A presentation on-

New Concerns in an Uncertain

World
Prepared for
Associate Professor Mehedi Hasan Md. Hefjur Rahman
Head
Business Administration Discipline
Khulna University
Prepared by
Name ID
Group Name-
Abdur Rakib Akon 070305
EXPLORER Reza Al Saad 070312
Md. Masrul Mollah 070314
Md. Nazmul Huda 070323
Start-Up . . .

Despite the economic recession FDI

remains increasing in these days. China
& India representing developing world
being at the top of FDI index. From the
developed world USA, Germany, UK
lead in the investors confidence. Now a
days investor consider economical,
political, social & environmental stability
of a country.
Start-Up . . .

Now days FDI is face to face with private

equity. Likely two thirds of investors &
three quarters of recognized firms
consider private equity as threat of FDI
plan.
Findings

• FDI started recovering after 2003

• In 2006 it reached second highest level
of !.3 trillion
• In 2007 it was 1.5 trillion
Findings
Investors concern of US economic health
Because of tightening credit condition and high oil price the
investors are more uneasy. In case of FDI their main concern is
• The slowdown in US economy
• Volatility of US dollar
• Rising interest rates
• Increased government regulation
• Energy price volatility
• Cost of Iraq war
• Looming protectionism
• High consumer indebtness
• Decline in skilled workforce
• Persistent budget & trade deficit
Findings

US attractiveness
•US is the third most attractive FDI destination
•US has stable macroeconomic environment
that attract investors
•They have large consumer market
•Robust economic growth they have
Findings
Reasons to leave USA for the investors
•Better overseas investment option
•Major dollar devaluation
•Slowing of US economy
•Increased R & D regulation
•Uncertainty surrounding the last
Presidential election
China & India
China & India are the top two countries in the index.
China
•In index for fifth consecutive year
•Both developed & developing countries investors cite
china as their preferred one for first time investment
•It has financial & nonfinancial service sector
•Light & heavy manufacturing sector
China & India
India
• Took position in index displacing USA
• Took the secod position
• FDI increased 250 percent in 2006
• They have strong financial services
• They have advanced information technology
Frontier market attractiveness
United Arab Emirates considered as frontier market to
the investors
Vietnam
•Occupies 12th position in index
•Manufacturing is their main attraction
•Is a attractive low production base for export
Gulf State
•It arrives at 17
•They have attractive petrochemical downstream
industries
•Real estate & financial services
Frontier market attractiveness

South Africa
• It was ranked 18th
• It has political and economic stability
• Acquisition of standard bank will allow
china to make future commodity & energy
investment
Malaysia & Indonesia also took place in top
25
Near-Shore Destinations Draw Asian
and European investor
• Investor in Asia & Europe prefer the
“near abroad” for investment
• On the other hand North American
investors tend to look outside of
western hemisphere
Competition for FDI

• Private equity firms

• Sovereign wealth fund
• High profile investment of hedge funds
Sustainability in Global
Investment
• Consumers driving environmentalism
• Global Corporations are looking outside their own organization
for solutions
• i.e. green building systems
• Larger firms reported better ROI on their sustainability
investments than smaller firms
• Although developing country investors share the same
sustainability concerns and priorities, voluntary standards have
generally lagged behind government enforcement in responding
to environmental challenges
• India continuing to move toward Western Standards
• China has shown increasing interest in greener development
• China's booming construction industry has begun to adapt clean
technologies to its purposes
REGIONAL FINDINGS
THE AMERICAS
• Despite Macro concerns, the U.S. economy still
exerts a powerful pull on FDI
• Global investors are more optimistic about Brazil as
an investments destination in the future
• Mexico is getting more investments from America
in manufacturing
• Venezuela’s FDI rising
• Bolivia’s FDI intake fell
• United States has taken to negotiating separate
trade deals with many of its major Latin American
trading partners
United States
• Holding third place in the overall index
• FDI Inflows – from $101 billion in 2005 to $175 billion in
2006
• Investors in the heavy manufacturing and the primary
sectors are also upbeat about the U.S. economy
• U.S. Dollar devaluation and subprime mortgage debacle is
prompting investments in financial services firms
• Short-term investment prospects in the United States
appear to be mixed
• A slowdown in the economy coupled with concerns about
exposure to the U.S. subprime market should mean a less
favorable climate for investment
Brazil
• Brazil continues to be a favorite of international investors
• FDI Inflows – from $15 billion in 2005 to $18.8 billion in
2006
• Investors in the primary, manufacturing, telecom and
utilities sectors are especially confident about investment
in Brazil
• The Unites States and Europe remain the largest sources
of FDI in Brazil but the lead narrowing as Asian investors
• High commodity and energy prices have boosted investor
interest in the energy and commodities sector
• Brazil has a comparative advantage in Biofuels
• Success of central bank in controlling inflation are driving
Brazil’s continued FDI attractiveness
Canada
• Canada’s booming economy attracted FDI
inflows of $69 million in 2006
• Primary sector investors show the greatest
confidence in Canada
• In the face of strong demand and tight
commodities markets, they are increasing
investments and riding the boom
• The new government’s focus on continuing
reforms by lowering taxes maintaining fiscal
surpluses and continuing debt reduction has
contributed to investor optimism
Mexico
• Mexico’s overall ranking of 19th is three places below its
spot in 3005
• FDI Inflows – from $19.7 billion in 2005 to $19 billion in
2006
• Almost two-third of FDI inflows come from United States
and Canada
• The agreement with the EU, Asia and Latin American
countries also underpin investment in Mexico
• Mexico competes with China for manufacturing
investments
• The commodity boom has also benefited Mexico
Argentina

