FDI outflows from Egypt more than doubled in 2010: UN body

Salma El-Wardani , Wednesday 27 Apr 2011

The quarterly monitor issued by the UNCTAD reveals that Egypt's outgoing FDI jumped significantly in 2010

Sudan
Egyptian investments in Sudanese farmlands (Photo: Reuters/Luc Gnago)

Foreign direct investment (FDI) outflows from Egypt more than doubled in 2010 compared to the previous year to reach $1.2 billion, the UNCTAD (United Nations Conference on Trade and Development) quarterly monitor, entitled Global and Regional Trends of FDI Outflows in 2010, reveals.

Meanwhile, FDI flows from Africa declined in 2010. UNCTAD estimates its value at $4 billion, barely one per cent of the developing economies’ total, down from $4.5 billion in 2009, with outflows from the two major outward investors, Libya and South Africa, which together accounted for more than half of the regional total in 2009, falling significantly.

"After a temporary setback in 2009, FDI flows from developing countries returned to their previous upward trend. They reached an estimated $316 billion in 2010, 23 per cent more than in 2009," the report stated.

The report reveals that most FDI from the global south is directed to other developing countries where recovery has been strong and the economic outlook is encouraging. In 2010, it is estimated that 70 per cent of investment (cross-border and “greenfield” projects) from the south were directed towards other developing and transitional economies.

Meanwhile, developing and transitional economies also were large recipients of FDI inflows in 2010, some 53 per cent of the global total, according to the previous monitor report.

Outflows of FDI from West Asia dropped to near zero in 2010, "due [in part] to large-scale divestments by West Asian firms from their enterprises abroad".

The largest divestment deals included the $10.7 billion sale by Zain Group (Kuwait) of its African operations to Bharti Airtel (India), and the $2.2 billion sale by the International Petroleum Investment Company (Abu Dhabi’s sovereign wealth fund) of a 70 per cent stake in Hyundai Oilbank in the Republic of Korea.

On the other hand, in 2010, West Asian greenfield projects abroad — mainly targeting developing countries — dropped by 52 per cent in value. Government-controlled entities (West Asia’s main outward investors) have been redirecting part of their oil surplus to support their home countries weakened by the global financial crisis. This is expected to continue as governments vowed to finance higher social spending to pre-empt or respond to popular discontent.

According to the UNCTAD report, outward FDI from south and east Asia rose by more than 20 per cent in 2010, particularly from Hong Kong, China, the Republic of Korea, Taiwan, and Malaysia, with Chinese companies continuing a buying spree, actively acquiring overseas assets in a wide range of industries and countries.

The quarterly monitor reveals that UNCTAD estimates for outgoing FDI for 2010 indicate that FDI rose by some 13 per cent over the previous year, although falling short of the record level achieved in 2007, the year prior to the global financial crisis.

"Much of the recovery in outbound FDI appears to have been driven by investment originating in developing and transitional economies," the report says. "Their share of these global outflows reached almost 30 per cent, up from 15 per cent in 2007."

"With the global economy gaining strength, resulting in rising stock market valuations and rebounding corporate profits for transnational corporations, UNCTAD expects FDI outflows to continue to rise in 2011," the monitor says.

 

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