9th Meeting of the Asia-Pacific Foreign Direct Investment (FDI) Network United Nations Conference Centre, Bangkok, Thailand

4 December 2019

FDI in Asia and Pacific: Impact of Trade Wars

Dr. Henry Loewendahl, CEO Wavteq / SVP fDi Intelligence

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TRENDS IN FDI

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Is global FDI increasing

or declining in 2019?

Audience Poll

# who say increasing:

# who say decreasing:

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Is FDI in Asia Pacific

increasing or declining in 2019?

Audience Poll

# who say increasing:

# who say decreasing:

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Global FDI market – the cake is getting smallerFDI TRENDS 2019

Source: UNCTAD in $ billion

• Note FDI flows

were low in 2018

due to repatriation

of capital back to

US by US foreign

subsidiaries

following US tax

reform in 2017

• 2019 data is best

compared to 2017

and before

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Global FDI market – FDI flows to emerging markets are not increasingFDI TRENDS 2019

Source: UNCTAD in $ billion.

Greenfield FDI is down 23% in 2019 Q1-Q3

Global FDI job creation is down by 13% in 2019 Q1-Q3

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Top 5 destination countries in the world for greenfield FDIFDI TRENDS 2019

Source: fDi Markets. Data includes estimates

(Q1-Q3)(Q1-Q3)

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Greenfield FDI jobs growth in SE Asia is being driven by Vietnam FDI TRENDS 2019

Source: fDi Markets. Data includes estimates

(Q1-Q3)

Vietnam’s share of FDI job creation in ASEAN increased from 31.4% in 2018 to a record

48.5% in 2019 YTD

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IMPACT OF THE TRADE WAR

02

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Greenfield FDI in the US – solid growth in 2019: could be a record yearIMPACT OF THE TRADE WAR

Source: fDi Markets. Data includes estimates. Data to October 2019. In $ million

(Q1-Q3)

Strong growth is being experienced in 2019 driven by investment in conventional and renewable energy and life sciences

Capital investment in $ million by quarter

11

Manufacturing FDI jobs growing strongly driven by auto and pharmaIMPACT OF THE TRADE WAR

Source: fDi Markets. Data includes estimates. Data to October 2019

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Impact of trade barriers on FDI – empirical evidence on FDI in the USAIMPACT OF THE TRADE WAR

7084

6084

13915 13760

7086

5959

12543

6847

21381403

2047

3425

1106

260 78

1094

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2018 Q3 2018 Q4 2019 Q1 2019 Q2

Germany Japan Korea China

FDI flow into USA $ million

Source: WAVTEQ based on BEA data

13

Greenfield manufacturing FDI in the US – Canada, UK, China increasing shareIMPACT OF THE TRADE WAR

(Q1-Q3 2019)

(Q1-Q3)

Source: fDi Markets. Data includes estimates. Data to October 2019

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Impact of trade barriers on FDI – empirical evidence on exports to the USAIMPACT OF THE TRADE WAR

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

China Mexico Canada Japan Germany Vietnam

• Chinese exports to the USA declined by 13% in first 8 months of 2019

• Mexican, Japanese, and German exports all increased by a few percent to the US (Canada’s fell slightly)

• Vietnam’s exports to the US grew by 34% with Vietnam moving from 12th to 7th largest exporter to the US

Jan-Aug 2018 Jan-Aug 2019

Source: WAVTEQ based on BEA data

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Impact of trade barriers on FDI – the Vietnam effectIMPACT OF THE TRADE WAR

738 799964

1,143

1,348

1,7461,816

1,956 2,010

2,358

0

500

1,000

1,500

2,000

2,500

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

US

FDI i

nto

Vie

tnam

$ m

illio

n

US FDI into Vietnam

o Chinese FDI to Vietnam has boomed following US tariffs on China, with China

becoming by far the biggest foreign investor in Vietnam in 2019

o US companies are also increasing their FDI in Vietnam every year

FDI into Vietnam by major country

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Sectors driving growth in FDI job creation in Vietnam in 2019 FDI TRENDS 2019

Source: fDi Markets. Data includes estimates. Data to Oct. 2019

(Q1-Q3)

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Impact of trade barriers on FDI – key winners in trade which may lead to FDIIMPACT OF THE TRADE WAR

Trade diversion effects, H2 2019

Source: UNCTAD

United States imports from

China have been replaced

with imports originating

elsewhere to a varying extent,

depending on the sector

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Thank you!

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About us

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