• Argentina has not ranked

• FDI Inflows – from $5 billion in 2005 to
$4.8 billion in 2006
• Argentina’s growth of at least 8.5 percent a
year
• Argentina will probably revisit its 2005 debt
restructuring and try to improve relations
with the International Monetary Fund (IMF)
Chile

• Not among the top 25 FDI destinations

• FDI Inflows rose 14 from 2005 to 2006
• Apart from commodities, Chile can also
act as a regional production and service
platform for adjacent markets
Andean Region

• At the time of the 2005 index, analysts

speculated that forthcoming bilateral
trade deals with Andean countries
• Recent United States-Peru Trade
Promotion Agreement was held up in
Congress until environmental and labor
standards were added to the terms
ASIA-PACIFIC
• Global Investors indicate strong confidence in the Asia-
Pacific region
• Not only do established markets such as China and India
remain on the top, but Singapore, Hong Kong, Vietnam,
Malaysia and Indonesia are also on the rise
• China and Hong Kong continue to dominate the
investment landscape
• Beyond energy, the prospects slowdown in Asia – China
and the United States – are of the similar magnitude
• Global protectionism – damaging to the export-based
growth model of so much of Asia
China
• Not topping the charts
• FDI Inflows – from $72.4 billion in 2005 to $69.5 billion in 2006
• Past restrictions in foreign participation in Chinese capital and
investment markets, as well as on foreign ownership of large
enterprises, have loosened
• Tax incentives for venture capital and social investment were also
announced in 2007
• The flurry of investments has raised fears of asset bubbles
• The effects of China’s changing banking regulations, streaming from its
commitment under the WTO to liberalize the banking sector
• Investment in traditional manufacturing and textile sectors remained
flat.
• Intellectual property rights remain a concern for 50 percent of investors
in China
• Foreign protectionists backlash against Chinese manufacturers
India
• India retains its number two position in 2005
• FDI Inflows – from $6.7 billion in 2005 to $16.9
billion in 2006
• Telecom and utilities investors are the most
optimistic
• Both heavy manufacturing and primary sector
firms are looking at major projects
• Investors in the financial and nonfinancial
services are also bullish on investment in India
• Restriction in FDI also dampen its potential
Hong Kong
• Hong Kong ranks fifth on the index
• FDI Inflows rose 28 from 2005 to 2006
• Hong Kong’s FDI success continues to be
shaped by its relationship with the
mainland’s booming economy.
• The service sector enjoys first mover
advantage
• More liberalization measures were
introduced across additional service
sectors.
SINGAPORE

• 7th from 18th as foreign investor friendly

nations.
• FDI inflows rose from $24.2 billion.
• First time investment destination among
developed & developing country investors.
Major Investments
• Kuwait based Proclads establishment of an oil
equipment manufacturing facility.
• Indonesian company Pan Sino’s new cocoa
processing plants.
• A manufacturing & R&D center opened by a India’s
Bahar industries.
• Strong intellectual property regulations.
• Reduction in corporate tax rate.
• The partial tax exemption regulation.
• Centralization of banks’ regional & global
processing operation.
Reasons for FDI flows

• Strong intellectual property regulations.

• Reduction in corporate tax rate.
• The partial tax exemption regulation.
• Centralization of banks’ regional &
global processing operation.
AUSTRALIA
Index

• Dropped to 11th from 8th place.

• FDI receipts recovered from the net
$35billion outflow in 2005 reaching $24
billion.
Major Investments

• Steel companies TATA steel & Posco of

South Korea.
• Chevron’s Gorgon natural gas project.
• BHP Billiton jointly with UK as
Australian Mining Firm.
Reasons for FDI flows

• Demand for commodities & strong

macroeconomic policies.
• Consistent labor market.
• Tax cut.
VIETNAM
Index

• Reaching 12th from below the top 25

positions.
• Asian investors ranking as third only
after China & India.
• 7th place in first time investment
destination.
Major Investments

• Intel’s $1billion investment.

