new concerns in an uncertain world (group-explorer)

8/14/2019 New Concerns in an Uncertain World (Group-Explorer)

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A presentation on-

New Concerns in an Uncertain

World


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Prepared for

Associate Professor Mehedi Hasan Md. Hefjur Rahman

Head

Business Administration Discipline

Khulna University


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Prepared by

Name ID

Abdur Rakib Akon 070305

Reza Al Saad 070312

Md. Masrul Mollah 070314

Md. Nazmul Huda 070323

Group Name-

EXPLORER


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Start-Up . . .

Despite the economic recession FDIremains increasing in these days. China

& India representing developing worldbeing at the top of FDI index. From thedeveloped world USA, Germany, UK

lead in the investors confidence. Now a

days investor consider economical,political, social & environmental stability

of a country.


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Start-Up . . .

Now days FDI is face to face with privateequity. Likely two thirds of investors &

three quarters of recognized firmsconsider private equity as threat of FDI

plan.


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Findings

FDI started recovering after 2003

In 2006 it reached second highest level

of !.3 trillion

In 2007 it was 1.5 trillion


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Findings

Investors concern of US economic healthBecause of tightening credit condition and high oil price the

investors are more uneasy. In case of FDI their main concern is The slowdown in US economy

Volatility of US dollar Rising interest rates Increased government regulation Energy price volatility Cost of Iraq war

Looming protectionism High consumer indebtness Decline in skilled workforce Persistent budget & trade deficit


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Findings

US attractiveness

US is the third most attractive FDI destination

US has stable macroeconomic environmentthat attract investors

They have large consumer market

Robust economic growth they have


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Findings

Reasons to leave USA for the investors

Better overseas investment option

Major dollar devaluationSlowing of US economy

Increased R & D regulation

Uncertainty surrounding the lastPresidential election


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China & India

China & India are the top two countries in the index.

China

In index for fifth consecutive year

Both developed & developing countries investors citechina as their preferred one for first time investment

It has financial & nonfinancial service sector

Light & heavy manufacturing sector


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China & India

India

Took position in index displacing USA

Took the secod position

FDI increased 250 percent in 2006

They have strong financial services

They have advanced information technology


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Frontier market attractiveness

United Arab Emirates considered as frontier market tothe investorsVietnam

Occupies 12th position in indexManufacturing is their main attractionIs a attractive low production base for export

Gulf State

It arrives at 17They have attractive petrochemical downstreamindustriesReal estate & financial services


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Frontier market attractiveness

South Africa

It was ranked 18th

It has political and economic stability

Acquisition of standard bank will allowchina to make future commodity & energy

investmentMalaysia & Indonesia also took place in top

25


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Near-Shore Destinations Draw Asian

and European investor Investor in Asia & Europe prefer the

near abroad for investment

On the other hand North Americaninvestors tend to look outside ofwestern hemisphere


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Competition for FDI

Private equity firms

Sovereign wealth fund

High profile investment of hedge funds


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Sustainability in Global

Investment Consumers driving environmentalism Global Corporations are looking outside their own organization

for solutions i.e. green building systems

Larger firms reported better ROI on their sustainabilityinvestments than smaller firms

Although developing country investors share the samesustainability concerns and priorities, voluntary standards havegenerally lagged behind government enforcement in respondingto environmental challenges

India continuing to move toward Western Standards China has shown increasing interest in greener development China's booming construction industry has begun to adapt clean

technologies to its purposes


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REGIONAL FINDINGS


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THE AMERICAS


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Despite Macro concerns, the U.S. economy stillexerts a powerful pull on FDI

Global investors are more optimistic about Brazil as

an investments destination in the future Mexico is getting more investments from Americain manufacturing

Venezuelas FDI rising Bolivias FDI intake fell United States has taken to negotiating separate

trade deals with many of its major Latin Americantrading partners


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United States

Holding third place in the overall index FDI Inflows from $101 billion in 2005 to $175 billion in

2006 Investors in the heavy manufacturing and the primary

sectors are also upbeat about the U.S. economy U.S. Dollar devaluation and subprime mortgage debacle is

prompting investments in financial services firms Short-term investment prospects in the United States

appear to be mixed

A slowdown in the economy coupled with concerns aboutexposure to the U.S. subprime market should mean a lessfavorable climate for investment


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Brazil

Brazil continues to be a favorite of international investors FDI Inflows from $15 billion in 2005 to $18.8 billion in

