A Border Roads Organisation (BRO) worker drives a steamroller while repairing a road surface with tarmac on a section of the Leh Manali highway in Ladakh region, Jammu and Kashmir, India, on Saturday, Aug. 8, 2015. India is scheduled to release second-quarter gross domestic product figures on Aug. 31. Photographer: Prashanth Vishwanathan/Bloomberg
© Bloomberg

Despite China’s slowing growth and commensurate decrease in inward foreign direct investment, which has had a knock-on effect on regional flows, Asia-Pacific is clinging to its global FDI crown.

The region soaked up 45 per cent of all greenfield investment globally in 2015, according to a report from fDi Intelligence, an FT data division. Foreign companies sited 3,883 greenfield investment projects in Asia-Pacific last year, totalling an estimated $302.5bn.

Although the number of greenfield projects locating in Asia-Pacific last year declined 7 per cent from 2014’s tally, the total capital investment increased 29 per cent on the back of large increases in markets such as India, Indonesia and Pakistan.

For the first time in many years, China was a laggard on regional FDI growth rather than an engine: it saw a 23 per cent decline in capital investment and a 16 per cent drop in FDI projects due to plateauing economic growth and rising costs.

It was knocked off its pedestal by India, which supplanted China as the world’s top destination for capital investment thanks to a number of mega investments throughout the year.

In the report, India comes out as the highest-ranked country by greenfield capital investment, with $63bn of FDI announced in 2015. Project numbers increased 8 per cent to 697, although that still trails China’s 789 projects.

Capital investment into Indonesia climbed 130 per cent to $38.5bn as a result of multiple large projects in the metals, chemicals and energy sectors, while Pakistan saw a 147 per cent increase to $18.9bn thanks to major energy-sector investments.

Other Asian countries seeing growth were the Philippines (project numbers up 16 per cent) and Thailand (up 7 per cent). But FDI in Asia-Pacific is top-heavy, with the top three destination countries for capital investment — India, China and Indonesia — accounting for nearly half of all investment into the region.

Meanwhile, a few pleasant surprises appeared in the FDI figures of previously struggling emerging Europe. The region encompassing Russia, the CIS countries and central, eastern and south-eastern Europe was the only world region to experience an increase in FDI across project numbers (+6 per cent), capital investment (+12 per cent) and jobs created through FDI (+13 per cent).

Even though their FDI figures tracked downward in the first part of the year and despite geopolitical tensions swirling around both of them, Russia and Turkey closed the year with stronger than expected performances. Russia attracted 7 per cent of estimated capital investment into Europe, at $11.6bn, and project numbers recorded by fDi Intelligence for the country were 33 per cent greater than in 2014. Turkey attracted $5.8bn and saw a 47 per cent increase in project numbers year on year.

Greenfield investment, 2015 — selected EMs*
CountryCapex, $bn**Projects
India63697
China56.6789
Indonesia38.5166
Mexico24.3351
Brazil17.3268
Russia11.6179
Turkey 5.8147
Egypt14.559
Saudi Arabia9.878
Source: The fDi Report 2016, fDi Intelligence
*top countries per region by capital investment
**includes estimates

The Middle East and Africa as a combined region remained flat, with a 6 per cent increase in project numbers into Africa balancing out decreases in the Middle East. Africa received 156 more projects than the Middle East, although the United Arab Emirates remained the top destination in the region by project numbers, accounting for nearly a quarter of the Middle East and Africa’s total.

Egypt retained its position as the top destination by capital investment in the region with $14.5bn recorded in 2015, despite a 19 per cent decrease in capex. Meanwhile, its project numbers increased 14 per cent.

Latin America and the Caribbean was the worst performing region last year. Capital investment declined to $70.2bn and project numbers dropped 13 per cent; and of the region’s top ten destination countries, only three — Chile, Bolivia and Jamaica — enjoyed growth in capital investment. After an exceptionally difficult year, Brazil managed to keep its capital investment levels flat with only a 0.2 per cent decline, but project numbers fell 17 per cent.

Globally, capital investment increased nearly 9% in 2015 to $713bn, but project numbers declined 7% to 11,930.

Courtney Fingar is head of content at fDi Intelligence, an FT data division

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