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Taiwan captures seventh place in regional FDI inflow

Taiwan was the seventh-ranking destination for foreign direct investment (FDI) last year among 57 countries collectively described as Asia and the Pacific (excluding Japan), according to a report issued by the UN Conference on Trade and Development (UNCTAD) on Thursday.

The UN's World Investment Report 2003 said that FDI flow to Taiwan declined by 65 percent to US$1.4 billion last year, from US$4.1 billion the previous year. China topped the chart, with FDI rising from US$46.8 billion in 2001 to US$52.17 billion last year.

Hong Kong took second place in the rankings, as FDI flow to the region was down 42 percent to US$14 billion last year from US$24 billion the previous year. Singapore placed third, followed by India, Malaysia and South Korea.

Overall, the report said FDI flows to Asia declined for the second consecutive year, down from US$107 billion in 2001 to US$95 billion last year. Factors that have contributed to the downturn included the slow global economic recovery, weak global demand, shaken corporate confidence and adjustments in industries such as semiconductors and electronics, the report said. The decline in FDI flows to the region also resulted from the relocation of trans-national corporation production activities to lower-cost locations, it noted.

Despite the downturn in FDI, it said Asia was least affected by the fall and was one of the most rapidly liberalizing regions, with more national measures, bilateral investment agreements and double-taxation treaties introduced last year in an effort to facilitate FDI flow.

With 31 out of 57 economies in the Asia and the Pacific region receiving less FDI, China was a notable exception, as sustained economic growth, low-cost labor and other advantages led to a 13 percent increase in FDI inflow, which reached US$52.7 billion last year.

The report concluded that prospects for rising FDI inflow to Asia and the Pacific this year are slim. But the region will continue to be the largest FDI recipient among developing regions this year, and its long-term prospects remain good, as the factors that contributed to the FDI downturn are expected to improve over the coming months.
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