Foreign Direct Investments to Meet United Nations Millennium Development Goals says Dr. Supachai Panitchpakdi, Secretary-General, UNCTAD
"FDI can play an important role in stimulating growth and employment and in bringing much needed capital and know-how to developing countries", stated Dr. Supachai Panitchpakdi, Secretary-General of UNCTAD ahead of the FDI-focused event "Annual Investment Meeting" (AIM) to be held from May 10 to May 12, 2011.
The stability and reliability of long-term capital flows have transformed FDI (Foreign Direct Investment) into the leading and most favored tool to finance development in transitioning, developing and high growth economies. After 2007's record USD 2 trillion volumes of FDI flows, World Bank statistics announced that a steady but slower growth is expected in 2011 and 2012 following a sharp growth deceleration owed to 2008's financial crisis. Cross-borders capital flows are expected to reach USD 746 billion in 2011 and to be directed to BRICS, CEE and Sub-Saharan African countries. The main beneficiaries of international capital outflows were emerging markets. With higher return prospects, resilient financial systems and viable economic models, high growth regions have increasingly edged ahead of mature economies in the race for FDI attraction.
Analysts agree that the key imperatives to encourage inward investments in emerging economies include establishing economic blocs to enhance regional trade. The link between enhanced trade and FDI has long been recognized. Emerging economies trade has increased substantially and so has their economic achievements. High growth nations such as BRICS began to chart new economic architecture with more compelling value propositions to help accelerate an inclusive economic integration of their markets and achieve exceptional competitiveness on the global stage. Their financial markets have evolved and to some extent decoupled from longer established stock markets. They now collectively claim a larger share of the global volume of IPOs. Other emerging economies have similarly increased coordination.
Conventional wisdom teaches that activating mechanism of economic and financial cooperation starts with building firm foundations to strengthen relationships between key stakeholders. The recent merger of ASEAN stock exchanges, the GCC unified monetary ordeal coming to prominence as well as a wide-spread movement in consolidating policies and coordinating positions in the field of trade and investments, are concomitantly the driving forces behind emerging countries' transition to maturity.
2010 witnessed USD 933 million worth of private equity transactions in MENA region, a volume expected to reach USD 3.2 billion in 2011. While Brazil, China, India & Russia are striving to maintain close the gap with longer established markets in North America and Western Europe, Argentina agribusiness top performers reached out to investors in Bahrain in a bid to extend trade corridors beyond South America.
Countless of success stories have recently emerged from the most unexpected economic landscape. In Sub-Saharan Africa, Mauritius foreign direct investment is predicted to grow 8% in 2011 to reach the target set of 13 billion rupees by the local Board of Investment of Mauritius. In the mainland, Botswana, Zambia, Namibia & South Africa are devising strategies to consolidate their inner trade relations and attract foreign capital interest in a broader range of opportunities including agriculture, mining, energy and transportation infrastructure.
Pondering on the importance of exploring multilateral trade agreements and supporting economic corridors, Her Excellency Sheikha Lubna Bint Khalid Al Qasimi, United Arab Emirates Minister of Foreign Trade and host of the AIM commented on UAE trade legacy: "International trade has been central to the UAE's development for many centuries given the country's location at the crossroads between Europe, Africa & Asia. Pursuant to this tradition, the Annual Investment Meeting provides a dynamic platform to strengthen international commercial ties, assess bilateral and multilateral agreements and lead conducive business negotiations."
The scarce liquidity observed since the downturn has undoubtedly complicated the financing of Public Private Partnership Projects however economist observed a secondary effect. It has engaged governments to draft or implement framework of policies allowing a greater accessibility for foreign capital. A slew of initiatives have been made by emerging countries to support the economic recovery as well as stimulating the public sectors' entrepreneurship and fostering the private sector's economic input. High growth regions governmental initiatives included the adoption of sustainable anti-crisis measures, the reassessment of state investment trends, the enhancement of the global visibility of promising sectors with the empowerment of IPA (Investment Promotion Agencies).
Weighing in on the role of governments in alleviating the investment climate and accelerating economic growth thereby meeting UN Millennium Development Goals, Dr Supachai Panitchpakdi reasserted the contribution of UNCTAD's biennial World Investment Forum to be held in Qatar in 2012 in lifting up the debate on the role of public and private sector players.
While the key concern for prospective investors (institutional, corporate or individual) lies in the improvement of investment returns, the crucial challenge remains availability of critical statistics to help get acquainted with countries' sovereign risks. Structured finance aimed at assessing the viability of foreign investors' transactions plays a major role in view of the growing interest in FDI as mean to finance the development of emerging markets.
Experts gauge the health of an economy by assessing the state of the financial systems. Reports show hefty influx of foreign funding dedicated to emerging markets' nascent or buoying financial sector. The knowledge of the risks related to developing nations' financial markets - namely high volatility due to societal or structural instability - seldom divert investors' interest from the prospect of limitless wealth of benefits.
An outlook at economic indicators points out that the renewable energy sector and its spectrum of green industries proved to be resilient and recession-proof and continue to draw tremendous amounts of investments. The climate change momentum and worldwide awareness to the energy efficiency dialogue triggered a steady wave of substantial investments toward emerging markets. These investments tap into the vast potential of developing economies in need of heavy infrastructure facelift. Foreign investments in green transportation systems, green agriculture businesses, green waste management operations, green housings lead to the creation of a new indicator: Green FDI. Green Investments or Green FDI has become a growth engine and a new alternative to help boost emerging markets economic performance.
Commenting on the High-level Meetings on Green FDI to be held during the AIM by UNCTAD, Dr. Panitchpakdi stressed on how instrumental, FDI have become in developing a low-carbon economy, which is critical to combating climate change and a driver for the diversification of energy sources. The Investment Showcases will focus on emerging investment opportunities in Kenya, Malaysia, Morocco, Uzbekistan and Vietnam.
The consolidation of ASEAN stock markets, the exponential increase of private equities transactions volume in MENA or the advent of the Annual Investment Meeting in Dubai mark the rise of a new blend of consolidated economic initiatives with a long-lasting impact on capital flows and can be construed as a definitive steps for emerging countries towards reaching the maturity levels of industrialized countries.
Note: This analysis is made in the context of the United Arab Emirates Ministry of Foreign Trade Annual Investment Meeting and the comments submitted by UNCTAD Secretary-General, Dr. Supaichai Panitchpakdi aligns with the participation of UNCTAD in the AIM and more specifically the UNCTAD High Level Meeting on Green FDI & Investment Showcases.
To register, please contact:
For media enquiries, please contact:
Source:
No comments:
Post a Comment