MARKETS & INVESTING | Staff Reporter, Singapore

Foreign direct investment from Singapore fell 11.79% to US$24.7b

This was due to a significant fall in foreign direct investments in the financial sector.

The United Nations Conference on Trade and Development (UNCTAD) previously reported in its World Investment Report that Singapore ranked as the fifth largest recipient of foreign direct investment (FDI) in the world as it got US$62b in 2017 and US$77b in 2016.

However, FDI plunged 19.9% due to a significant fall in foreign investment in the financial sector. Amongst developing countries, Singapore was the fourth largest FDI recipient after China, Hong Kong, and Brazil.

Meanwhile, its rank as the 14th largest source of FDI didn’t change, where it was just below South Korea and Russia but above Sweden and Netherlands. It invested US$28b in 2016 and US$24.7b in 2017, down 11.79% in just a year.

UNCTAD also noted that Singapore is the top developing economy in terms of its participation rate in the global value chain (GVC) at 76%, making it a place of regional headquarters and logistical centres for multinational enterprise (MNE) operations alongside Belgium, the Netherlands, Hong Kong, China, and Ireland.

Singapore’s Broadcom and Flex were one of the top MNEs that doubled their foreign assets in 2016, setting an example of Asian companies leading the way in cross-border megadeals and developing economies’ MNEs increasing their foreign operations.

The involvement of Singapore in the GVC has led it to become the leading investor in some of UNCTAD’s identified regions.

For developing Asia, Singapore is the fifth largest investor in terms of FDI stock, having invested US$188b in 2011 and US$258b in 2016.

Announced greenfield FDI projects in Singapore, in which a parent company builds its operations from the ground up, fell 46.34% from US$19.66b to US$10.55b. Greenfield FDI from the country jumped 168.64% from US$1.69b to US$4.54b.

Net cross-border mergers and acquisitions (M&A) sales of Singapore companies fell from US$3.09b to US$1.69b. Meanwhile, M&A purchases grew from US$3.8b to $4.45b.

For developed countries, from 2016 to 2017, cross-border M&A sales of Singapore companies jumped from US$2.4b to US$10.75b. M&A purchases soared from US$560m to $5.17b.

Meanwhile, Singapore is the top seven investor in Africa with investment worth US$17b in 2016.

For least developed countries, Singapore was the 10th largest investor in 2016 (US$3b). Notably, M&A sales surged by 468.89% from US$45m to US$256m.

For landlocked developing countries, greenfield FDI projects from Singapore in the least developed countries dramatically jumped from US$80m to US$938m.

For small island and developing states, Singapore’s investment fell by 14.29% from US$14b to US$12b. Cross-border M&A sales surged from US$31m to US$300m, whilst purchases hit a negative US$38m in 2017. 

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