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CALI 2011

“The New Leaders of the Investment World: Countries, Sectors and Projections”

Ist International Meeting of the Pacific BasinCali, Colombia 5th October, 2011

DR HENRY LOEWENDAHL

fDi Intelligence, Financial Times Ltd

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About the presentation• Focus on Greenfield Foreign Direct Investment (GFDI)• Unique data on GFDI & corporate strategies from fDi Markets

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New leaders of the investment world

COUNTRY TRENDS AND FORECASTS

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Global trends GFDI capital investment ($bn)

2005 2006 2007 2008 2009 2010 2011*0

200

400

600

800

1000

1200

1400

1600

PR (out)

Pacific Rim share of global: 38%-43% (2008-11). Share of GFDI outflows 41% to 49%AsiaPacific share grew 30% to 37% and LAC from 8% to 18% (fastest growth in world)

Source: fDi Markets database, fDi Intelligence. Includes estimates. *Projection for 2011 based on Jan-Sept data

Global

LAC

APPR (in)

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MNE strategy for Pacific RimHow companies segment the market

No. FDI projects investing in Pacific Rim by export market served

Greater China

Southern Europe

Americas

Asia-Pacific

Global

Europe

United States

North America

Domestic Only

Latin America

0 100 200 300 400 500 600

GFDI in Pacific LAC

Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Includes export markets for all activities (services, manufacturing, raw materials)

Middle East

East Asia

ASEAN

United States

Europe

Greater China

South-east Asia

Global

Domestic Only

Asia-Pacific

0 1000 2000 3000 4000

GFDI in Pacific AsiaPac

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LAC country performanceShare of GFDI in LAC (Jan-Sep 2011)

Brazil Mexico Argentina Colombia Chile Peru Panama Costa Rica

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

% FDI projects % FDI jobs % GDP 2011 forecast

Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.

Small countries outperforming larger ones. Pacific Rim countries performing strongly

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AsiaPac country performanceShare of GFDI in AsiaPac (Jan-Sep ‘11)

China

Singap

ore

Austra

lia

Hong K

ong

Vietna

m

Malays

ia

Indon

esia

Thaila

ndJa

pan

South

Korea

0%

5%

10%

15%

20%

25%

30%

35%% FDI projects % FDI jobs % GDP 2011 forecast

Source: fDi Markets database, fDi Intelligence, Financial Times Ltd.

Vietnam, Singapore, Malaysia, and Thailand best performing

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Where FDI is coming fromSource of GFDI jobs worldwide

W.Europe AsiaPac N.America M.East E.Europe LAC Africa0%

5%

10%

15%

20%

25%

30%

35%

40%

45% 41%

28%

19%

6%4%

1% 1%

38%

29%

21%

5%3%

2% 1%

35% 34%

21%

3% 3% 3%1%

2007 2009 2011 (Jan-July)

Sha

re o

f glo

bal

Source: fDi Markets database, fDi Intelligence, Financial Times Ltd

Europe in crisis. AP+LAC booming. North America flat. Middle East in decline

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Why invest in the Pacific Rim?Location determinants for GFDI projects

ICT Infrastructure Language Skills

Facilities Site or Real Estate Universities or researchers

Technology or Innovation Presence of Suppliers or JV Partners

Natural Resources Attractiveness / Quality of Life

Finance Incentives or Taxes or Funding IPA or Govt support

Lower Costs Infrastructure and logistics

Industry Cluster / Critical Mass Regulations or business climate

Skilled workforce availability Proximity to markets or customers Domestic Market Growth Potential

0 500 1000 1500 2000 2500 3000 3500 4000 4500

No. of MNES citing factor for their GFDI projects in Pacific Rim

Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Includes only GFDI projects in the Pacific Rim

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Rank in growth of GFDI projects• New Zealand• Panama• (Argentina, Brazil)• Mexico• Taiwan• Canada• Indonesia• USA• Singapore

• China• Colombia• Hong Kong

• Costa Rica

• South Korea

• Chile

Pacific Rim best performers GFDI forecasts for 2011

Source: fDi Markets database, fDi Intelligence, Financial Times Ltd. Projection for 2011

Rank in growth of GFDI new jobs• Nicaragua• Papua New Guinea• Chile• (Argentina)• Indonesia• Taiwan• Panama• South Korea• Mexico• (Brazil)• Colombia• Singapore• Vietnam• New Zealand• El Salvador

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Investment leaders in 2015Inward & outward GFDI job forecasts

China India Russia Brazil Vietnam0

100,000

200,000

300,000

400,000

500,000

600,000

2005 2010

2015 (forecast)