• Thailand’s Siam Cement’s plan to build
petrochemical complex.
• Italy’s Piaggio’s investment to produce
scooter.
• Manufacturing plant of Japan’s Hitachi
Construction Machinery Company.
Reasons FDI Flows

• Reformation in legislation governing

private enterprise.
• Stable political situation.
• Reformation of state owned enterprises.
• Reduction of bottleneck in
infrastructure.
JAPAN
Index

• 14th most attractive first time investment

destination.
• FDI inflows $28.8billion in 2007.
Major Investments

• Health care & Pharmaceuticals.

• CitiGroup’s $7.9billion layout of
brokerage firms.
Reasons for FDI flows

• Recent move to allow so called

triangular mergers.
• Good fundamentals & paying debts.
• Growth of 1.5% since 2003 and 2.7%
since 2004.
MALAYSIA
Index

• 16th place in 2007 index.

• FDI inflow rose to $6.1billion.
Major Investments

• Electronics sector.
• Petrochemicals & Pharmaceuticals.
• Transport Machinery.
• Wood based products.
Reasons for FDI Flows

• Quality manpower with less cost.

• Flexibility on the rules pertaining to
foreign ownership of manufacturing.
• 10 years tax exemption.
• No restrictions in the hiring of foreign
employees.
INDONESIA
Index

• 21st place in FDICI.

• Asian investors ranked as 11th.
• Developing countries investors ranked
as 15th most attractive first time
investment destination.
• FDI rose to $3.5billion.
Major Investments

• Japan –Indonesia economic

partnership.
• Mitsubishi in a gas refining project.
Reasons for FDI Flows

• New investment laws.

• Rich in natural resources.
CENTRAL ASIA
Index

• Moved to 23rd from 24th place.

• FDI rose to $8.3billion.
• Kazakhstan is the clear leader.
Major Investments

• Investment in gas of Conoco Phillips,

Chevron, PETRONAS, BP etc.
• UniCredit acquired Kazakhstan’s ATI
bank for $2.1billion.
Reasons for FDI Flows

• Energy resources like oil.

• Mining.
• Nuclear energy.
• Gas.
SOUTH KOREA
Index

• Decline from 23rd to 24th place.

• FDI inflows down to 30%.
Major Investments

• Electronics like mobile sets, flat TVs.

Reasons for FDI Flows

• US-Korea free trade agreements.

• Positioning of its free economic zones.
• Doesn’t face cost competition.
THAILAND
Index

• Dropped of 2007 index.

• Ranks as 11th as first time investment
destination.
• Grew 9% from 2005 to ‘06 reaching
$9.7billion.
Major Investments & Reasons for
FDI Inflows
• Political stability.
• Bank loosing shares to foreign
companies.
• To improve regulatory oversight.
• Broaden & deepen capit
• al market.
EUROPE
Index

• UK at the 4th, Germany & France

respectively at 10th & 13th place.
• Half of the FDI inflows in these three
core European economies of around
$263.4billion.
United Kingdom
• Fourth Place IN the index
• Twenty three percent investors report
positive outlook.
• Top for first time investment
• Financial and non financial indicate high
investment
• Higher transportation cost
• Industrial and consumer goods received
60%of total investment
Russia

• Third in the index

• Resource extraction regulation
• Improved large consumer market
• Explicit political concern
• Faces significant challenges
Germany

• 10th place in the index

• Investors have more positive outlook
• Media, television and communication
are top three recipients of foreign
investment
• Management and Union had much
impact
France

• Place13th in the index

• 40000new jobs created by foreign
investment
• Reformation of France economy
• Election wider budget deficit.
• Telecom and utility sector investors
were confident
Czech republic

• Drops to25th place

• Attract auto manufacturing investment
• Technology sector contributes lot to
development
• Czech Govt. lowered tax
Hungary

• Does not rank within top 25

• Experienced significant political turmoil
• Wage and cost advantage
Romania

• Falls out of the index

• Auto industry become magnet for
investment
• Geographic proximity
• Much lower wage structure
Middle East

• The united Arab Emirates and Saudi

Arabia account for half
• Chronic geographic challenges
• Outbreak of war, anti western bias
• Availability of service industry hubs
Africa

• FDI performance was positive in 2006

• Interested in service industry
• Greatest investment for raw materials
and retail
• 23% of traditional energy
Conclusion

• Developed markets feel the effects of

financial
• Emerging markets draw growing.
THANK YOU