Foreign direct investment to Asia holds steady, although flows in individual countries vary

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Page 48

An anticipated decline in flows of foreign direct investment (FDI) to Asia in the wake of the 1997–98 financial crisis failed to materialize, according to a United Nations Conference on Trade and Development (UNCTAD) press release issued on January 25. Preliminary UNCTAD estimates for 1999 show, instead, that FDI flows to developing Asia in 1999 actually increased slightly by 1 percent to $91 billion in 1999 over 1998.

The overall regional increase masks considerable variation in FDI flows to individual countries, however, according to the press release. Flows to China, the principal FDI recipient in developing Asia throughout the 1990s, dropped nearly 8 percent to just over $40 billion in 1999. In contrast, flows to Korea, one of the five countries most heavily affected by the financial crisis, skyrocketed by nearly 55 percent (to $8.5 billion). Singapore followed with a 20 percent increase to $8.7 billion. Among the other four crisis-affected countries, FDI flows fell in Indonesia, the Philippines, and Thailand, while remaining steady in Malaysia. The press release notes that the drop in FDI flows to Thailand—by about 15 percent, to $5.8 billion—was partly due to the flattening of the wave of massive recapitalization in the banking sector, which reached exceptional highs in 1998. Nevertheless, FDI flows into Thailand surpassed...