Global FDI expected to rise slightly this year; Asean, Thailand seen outperforming trend

Watcharas Leelawath, deputy executive director of the International Institute for Trade and Development, sees a gradual increase of 2 to 3 per cent in FDI around the world this year, resulting in around $1.4 trillion of investment.
The FDI inflow to Asean – and not least, Thailand – is, however, expected to outperform this trend.
The inflow to Asean will continue to increase, having risen by 2 per cent last year, according to Unctad’s report.
The region’s infrastructure, logistics and transportation are the main factors attracting investors.
Labour-intensive industries still see opportunities in the region, especially in Cambodia, Vietnam and Myanmar, while Asean continues to be an attractive FDI recipient with the approach of the Asean Economic Community, which comes into effect in 2015.

THAI FDI IN ASEAN RISES
“The most interesting points are a noticeable increase in FDI outflow from and inflow to Thailand,” said Watcharas.
Thai investors have increased investment in Asean countries such as Indonesia, Cambodia, Vietnam and |Laos. The investment – mostly in the agriculture, food and textile industries – increased by 44.9 per cent last year to $11.911 billion.
“It is a good development for the coming regional cooperation, sharing resources and labour,” he said.
The growth rate of Asean FDI inflow was 10.6 per cent last year, with the potential for further impressive increases in the years to come, he added.
Despite its potential effect on investment, political instability in Thailand would be offset by the confidence of private-sector operators that any negative impact would not directly damage their facilities, he said.
On the other hand, currency volatility is a concern. The baht has recently been fluctuating wildly in a broad range against the US dollar, he said, adding that a means of maintaining currency stability should be introduced.
 Another concern is the Chinese economy, as China is both the leading FDI recipient and the world’s largest investor.
The negative economic outlook could hurt investment and trade volume in Thailand, as China is one of the biggest investors in Kingdom, as well as a major target for Thai exporters. In general, the impact is expected to be seen in six months to a year, he said.
 The decline in the US quantitative-easing scheme will also influence FDI and trade volume in the region, but it is hard to calculate the size of the impact.
 The main foreign investors in Thailand will continue to be Japan in the automobile and electrical and electronics industries, which are technology-intensive.
 Watcharas suggested that the Thai private and public sectors should cooperate and help increase productivity by equipping labour with efficient skills, and better knowledge and technology.
 This would increase the country’s capability to involve itself in the global value chain, and result in added value in Thailand, he said.