| World Investment Flow Restored In 2010-2012 |
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| Friday, 23 July 2010 10:23 | |||||||
Page 1 of 2 Geneva (Reuters) - The flow of foreign direct investment (FDI), the world will be stable this year and increased in 2011-12 because of the merger (the merger) across borders by multinationals are lifted by the growing business confidence, the UN said.
FDI, where many developing countries rely to finance their economy, will increase to 1.3 to 1.5 trillion U.S. dollars in 2011 and 1.6 to 2.0 trillion dollars in 2012 from 1.2 dollars this year, said Bureau of Trade and Development United Nations (UNCTAD). FDI inflows fell 37 percent to 1.11 trillion dollars in 2009 after falling 16 percent in 2008 and reached its peak in 2007 with a value of 2.1 trillion dollars, according to the World Investment Report, released by UNCTAD, Thursday. In the first quarter of this year, FDI outflows of about 20 percent higher than the previous year, he said. "After a free fall, the recovery is shy and does not flatten toward the road, thanks to a better corporate profits and improving economic and financial conditions." FDI growth prospects are still full of risks and uncertainties, including the fragile recovery, he said. FDI refers to long-term investments, like shares in foreign companies or building factories for the subsidiary, in contrast to the fragile financial investment. Trust multinational FDI recovery will occur primarily through the proliferation of mergers and cross-border acquisitions (M & A) in which the restructuring and privatization saved the company from the crisis, while offering the opportunity, he said. Willingness of multinational companies expand their business abroad looks stronger for 2011 and 2012 than in 2010, with business confidence continues to benefit from improved economic conditions, corporate profits, and stock market valuations are seen in this year. The report noted the growing role of emerging economies, both as source and destination for FDI. China and Russia are the largest source of FDI in the sixth and seventh year in 2009 with an investment of each of 48 billion dollars and 46 billion dollars, up from ninth and eighth position in 2008. China and other Asian countries become a source of FDI in Africa and other underdeveloped countries with FDI remains the main source of overall investment in the economy. When the United States survive into the largest destination of FDI, China moved up to second place from third in 2009 in 2008. Decline of investment in manufacturing to service recently - driven by the needs of labor-intensive project - and the main sectors such as mining and energy - which benefited from rising commodity prices - can not be reversed, says UNCTAD. In cross-border M & A, the value of manufacturing investment fell 77 percent in 2009, while the primary sector and the services each contraction menglakami 47 percent and 57 percent. Although M & A financial services sector declined by 87 percent. Agreement cross-border M & A fell 34 percent in 2009, or 65 percent of their value, while the construction of new manufacturing facilities by multinational companies fell only 15 percent. M & A this year apparently recovered more quickly than building a new manufacturing facility. Internationalization of production continues to grow, with the value added of foreign-affiliated companies in a multinational company to shrink slightly in the last two years than the overall economy. It makes perekonomianm share of the world's multinational companies listed reached 11 percent, employ 80 million people. Foreign direct investment by private equity fund fell by 65 percent in 2009, but flows from the sovereign wealth funds increased by 15 percent, says UNCTAD. Efforts to encourage the entry of investments while regulating them thoroughly in the midst of the crisis became a challenge to the government. Various restrictions on investment policy which is more proportionate increase to 30 percent in 2009, the highest level since UNCTAD started monitoring the trend of investment in 1992. (A027/K004)
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