FDI

By Stuart Larkin of the Institute of Southeast Asian Studies

Following his “flipping the switch” on political reform, Thein Sein, Myanmar’s president, has embraced the international donor community – of bilateral and multilateral agencies led by the Asian Development Bank, the World Bank and the IMF – in an agenda of good governance and economic liberalisation. Early reforms have spurred economic growth to around 8 per cent and both government and donors have extrapolated this trend out to 2030 and the attainment of middle income status almost as if it is already in the bag. Not wanting to be seen as a spoiler, neither side has an interest in deviating from this new economic narrative. Continue reading »

By Sunil Sanghai of HSBC

The days of hot and smart money are over. An increasing number of long-term foreign investors are betting heavily on a bright future for India. They were already doing so before the decisive election result in May and we expect this momentum to grow and grow.

Around this time last year, India’s economy seemed to be in a state of flux. The rupee was at an all-time low, inflation was stubbornly high and the equity market was shackled. Foreign institutional investors often looked confused, sucking hot money out of the markets one day only to pour it back the next. Continue reading »

Next year marks the 40th anniversary of China’s recognition of Bangladesh. It’s not a celebrated anniversary for many, least of all the country’s prime minister, Sheikh Hasina. The year, 1975, was also that of the death of her father, the country’s independence hero Sheikh Mujibur Rahman. His struggle against Pakistani domination was bitterly opposed by Beijing, where in 1971 state media described him as a “puppet countenance” and the country’s creation as “fascist nonsense”. It wasn’t until he and most of his family were gunned down that China opened relations with the country. Continue reading »

To see how China is managing its growing clout over trade and investment around the world, it might help to take a look at how an economic hegemon evolved in the past – Britain’s colonists in eighteenth and nineteenth-century India.

In reality, China is still in the East India Company stage of global economic strategy – opportunistic and pragmatic rather than ideological and intellectually coherent. (It is something of an irony that the one-party autocracy of China is proving itself eclectic while the open-market democracy of the US has been doctrinaire.) And while there are some signs that China’s economic statecraft is moving towards the transparent and plurilateral, most of its policies towards other emerging markets are opaque and self-interested. Continue reading »

By Ravi Venkatesan

India will soon have a new government and prime minister. That new leader will not have to do much to woo global companies, who are drawn already to the country’s size, demographics and talent. Instead, India just has to stop scaring companies away. Here things like infrastructure and labour law reform are important, but more than anything else, the new government must focus on making India a less difficult country in which to do businessContinue reading »

Amid the encircling gloom, a boost for the Polish economy on Tuesday: Volkswagen is to spend around 3.4bn zlotys ($1.1bn) to build a factory at Września in Poland’s Wielkopolska province. It will make VW’s Crafter delivery vans, currently built under contract by Daimler at two German factories, from the end of 2016. “Volkswagen has trusted the Poles once again,” said Janusz Piechociński, deputy prime minister. Continue reading »

Why did inflows of foreign direct investment to China jump by a strong 16.1 per cent to $10.8bn in January?

Such a robust performance may seem counterintuitive. The Chinese economy slowed last year. Its manufacturing competitiveness is being eroded by a welter of rising costs. Several high-profile incidents – a corruption scandal at GSK, the UK pharmaceuticals company, a $580m write-down on a China acquisition by Caterpillar, the US machinery giant, and the retreat of Revlon Inc, the cosmetics company, have all raised questions over the longevity of China’s allure.

But even so, say analysts, the country retains its attractiveness for foreign investors simply because it generates superior returns. Continue reading »

The Indian government is keen to draw investors to the country, easing FDI caps in a range of sectors over the last year and a half. But you might think recent financial instability and political uncertainty ahead of this year’s general elections would hurt enthusiasm.

However, an Ernst & Young survey of 500 international investors has found some optimism about Asia’s third largest economy. Continue reading »

If investing is all about value creation, the latest batch of figures from Brazil’s central bank make for sobering reading. They show the rich returns you can make when investing in Brazil goes right – and the huge losses that result when it goes wrong. Over the past three years, foreign direct investors and buyers of Brazilian portfolio assets have suffered value destruction on a colossal scale.

An analysis of central bank figures by beyondbrics shows that ,taken together, flows of foreign direct investment to Brazil and foreign investment in Brazilian portfolio assets were worth more than $260bn between January 2011 and November 2013. Over the same period, in spite of those inflows, the value of such assets held by foreigners fell from $1,351bn to $1,327bn, a loss of $24bn, implying value destruction of more than $284bn in less than three years. Continue reading »

Don't worry, it's not happening

The Aam Aadmi Party (AAP), having assumed power in Delhi just last month, is starting to deliver on the populist promises in its manifesto. On Monday, its target was FDI in multibrand retail as it took advantage of the opt-out clause and rolled back approvals for the state.

For foreign investors, it makes India that bit less attractive. Continue reading »

Majid Al Futtaim, the malls operator that brought an indoor ski slope to Dubai, is seeking to double revenues over the next five years by bringing Carrefour markets and mega-malls to more countries across the broader region.

Having expanded across 12 countries in the Middle East, North Africa and central Asia, the retailing giant is scouting four out of the 14 sub-Saharan African countries for which it holds Carrefour franchisee rights. Continue reading »

By Leslie Young of the Cheung Kong Graduate School of Business

The past few weeks have seen a significant uplift in UK-China relations. After a long diplomatic freeze, a warming of relations between Westminster, the City and Beijing was manifested in highly-publicised visits by the UK’s Chancellor and the Mayor of London in early October; next up is the Prime Minister’s visit to China. The next few days will see the largest-ever UK business delegation hit Beijing and Shanghai. But how to turn such visits into a long-term, strategic partnership with China that generates jobs and sustains growth? Continue reading »

By Kim Kyung-Hoon of SERI

Global investors who have shifted to “safer” Korea from southeast Asia should not assume they are unbuckled completely. Korea is raising its bet on Asean and its corporations’ balance sheets should increasingly reflect the economic direction of the 10-nation bloc.

Fronting the push is President Park Geun-hye’s self-styled “sales diplomacy.” Continue reading »

Last year the Indian government eased the rules on FDI into single-brand retail, allowing 100 per cent foreign ownership. Yet Villeroy & Boch, the German-owned porcelain manufacturer, has chosen to come to India in a joint venture with a local partner.

It raises questions about the policy reform and whether foreign stores will set up alone in India – even if they are now allowed to. Continue reading »

By Kim Hayward of BDO

The growth potential for medium sized businesses following international expansion is enormous. For many, the route may lie in emerging markets; yet although these markets play an increasingly large role in the global economy, just over 5 per cent of UK exports are to the Bric countries and the UK still exports more to Ireland than to China – and this is likely still to be the case in 2030. To unlock their potential, MSBs must capitalise on opportunities in emerging markets with a combination of strategy and opportunism. Continue reading »