Malaysia among the top 20 favourite destinations for FDI

BANGKOK, Oct 5 (Bernama) -- Malaysia is ranked among the world's top 20 attractive economies for foreign direct investment (FDI), according to the World Investment Prospects Survey 2007-2009 FDI released Friday.The United Nations Conference on Trade and Development (Unctad) says Malaysia is ranked 14th, ahead of 15th place Indonesia and Singapore one rung lower, as five Southeast Asian countries remain among the favourite FDI destinations.The top 10 countries in the survey are led by the world's two fastest growing - China and India - followed by the United States, Russia, Brazil, rising star Vietnam, Britain, Australia, Mexico and Poland.Others in the top 20 are Germany (11), Thailand (12), France (13), Italy (17), Ukraine (18), Japan (19) and Canada (20).According to the survey, South, East and Southeast Asia, which offer major locational advantages such as market growth and size, cost and quality of labour, are consolidating their position as the most preferred region of international investors.In fact, almost two thirds of the companies which participated in the survey say they have plans to invest in either China or India or both."While, in the view of investors, they share the same advantages in terms of labour costs and size/growth of market, India ranks higher in terms of skilled labour," it notes.Unctad says FDI flows are expected to increase over the next three years despite concerns about global financial instability and protectionism in some countries.According to it, the survey results are based on 192 respondents among the largest transnational corporations (TNCs), and that more than two-thirds of them plan to increase their FDI expenditure in each of the years from 2007 to 2009.The survey shows that FDI is expected to increase across practically all sectors and home countries due to continued world economic growth, high profitability and the availability of external finance.Greenfield investments (the establishment of new affiliates in foreign countries) will be more commonly used as an entry mode into developing economies while investment in developed countries will more frequently take the form of mergers and acquisitions.Unctad says access to large and growing markets will be by far the main driver of FDI growth - this factor was mentioned as a major investment determinant by more than half of the TNC respondents - followed by access to resources (17 percent of respondents), especially skilled labour.On the other hand, geopolitical and financial instability are mentioned by companies as the major uncertainties that could potentially hinder their FDI expansion, as well as possible increase in protectionism.The survey says more than 80 percent of the respondents mention these three risks as important or very important.