2023-07-05 14:40:57
Foreign direct investment (FDI) in developing countries in Asia remained flat year-on-year at $662 billion during 2022, despite clocking about half of global inflows, the United Nations Conference on Trade and Development (UNCTAD) said Wednesday in its World Investment Report 2023.
India and ASEAN were the most buoyant recipients, with increases of 10 and 5%, respectively, and strong growth in project announcements, it said.
FDI inflows were higher in developing countries compared with those in developed economies. Globally, FDI declined 12% to $1.3 trillion in 2022 after a strong rebound in 2021 following the steep drop due to the coronavirus pandemic, according to the report.
China, the second largest FDI host country in the world, saw a 5% increase. FDI in the Gulf region declined, but the number of project announcements increased by two thirds.
“Inflows in many smaller developing countries were stagnant, and FDI to the least developed countries (LDCs) declined,” it said.
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Stressing on the need to focus on investing in sustainable energy for all as “much of the growth in international investment in renewable energy has been concentrated in developed countries”, UNCTAD called for urgent support to developing countries to bridge the gap by attracting massive investment in clean energy.
The report also shows that the investment gap across all sectors of the Sustainable Development Goals has nearly doubled since 2015.
“Developing countries need renewable energy investments of about $1.7 trillion annually but attracted foreign direct investment in clean energy worth only $544 billion in 2022,” it said.
On financing, the report called for the de-risking of energy transition investment in developing countries through loans, guarantees, insurance instruments and equity participation of both the public sector – through public private partnerships and blended finance – and multilateral development banks. It also mentioned a “new model of climate-aligned dealmaking”.
As per the report, the investment gap across all sectors of the Sustainable Development Goals has increased to more than $4 trillion per year from $2.5 trillion in 2015.
The largest gaps are in energy, water and transport infrastructure. The increase is the result of both underinvestment and additional needs.
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