Restored 2011 World Investment Flows

United Nations estimates that the flow of foreign direct investment (FDI),

the world will be stable this year and increased in 2011-2012 due to the merger (the merger) across borders by multinationals are lifted by the growing business confidence.

"FDI, where many developing countries rely to finance their economy, will increase to 1.3 to 1.5 trillion U.S. dollars in 2011 and 1.6 to 2.0 trillion U.S. dollars in 2012 from U.S. dollars 1.2 years this, "said Trade and Development Agency Affairs United Nations (UNCTAD).

According to World Investment Report, released by UNCTAD, Thursday (22/07/2010), FDI inflows fell 37 percent to 1.11 trillion U.S. dollars in 2009 after falling 16 percent in 2008 and reached its peak in 2007 with a value of 2.1 trillion the U.S. dollar. "In the first quarter of this year, FDI outflows of about 20 percent higher than the previous year," he said.

"After a free fall, the recovery is shy and does not flatten toward the road thanks to a better corporate profits and improving economic and financial conditions. The prospect of growth of FDI is still full of risks and uncertainties, including the fragile recovery," he said.

FDI refers to long-term investments, like shares in foreign companies or building factories for the subsidiary, in contrast to the fragile financial investment.

Trust multinational

FDI recovery will occur primarily through the widespread cross-border mergers and acquisitions where the restructuring and privatization saved the company from the crisis, while offering the opportunity.

A willingness on the multinational companies expand their business abroad looks stronger in 2011 and 2012 compared with 2010, with business confidence continues to benefit from improved economic conditions, corporate profits, and stock market valuations are seen in this year.

The report noted the growing role of emerging economies, both as a source or destination for FDI.

China and Russia are the largest source of FDI in the sixth and seventh in 2009 with their respective investment 48 billion dollars and 46 billion U.S. dollars, up from ninth and eighth position in 2008.

China and other Asian countries become a source of FDI in Africa and other underdeveloped countries with FDI remains the main source of overall investment in the economy.

When the United States survive into the largest destination of FDI, China moved up to second position in 2009 from the third year in 2008. "The decline in manufacturing investment to service recently, driven by the need for labor intensive projects, and major sectors, such as mining and energy, which benefited from rising commodity prices-is not possible upside," said UNCTAD.

In cross-border corporate actions, the value of manufacturing investment fell 77 percent in 2009, while primary and services sectors experienced contraction respectively 47 percent and 57 percent. Although mergers and acquisitions of financial services sector declined by 87 percent.

Agreement cross-border mergers and acquisition in 2009, down 34 percent or 65 percent of its value, while the construction of new manufacturing facilities by multinational companies fell only 15 percent.

Mergers and acquisitions this year seems to recover more quickly than building new manufacturing facilities.

Internationalization of production continues to grow, with the value added of foreign-affiliated companies in a multinational company to shrink slightly in the last two years than the overall economy. That makes share of multinational companies listed on the world economy reached 11 percent, employ 80 million people.

"Foreign Direct Investment by private equity funds fell by 65 percent in 2009, but flows from the sovereign wealth funds increased by 15 percent," said UNCTAD.

Efforts to encourage the entry of investments while regulating them thoroughly in the midst of the crisis to challenge for the government.

Various restrictions on investment policy which is more proportionate increase to 30 percent in 2009, the highest level since UNCTAD started monitoring the trend of investment in 1992.