AJBM PUBLIC SEMINAR

1
AJBM PUBLIC SEMINARA NEW PATTERN OF FOREIGN
INVESTMENT IN EMERGING EAST ASIA ECONOMY
5.1.1.4

• SESSION II
• FACTORS ENABLING FOREIGN
• INVESTMENT IN ASEAN EAST ASIA
• 23 NOVEMBER 2005
• PLAZA ATHENEE, BANGKOK, THAILAND
• PANEL DISCUSSION
• COMMENTS BY PANELIST
• DATO MOHAMED IQBAL
• SECRETARY GENERAL OF MAJECA
• MALAYSIA-JAPAN ECONOMIC ASSOCIATION
• AND GROUP EXECUTIVE DIRECTOR OF
• FARLIM GROUP (MALAYSIA) BERHAD

2
UNCTAD WORLD INVESTMENT REPORT 2005

• ASIA OCEANIA RECEIVED IN FDI
• 2002 US94 BILLION
• 2003 US107 BILLION
• 2004 US148 BILLION
• TOP RECEIPIENT AMONG DEVELOPING REGIONS.
• GEOGRAPHICALLY CONCENTRATED CHINA, HONG KONG,
  SINGAPORE, INDIA REPUBLIC OF KOREA
• EAST ASIA INCLUDING ASEAN PREFERRED TARGET IN
  2004
• 46 INCREASE IN FDI FLOWS
• 2002 US15 BILLION
• 2003 US19 BILLION 27 INCREASE
• CHINA LARGEST RECEPIENT US60.6 BILLION
• HONG KONG, CHINA US34 BILLION 150 INCREASE
• CHINA HONG KONG 2/3 OF THE FDIs IN THIS PART
  OF THE WORLD

3

• FACTORS ENABLING LARGE CAPITAL FLOWS
• RAPID AND STRONG ECONOMIC GROWTH
• IMPROVED POLICY ENVIRONMENT
• INCREASING STRATEGIC COMMITMENTS TO ASIAN MARKETS
  BY TNCS
• ELECTION OF NEW GOVERNMENTS IN MOST COUNTRIES
• REGIONAL INTEGRATION
• INTRA-REGIONAL INVESTMENT INCENTIVES

4
INVESTMENTS
DEVELOPING COUNTRIES
EMERGING MARKETS
TECHNOLOGY
CAPITAL FLOWS - SOURCE OF
ECONOMIC GROWTH
INADEQUATE TO MEET DEVELOPMENTAL TARGETS
DOMESTIC
DEMAND FOR CAPITAL (INVESTMENT)
CAPITAL FLOWS
FOREIGN
5

PORTFOLIO INVESTMENT
COMMERCIAL FLOWS
BANK LENDING
FDI
PRIVATE CAPITAL FLOWS
NON-COMMERCIAL FLOWS MIGRANT WORKERS
REMITTANCE
BILATERAL
EXTERNAL DEVELOPMENT FINANCING
MULTILATERAL
ODA (OFFICIAL DEVELOPMENT ASSISTANCE
6

• FDI
• ACCESS TO
• NEW INVESTMENT CAPITAL
• NEW TECHNOLOGIES
• MANAGEMENT EXPERTISE
• EXPORT MARKETS
• DERIVE THRU MNCS
• NEW TECHNOLOGIES
• QUALITY IMPROVEMENT
• PRODUCTIVITY TO MEET INVESTMENT STANDARDS
• GREEN FIELD INVESTMENTS (BUILDING NEW
  PRODUCTIVE CAPACITY, JOBS GENERATION IN HOST
  COUNTRY)
• ENHANCE
• BUDGET CONSTRAINTS, AND LOW LEVEL OF DOMESTIC
  SAVINGS FACED BY MOST DEVELOPING COUNTRIES
• WILL REMAIN
• AS A STRATEGIC SOURCE OF FINANCING

7
CRISES AND RESILIENCE

• 1980s DEBT CRISES - DROP IN BANK LENDING
• 1990s ASIAN FINANCIAL CRISIS
• LED TO REFORMS IN INVESTMENT POLICIES
• OBJECTIVE TO ATTRACT STABLE FORMS OF FOREIGN
  CAPITAL
• FDI AS AN ALTERNATIVE TO DOMESTIC SOURCES
  INCLUDING BANK LOANS

8
GLOBALISING WORLD

• COMPETITION FOR FDIs
• FOCUS ON
• 1. ENABLING BUSINESS FRIENDLY ENVIRONMENT
• 2. NEW APPROACHES TO ATTRACT FDI
• 3. MANAGING FDI TO MAXIMISE CONTRIBUTION

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• PAST
• TARGETTED PROMOTION POLICIES
• INCENTIVES
• PERFORMANCE REQUIREMENTS
• STRUCTURES/MECHANISMS TO SUPPORT ENTERPRISES
• PRESENT TREND
• LIBERALISATION OF FDI REGIMES
• SINCE 2003 244 CHANGES IN LAWS AND REGULATIONS
  AFFECTING FDI 220 IN THE DIRECTION OF MORE
  LIBERALISATION.
• INTERNATIONAL RULES IN THE FRAMEWORK OF
  MULTILATERAL AGREEMENTS
• 86 BILATERAL INVESTMENT TREATIES (BITs), and
• 60 DOUBLE TAXATION TREATIES (DITTs) TOTAL 2316
  CONCLUDED IN 2003
• TRIMS - TRADE RELATED INVESTMENT MEASURES
• - SUBSIDIES AND COUNTERVAILING MEASURES (SCMS)
• DROPED LOCAL CONTENT REQUIREMENTS PHASED OUT
• ABOLISHED INVESTMENT PERFORMANCE REQUIREMENTS
• EXPANDED SCOPE OF INCENTIVES

10
MALAYSIA 2006 BUDGET

• PRO BUSINESS
• PRO GROWTH
• STRENGTHENING RESILIENCE MEETING CHALLENGES
• PROACTIVE GOVERNMENT MEASURES TO ACCELERATE
  ECONOMIC ACTIVITIES
• PROVIDING BUSINESS FRIENDLY ENVIRONMENT

APPROACH