2006 Investors in the primary, manufacturing, telecom and

utilities sectors are especially confident about investmentin Brazil

The Unites States and Europe remain the largest sourcesof FDI in Brazil but the lead narrowing as Asian investors

High commodity and energy prices have boosted investor

interest in the energy and commodities sector Brazil has a comparative advantage in Biofuels Success of central bank in controlling inflation are driving

Brazils continued FDI attractiveness


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Canada

Canadas booming economy attracted FDIinflows of $69 million in 2006

Primary sector investors show the greatest

confidence in Canada In the face of strong demand and tight

commodities markets, they are increasinginvestments and riding the boom

The new governments focus on continuingreforms by lowering taxes maintaining fiscalsurpluses and continuing debt reduction hascontributed to investor optimism


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Mexico

Mexicos overall ranking of 19th is three places below itsspot in 3005

FDI Inflows from $19.7 billion in 2005 to $19 billion in2006

Almost two-third of FDI inflows come from United Statesand Canada

The agreement with the EU, Asia and Latin Americancountries also underpin investment in Mexico

Mexico competes with China for manufacturing

investments The commodity boom has also benefited Mexico


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Argentina

Argentina has not ranked

FDI Inflows from $5 billion in 2005 to

$4.8 billion in 2006 Argentinas growth of at least 8.5 percent a

year

Argentina will probably revisit its 2005 debtrestructuring and try to improve relationswith the International Monetary Fund (IMF)


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Chile

Not among the top 25 FDI destinations

FDI Inflows rose 14 from 2005 to 2006

Apart from commodities, Chile can alsoact as a regional production and serviceplatform for adjacent markets


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Andean Region

At the time of the 2005 index, analystsspeculated that forthcoming bilateral

trade deals with Andean countries Recent United States-Peru Trade

Promotion Agreement was held up in

Congress until environmental and laborstandards were added to the terms


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ASIA-PACIFIC


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Global Investors indicate strong confidence in the Asia-Pacific region

Not only do established markets such as China and Indiaremain on the top, but Singapore, Hong Kong, Vietnam,

Malaysia and Indonesia are also on the rise China and Hong Kong continue to dominate the

investment landscape Beyond energy, the prospects slowdown in Asia China

and the United States are of the similar magnitude

Global protectionism damaging to the export-basedgrowth model of so much of Asia


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China

Not topping the charts FDI Inflows from $72.4 billion in 2005 to $69.5 billion in 2006 Past restrictions in foreign participation in Chinese capital and

investment markets, as well as on foreign ownership of largeenterprises, have loosened

Tax incentives for venture capital and social investment were alsoannounced in 2007

The flurry of investments has raised fears of asset bubbles The effects of Chinas changing banking regulations, streaming from its

commitment under the WTO to liberalize the banking sector Investment in traditional manufacturing and textile sectors remained

flat. Intellectual property rights remain a concern for 50 percent of investors

in China Foreign protectionists backlash against Chinese manufacturers


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India

India retains its number two position in 2005 FDI Inflows from $6.7 billion in 2005 to $16.9

billion in 2006

Telecom and utilities investors are the mostoptimistic

Both heavy manufacturing and primary sectorfirms are looking at major projects

Investors in the financial and nonfinancialservices are also bullish on investment in India Restriction in FDI also dampen its potential


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Hong Kong

Hong Kong ranks fifth on the index FDI Inflows rose 28 from 2005 to 2006

Hong Kongs FDI success continues to beshaped by its relationship with themainlands booming economy.

The service sector enjoys first moveradvantage

More liberalization measures wereintroduced across additional servicesectors.


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SINGAPORE

7th from 18th as foreign investor friendlynations.

FDI inflows rose from $24.2 billion. First time investment destination among

developed & developing country investors.


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Major Investments

Kuwait based Proclads establishment of an oilequipment manufacturing facility.

Indonesian company Pan Sinos new cocoa

processing plants. A manufacturing & R&D center opened by a IndiasBahar industries.

Strong intellectual property regulations. Reduction in corporate tax rate.

The partial tax exemption regulation. Centralization of banks regional & global

processing operation.


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Reasons for FDI flows

Strong intellectual property regulations.

Reduction in corporate tax rate.

The partial tax exemption regulation.

Centralization of banks regional &global processing operation.


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AUSTRALIA


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Index

Dropped to 11th from 8th place.

