FDI in Developing Asia Weathers COVID Upset

Foreign direct investment plummeted in 2020 due to the coronavirus pandemic, losing 42 percent of its global volume compared with 2019. While developed economies suffered most, developing economies – especially those in Asia – handled the crisis better. As a result, 72 percent of global FDI inflows went to the developing world in 2020. This is according to a report released by the U.N. Conference for Trade and Development on Sunday.

Foreign investment inflow into developing Asia was still down by 4 percent, but individual countries actually managed to grow FDI during the global crisis. Among them were China, where FDI was up by 4 percent, and India, where inflows were up by 13 percent. The acquisition of a 9.99 percent share of tech and telecom company Jio by Facebook for $5.7 billion was one example of continued foreign interest in the country’s digital economy.

The Philippines bucked the negative growth trend in Southeast Asia by increasing incoming FDI by a whopping 29 percent to $6.4 billion. The country has loosened its foreign investment rules incrementally to increase competitiveness and climbed up 29 ranks in the 2020 "Doing Business" ranking by the World Bank. The Philippines also recently launched a campaign - Make it Happen in the Philippines - to advertise its investment options.

Since the Philippines remain a smaller investment market in Southeast Asia, the region suffered due to dismal performances of its larger players. FDI in Singapore was down 37 percent while Indonesia lost 24 percent and Vietnam 10 percent – resulting in a regional decrease of 31 percent. South Asia grew FDI by 10 percent, buoyed by India’s performance. FDI in East Asia grew by 12 percent due to positive performances by China, Hong Kong and Japan, one of the few developed nations where FDI increased.