Source: fDi Intelligence FDI Forecasting Model

Inward FDI

USA

Japan

Germ

any

China

S.Korea

Outward FDI

Top 5 countries in 2015: Half of inward and outward FDI job creation globally

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New leaders of the investment world

SECTOR TRENDS AND FORECASTS

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FDI by business activityGFDI jobs worldwide by activity

Manufa

cturin

g

Constr

uctio

n R&D

Logis

tics

Front/B

ack o

ffice

Extrac

tion

Headq

uarte

rs

Busine

ss S

ervice

s

Sales&

Marketi

ng

ICT In

frastr

uctur

e 0%

10%

20%

30%

40%

50%

60%

46%

28%

4% 5%4% 3% 2% 2% 2% 1%

42%

24%

5%6%

5% 4% 3% 3% 2% 2%

60%

11%

6%4% 4% 3% 2% 3% 2% 3%

2007 2009 2011 (Jan-July)

Sha

re o

f glo

bal

Source: fDi Markets database, fDi Intelligence, Financial Times Ltd

Major growth in manufacturing following the recession. Growth in R&D, front/back office and ICT infrastructure. Huge decline in construction.

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FDI by industry sectorGFDI jobs worldwide by top 10 sectors

0%

5%

10%

15%

20%

25%

7% 7%

25%

8%

4%4%

2% 3%4%

2%

5%

8%

20%

6%

2%

4% 3% 3% 3%4%

10% 10%9%

7%5% 5% 5% 5% 4% 4%

2007 2009 2011 (Jan-July)

Sha

re o

f glo

bal

Source: fDi Markets database, fDi Intelligence, Financial Times Ltd

Top 10 sectors account for over 60% of global GFDI job creation

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Sub-sector forecasts 2015High growth sub-sectors (#projects)

Cloud c

ompu

ting

Wind

power

Photovo

ltaics

Social m

edia

Semicondu

ctors

Marine/W

ind tu

rbine

s

IT cons

ulting

/outsou

rcing

Knowledg

e-bas

ed outso

urce

0

50

100

150

200

250

300

8167 73

38

105

61

195

98

225

165

143

68

162

91

269

133

2010 2015

Cloud computing forecast to be fastest growing FDI sub-sector worldwide over next five years. Rapid growth forecast in renewable energy segments

Source: fDi Intelligence FDI Forecasting Model

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New leaders of the investment world

SUMMARY

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Summary – country trends• Financial crisis signalled major change in global FDI

• Pacific Rim = over 40% of inward GFDI and 50% of outward• LAC and AsiaPac fastest growing locations for GFDI worldwide• AsiaPac has reached Western Europe levels of outward GFDI

• Shift in global value chains to accelerate in next 5 years• 26 of 30 fastest growing FDI locations in 2011 are emerging markets• Top 4 leading locations in 2015 all forecast to be emerging markets• Outward GFDI from China forecast to nearly triple in next 5 years

• MNEs see Pacific Rim in terms of AsiaPac, LAC, & North America• Integration across the Pacific Rim driven by GFDI in LAC serving

North America and to a lesser extent AsiaPac• The Pacific Rim will become the major destination and source of

GFDI in next 5 years

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Summary – sector trends & competitiveness• Export orientated activities rebound in 2011

• Fastest FDI growth in manufacturing, R&D, and export services• Strong growth in FDI across many sectors in 2011

• Retail sectors, software, telecom, renewables, minerals, metals, food & drink, industrial machinery, auto components

• Fastest growth forecast in emerging technology areas• Cloud computing, renewable energy segments, social media,

semiconductors, ITO, KBO, education & training• Pacific Rim countries competitive position

• Very strong for market-seeking FDI (national/regional)• Overall attractiveness depends on skills, business climate, clusters

and infrastructure more than government incentives• Attractiveness for technology-based FDI requires sustained

investment in education and R&D to match developed country levels

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“In economics, things take longer to

happen than you think they will, and

then they happen faster than you

thought they would”

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CONTACTS

Dr Henry LoewendahlSenior Advisor, Representing fDi Intelligence, Financial Times Ltd Managing Director, WAVTEQ LtdCo-founder, Loco Software Ltd and ICA Incentives LtdE-mail: henry.loewendahl@wavteq.comSkype/MSN: hloewendahlLinkedin: Henry LoewendahlM: +44(0) 792 474 6365 W: www.fdiintelligence.comW: www.wavteq.com; www.locosoftware.ie; www.icaincentives.com