FDI receipts recovered from the net

$35billion outflow in 2005 reaching $24billion.


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Major Investments

Steel companies TATA steel & Posco ofSouth Korea.

Chevrons Gorgon natural gas project. BHP Billiton jointly with UK as

Australian Mining Firm.


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Demand for commodities & strongmacroeconomic policies.

Consistent labor market. Tax cut.


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VIETNAM


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Index

Reaching 12th from below the top 25positions.

Asian investors ranking as third onlyafter China & India.

7th place in first time investment

destination.


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Major Investments

Intels $1billion investment.

Thailands Siam Cements plan to build

petrochemical complex. Italys Piaggios investment to produce

scooter.

Manufacturing plant of Japans HitachiConstruction Machinery Company.


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Reasons FDI Flows

Reformation in legislation governingprivate enterprise.

Stable political situation. Reformation of state owned enterprises.

Reduction of bottleneck in

infrastructure.


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JAPAN


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Index

14th most attractive first time investmentdestination.

FDI inflows $28.8billion in 2007.


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Major Investments

Health care & Pharmaceuticals.

CitiGroups $7.9billion layout of

brokerage firms.


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Recent move to allow so calledtriangular mergers.

Good fundamentals & paying debts. Growth of 1.5% since 2003 and 2.7%

since 2004.


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MALAYSIA


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Index

16th place in 2007 index.

FDI inflow rose to $6.1billion.


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Major Investments

Electronics sector.

Petrochemicals & Pharmaceuticals.

Transport Machinery.

Wood based products.


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Reasons for FDI Flows

Quality manpower with less cost.

Flexibility on the rules pertaining to

foreign ownership of manufacturing. 10 years tax exemption.

No restrictions in the hiring of foreign

employees.


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INDONESIA


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Index

21st place in FDICI.

Asian investors ranked as 11th.

Developing countries investors rankedas 15th most attractive first timeinvestment destination.

FDI rose to $3.5billion.


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Major Investments

Japan Indonesia economicpartnership.

Mitsubishi in a gas refining project.


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New investment laws.

Rich in natural resources.


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CENTRAL ASIA


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Major Investments

Investment in gas of Conoco Phillips,Chevron, PETRONAS, BP etc.

UniCredit acquired Kazakhstans ATIbank for $2.1billion.


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Energy resources like oil.

Mining.

Nuclear energy.

Gas.


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SOUTH KOREA


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Index

Decline from 23rd to 24th place.

FDI inflows down to 30%.


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Major Investments

Electronics like mobile sets, flat TVs.


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US-Korea free trade agreements.

Positioning of its free economic zones.

Doesnt face cost competition.


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THAILAND


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Index

Dropped of 2007 index.

Ranks as 11th as first time investment

destination. Grew 9% from 2005 to 06 reaching

$9.7billion.


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Major Investments & Reasons for

FDI Inflows

Political stability.

Bank loosing shares to foreign

companies. To improve regulatory oversight.

Broaden & deepen capit

al market.


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EUROPE


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Index

UK at the 4th, Germany & Francerespectively at 10th & 13th place.

Half of the FDI inflows in these threecore European economies of around$263.4billion.


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United Kingdom

Fourth Place IN the index Twenty three percent investors report

positive outlook.

Top for first time investment Financial and non financial indicate high

investment

Higher transportation cost Industrial and consumer goods received60%of total investment


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Russia

Third in the index

Resource extraction regulation

Improved large consumer market

Explicit political concern

Faces significant challenges


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Germany

10th place in the index

Investors have more positive outlook

Media, television and communicationare top three recipients of foreigninvestment

Management and Union had muchimpact


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France

Place13th in the index

40000new jobs created by foreign

investment Reformation of France economy

Election wider budget deficit.

Telecom and utility sector investorswere confident


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Czech republic

Drops to25th place

Attract auto manufacturing investment

Technology sector contributes lot todevelopment

Czech Govt. lowered tax


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Romania

Falls out of the index

Auto industry become magnet for

investment Geographic proximity

Much lower wage structure


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Middle East

The united Arab Emirates and SaudiArabia account for half

Chronic geographic challenges Outbreak of war, anti western bias

Availability of service industry hubs


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Africa

FDI performance was positive in 2006

Interested in service industry

Greatest investment for raw materialsand retail

23% of traditional energy


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Conclusion

Developed markets feel the effects offinancial

Emerging markets draw growing.


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THANK YOU

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