FDI in Thailand up 21% in 2013
FOREIGN direct investment (FDI) in Thailand showed a 20.9-per-cent increase to US$13 billion (Bt419 billion) last year, though an uncertain political outlook poses a challenge, said a report by Escap.
According to the “Asia-Pacific Trade and Investment Report 2014” published by the United Nations Economic and Social Commission for Asia and the Pacific, the surge in FDI was driven mainly by a rise in mergers and acquisitions. In the year, Thailand was the second-largest target of M&A purchases in Southeast Asia, behind Singapore, with concluded sales worth $6 billion.
A major deal was the acquisition of Bank of Ayudhya by Bank of Tokyo for $5.3 billion.
Escap noted that future FDI trends of Thailand remained somewhat uncertain after months of political turmoil came to an end with a military coup in May.
“Foreign investors could begin to find neighbouring countries more attractive if the long-term political outlook remains uncertain. However, the situation is beginning to look more settled,” it said.
Thailand and China stood out among Asia-Pacific countries in terms of increases in FDI through M&As. While the entire region registered a slight decline of 3.6 per cent, the two countries attracted record values in deals in 2013, with China reaching a total of $25 billion and slightly more than $6 billion for Thailand.
In the same year, Myanmar recorded its three first M&A deals ever.
Between 2011 and 2013, Asean attracted $22.5 billion of FDI in the form of M&As from Asian countries outside the bloc, representing close to one-third of all FDI inflows through M&As to Asean. Japanese companies were involved in 51.6 per cent of intra-regional M&A-related FDI inflows, while enterprises from China including Hong Kong accounted for 21.6 per cent. The most attractive economies in this regard were Singapore and Thailand, both of which attracted $6.7 billion from Asia-Pacific firms outside Asean.
Low-income economies also took part in the intra-regional dynamic, with all M&As in Cambodia, Laos and Myanmar involving companies from the Asia-Pacific region. The financial, materials, energy and power industries were the most popular among investors in Asean, while the telecommunications sector attracted the most investments in low-income economies.
For higher-income economies, the financial sector was the main driver for intra-regional flows.
Between 2011 and 2013, Asean countries took an increasing part in M&A activities in the region.
The amount for outward M&As accounted for 36.7 per cent of total FDI. Singapore and Thailand were the most active intraregional investors, accounting for 80 per cent of Asean M&A purchases in Asia and the Pacific.
Regarding overall FDI in other Asean nations, the Philippines witnessed a 20.1percent increase in the year to almost $4 billion. At the value of $9 billion, FDI to Vietnam rose 6.4 per cent from 2012, thanks to large domestic market, low inflation and huge labour market.
FDI inflows into Indonesia decreased slightly, from $19 billion in 2012 to $18 billion last year. The major sources of investment were Japan and Singapore and most inflows were directed to the automotive manufacturing, mining, oil and gas sectors.
