1. Geneva, 26 July 2011 - Developing Asia (excluding West Asia) set new records for FDI inflows and outflows
in 2010, UNCTAD´s World Investment Report 2011(1) (WIR11) announces. The report, subtitled"Non-
equity modes of international production and development", was released today.
In 2010, FDI inflows to South, East, and South-East Asia rose 24 per cent to $300 billion, nearly one fourth
of the global total, the annual report says. However, the performance of the three subregions and their
major economies varied significantly (figure 1):
FDI to the member countries of the Association of Southeast Asian Nations more than doubled,
reaching $79 billion in 2010. Proactive policy efforts at the country level contributed to the good
performance of the group, and seem likely to continue to do so, the report says. Some ASEAN
countries, for example, Indonesia and Viet Nam, have gained ground as low-cost production
locations, especially for low-end manufacturing, while the region´s least developed countries (the
Lao People´s Democratic Republic and Cambodia) received increasing inflows, particularly from
neighbouring countries.
FDI to East Asia rose to $188 billion, thanks to double-digit growth in inflows to China and Hong
Kong (China). Inflows to China climbed by 11 per cent to $106 billion. China continues to
experience rising wages and production costs, so that the trend in widespread offshoring of labour-
intensive manufacturing to the country has slowed and FDI inflows are shifting towards high-
technology industries and services.
FDI to South Asia declined to $32 billion, reflecting a 31 per cent slide in inflows to India and a 14
per cent drop in flows to Pakistan. By contrast, inflows to Bangladesh, a rising low-cost production
location, increased by nearly 30 per cent to $913 million.
FDI outflows from developing Asia grew by 20 per cent to about $230 billion in 2010, driven by increased
investment coming out of China, Hong Kong (China), Malaysia, the Republic of Korea, Singapore and Taiwan
Province of China (figure 1). Outflows from the region´s two largest FDI sources - Hong Kong (China) and
China - increased by more than $10 billion each and reached historic highs of $76 billion and $68 billion,
respectively. In 2010, China exceeded Japan for the first time in outward FDI, as well as in gross domestic
product.
The region´s share in global FDI outflows has jumped from below 10 per cent before 2008 to around 17 per
cent over the past two years. Companies from developing Asia have been actively taking over companies in
the developed world, including through a number of very large acquisitions (table 1). However, they are
facing increasing political obstacles, as illustrated by the failed attempts by Huawei (China) to take over
3Com and 3Leaf in the United States.
The significance of electronics in outward FDI from developing Asia reflects the international competitiveness
of Asian companies in this industry, particularly the contract manufacturers, such as Foxconn (Taiwan
Province of China) and Flextronics (Singapore). They have become a dominant force at the production stage
of the global electronics value chain (see UNCTAD/PRESS/PR/2011/033).
Both inflows to and outflows from developing Asia are expected to continue to grow, the report predicts.
Countries in the region have made considerable progress in their regional economic integration efforts. The
report says that this will translate into a more favourable investment climate for intraregional FDI

2. Foreign direct investment (FDI) in the region of Asia and Oceania broke records in 2004, according to
UNCTAD´s World Investment Report 2005: Transnational Corporations and the Internationalization of
R&D (1). The report, released today, says the region received US$ 148 billion in FDI - US$ 46 billion more
than in 2003 - making it the top recipient among developing regions. Rapid economic growth, an improved
policy environment, and increasing strategic commitments to Asian markets by transnational corporations
(TNCs) contributed to the surge.
China was again the largest recipient of FDI inflows, not only among all countries in the region (fig. 1) but
among developing countries worldwide. FDI in China attained another record of US$ 60.6 billion. Flows to
Hong Kong, China, amounted to US$ 34 billion, a 150% increase and the highest investment growth rate
among the region´s economies. Together, China and Hong Kong accounted for two thirds of all FDI in this
part of the world.
