JAMAICA and other developing countries absorbed more than half of the world’s foreign direct investments (FDI) — a total of US$703 billion — last year.
But, although the FDI flows to those nations were the second highest recorded, the figure actually reflects a decline by four per cent, according the 2013 World Investment Report. Overall global FDI inflows fell by 18 per cent to US$1.35 trillion last year.Consequently, recovery to more vigorous investment levels will take longer than expected, mainly due to global economic fragility and policy uncertainty, said United Nations Conference on Trade and Development (UNCTAD) in its report on investment trends.UNCTAD forecast FDI in 2013 to remain close to the 2012 level, with the upper range of US$1.45 trillion, as macroeconomic canditions improve and investore regain confidence in the medium term.Based on the weak global economy, there is therefore a clear indication that investors are looking for policy stability when seeking locations for setting up their businesses overseas, said Milton Samuda, chairman of Jampro.“There is a strong relationship between the number of external companies or transnational corporations (TNCs) operating in a country and the opportunities that country has for developing linkages with global value chains,” Samuda said Wednesday at the launch of the report at Jampro’s offices in New Kingston.Policies that attract TNCs to make developing countries, such as Jamaica, more integrated in their value chains can be considered.According to the report, TNCs are forecast to convert their record levels of cash holdings into new investments.“FDI flows may then climb to US$1.6 trillion in 2014 and US$1.8 trillion in 2015,” said UNCTAD.Jamaica’s FDI performance last year increased by 66 per cent over the prior year.The improvement was likely due to investments in major growth industries such as the business process outsourcing and tourism sectors, namely by Sutherland Global, Hinduja and Memories White Sand.Other FDI flows facilitated by the Jampro include a 100,000 square feet facililty by Vista Print in Montego Bay as well as an upgrade and expansion undertaken by telecommunications company, Columbus Communications (which operates in Jamaica as Flow).Inflows to the Caribbean and Latin America as well as Asia remained at historically high levels. Nevertheless, their growth momentum weakened, said UNCTAD.Meanwhile, foreign investments are growing in the weaker economies — least developed countries and those that are developing.“Despite these positives for the developing world, we must remain vigilant in shaping and attracting the type of investments that will always augur best for our country’s development,” Samuda said.(From left) Milton Samuda, chairman of Jampro, shares a moment with Anthony Hylton, minister of Industry, Investment and Commerce, and David Martin, general manager of JP Tropical Foods, Jamaica Producers Group at Wednesday’s launch of the World Investment Report at Jampro’s office in New Kingston. (PHOTO: JOSEPH WELLINGTON)View the original article here
FDI to developing countries declined in 2012
