UNCTAD-World Investment Report 2009: BRIC countries most favoured destination for FDI-
Global FDI flows will shrink by 30% in 2009
The report shows that there was a huge surge in investments in developing and transition economies, increasing their share in global FDI flows to 43% in 2008. This was partly due a concurrent large decline in FDI flows to developed countries (29%).
FDI inflows to South Asia in 2008 amounted to $51 billion. In 2007, the growth rate in South Asia was 49%. Inflows to the two largest emerging economies, China and India, continued to increase in 2008. China and India have been steadily gaining importance as host economies.
Outward investment in regional outflows from China and India rose from 23% in 2007 to 37% in 2008. India ranked third among all developing and transition economies and 13th in the world as a source of FDI. In addition to oil companies, large mining and metal companies from China and India have become more and more aggressive in acquiring overseas assets.
In the case of cross-border mergers and acquisitions (M&As), Indian companiesí net sales surged from an annual average of $282 million during 1990-2000 to $4.4 billion in 2007 and to $9.5 billion in 2008. Against this, Indian companiesí purchases of overseas firms which averaged $104 million annually between 1990 and 2000 rose to a peak of $29 billion in 2007 and came down to $11.6 billion last year in the wake of the onset of the global economic and financial crisis.
The report said that two Indian companies, one in the private sector and the other in the public sector, found a place among the top 100 non-financial transnational companies from developing countries, ranked by foreign assets in 2007. Tata Steel Ltd (metals and metal products), with assets of $20.7 billion, was ranked ninth, while Oil and Natural Gas Corporation (ONGC), with assets of $13.3 billion, was ranked 13th.
Unctad states that for many Chinese and Indian companies, in particular, the desire to acquire undervalued assets (such as mineral deposits, technologies, brand names and distribution networks) during the global and financial crisis may boost Asian investments in developed countries.
There has been an overall trend by Asian countries to change national policies and legislation to become more favourable to FDI, leading to the further opening up of markets. Thus, in 2008 and early 2009, India has either raised or abolished existing FDI ceilings for certain industries.
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