Coal, oil & gas 859
SHOWA AIRCRAFT INDUSTRY CO., LTD Cayman Islands Japan Aerospace 836
OutwardTarget Company Name Partner Reporter Sector Deal Value ($ mn)
ENECO GROEP NV Japan Netherlands Renewable energy 4,434
AUDENTES THERAPEUTICS INC. Japan United States of America Business services 3,000
ALERIS CORPORATION India United States of America Metals 2,800
BANK PERMATA TBK, PT Thailand Indonesia Financial services 2,279
GRIFOLS DIAGNOSTIC SOLUTIONS INC. China United States of America Healthcare 1,884
YAGEO HOLDING HUNGARY LLC Taiwan Hungary Business services 1,640
FINANCE TOWER IN BRUSSELS, BELGIUM Korea,Republic of Belgium Real estate 1,337
LUZ DEL SUR SAA China Peru Coal, oil & gas 1,197
FRASERS COMMERCIAL TRUST Australia Singapore Real estate 1,106
CONTINENTAL GOLD INC. China Canada Metals 1,046
Source: Bureau van Dijk. Zephyr M&A Database.
