Kanpur Stock：Foreign direct investment trends and outlook in Asia and the Pacific 2023／2024

• Asia and the Pacific witnessed US$ 302 billion worth of Greenfield projects announced in the January to September 2023 period, a staggering 35 per cent increase compared with the same period in 2022, when US$ 224 billion had been recorded. 2023 appears to be on track to match – and exceed – the project announcements in terms of capital investment levels of 2022.

• As of September 2023, outward Greenfield announcements in Asia and the Pacific have already surpassed the levels recorded in the first three quarters of 2022 by 32 per cent, increasing from US$ 231 billion in 2022 to US$ 305 billion in 2023Kanpur Stock. After 2017 and 2022, outward Greenfield FDI announcements are surpassing inward flows for the third time in the past decade.

• Subregional data highlights three key trends. First, ASEAN countries’ stability, digitalization, adoption of sustainable policies and targets, and growth histories maintain it as a top region within the Asia-Pacific region for Greenfield FD. Second, India’s potential for rapid growth, educated labour pool and large domestic market will similarly ensure its place among the largest receiving countries for FDI in the region and globally in the medium term. Third, China is increasingly looking outward, investing more in its neighbours, particularly within ASEAN.Varanasi Investment

• Locations in Asia-Pacific are being increasingly chosen due to dynamic qualitative factors, such as a skilled workforce, rather than static quantitative factors, such as low-cost considerations. From 2013-2017, investors’ most cited determinants for investment in the Asia-Pacific region were domestic market growth, proximity to markets or customers and the regulatory environment. Since then, skilled workforce availability has entered the top three most influential factors.

• This observation – locations in Asia-Pacific being increasingly chosen due to dynamic qualitative factors rather than static quantitative factors – is reinforced by the number of incentives deals concluded over the years. With the exception of the COVID- 19 pandemic and its immediate aftermath, where (mostly fiscal) government support measures were hiked up, incentives deals in the region have been continuously declining since 2014.

• Economies are increasingly competing through pro-active investment attraction, not least as the challenge to established patterns of Greenfield FDI is opening up new opportunities for countries that have traditionally been overlooked. In terms of strategy, it is imperative that IPAs and the responsible line ministries co-operate to integrate FDI into coherent national development strategiesKanpur Investment. In terms of execution, IPAs should support the entire investment development life cycle, ranging from image building and marketing, investor targeting, servicing and facilitation, to aftercare and policy advocacy. To maximize benefits, strategy and execution should be regularly monitored and evaluated to make sure they result in the desired outcomes. This way, IPAs can influence investment patterns and contribute to the national development agenda, especially around boosting FDI in and for sustainable development.

Mumbai Wealth Management