Among the various subregions of Asia, East Asia remained the preferred target last year, with a 46% gain in
FDI inflows; in terms of FDI growth, West Asia performed the best. Foreign investment there was up by
51%, to US$ 9.8 billion. This was due to high oil prices, efforts to diversify, and a series of liberalization
measures aimed at improving the investment climate, the UNCTAD report states. South-East Asia
(comprising the 10 member States of the Association of South-East Asian Nations and Timor-Leste) saw a
further rise in inflows - from US$ 17 billion in 2003 to US$ 26 billion in 2004 - the steepest increase since
the 1997-1998 financial crisis. In fact, the climb in investment there shows that the impact of the crisis on
FDI inflows is now a thing of the past, the report suggests. FDI in South Asia increased by 31% to US$ 7
billion because of higher flows to India, Pakistan and Bangladesh. By contrast, Oceania (the Pacific island
economies) suffered a 54% decline in FDI last year, to US$ 67 million.
While greenfield investment remained the most important mode of FDI in the region, cross-border mergers
and acquisitions (M&As) continued to increase, particularly in the services sector. This was due largely to a
rise in M&A transactions in East Asia, UNCTAD says. FDI in research and development (R&D), a relatively
new area of growth for transnational corporations (TNCs) in developing countries, has expanded rapidly in
developing Asia in recent years (see UNCTAD/PRESS/2005/033). Some countries have become important
destinations for FDI in R&D, especially China and India, both of which have large pools of technically well-
qualified workers. In China, the number of foreign affiliate R&D centres climbed to 700 in 2004; in India,
more than 100 TNCs have established R&D facilities. In addition, some relatively small-sized economies
have attracted R&D by TNCs. Thailand, for example, was recently selected as the site of Toyota´s fourth
overseas R&D centre.
Outward FDI from Asia and Oceania quadrupled to US$ 69 billion last year, driven particularly by flows of
US$ 40 billion from Hong Kong, China, the report notes. Outflows from the Republic of Korea and Singapore
also rose sharply, as did those from China and India. Intraregional FDI has expanded considerably in recent
years, encouraged by regional integration efforts, the expansion of production networks and the relocation
of production to lower-cost areas. Of UNCTAD´s list of top 50 developing-country TNCs, 39 are based in
Asia, and four of those 39 rank among the 100 largest TNCs worldwide (see fig. 2 for the top five, and
UNCTAD/PRESS/PR/2005/039). Ranked 16th globally in terms of foreign assets, Hutchison Whampoa (Hong
Kong, China) is the region´s leading TNC. Some Chinese, Indian and Korean firms in the information and
communications technology field have been actively expanding their R&D activities abroad.
As the policy environment for FDI continues to improve within the region, prospects for both inward and
outward FDI remain promising, the report says. FDI to China is expected to rise yet again this year, led by
flows to the services sector. Flows to South-East Asia are also set to surge, for the third consecutive year,
with increases expected in South Asia (led by India) as well. In West Asia, the upward trend in FDI inflows
should persist through 2005, notably in oil- and gas-related industries in response to increasing world
demand. The report predicts a recovery by the Oceania subregion in FDI flows this year. And as TNCs
constantly seek to improve their competitiveness by reducing costs in highly knowledge-intensive activities,
the rapid expansion of R&D by TNCs in developing Asia will most probably continue as well, the report
posits.
Chinese, Indian and Korean firms will account for an increasing proportion of an expected continued growth
in FDI outflows from the region during 2005, including through large-scale overseas mergers and
acquisitions, UNCTAD foresees. China is set to become a major foreign investor in Latin America, driven by
its growing demand for natural resources and commodities with which to fuel its rapid economic growth.
Chinese investments in developed countries will also mount, as exemplified by Lenovo (China)´s takeover of

3. IBM´s PC business. Because of the huge amount of "Chinese dollars" still rapidly accumulating, as well as
other developments, China is seeking to acquire corporate equities in the United States rather than
continuing to serve merely as a large holder of US Treasury bonds. This trend has been illustrated by recent
Chinese corporate bids for companies in the United States.