Asia continues to position itself as an attractive destination for greenfield projects with six of the 10 largest projects worldwide located in developing countries in the continent. UN Trade and Development‘s (UNCTAD) latest report, the World Investment Report 2024, also reveals that of the six projects, four were located in South-East Asia.
Indonesia leads greenfield projects by value
The UNCTAD report reveals that Indonesia was a top destination for greenfield project announcements by value. Notable projects in the country included upstream investments by Chinese glass and solar manufacturer Xinyi Group totaling $11 billion. In addition, a consortium of European and Indonesian companies is developing a $9 billion battery supply chain for electric vehicles in the country.
Greenfield project announcements rise significantly
The overall value and the number of greenfield project announcements in developing Asia increased significantly in 2023, by 44 percent and 22 percent, respectively.
South-East Asia saw a 42 percent increase in announcements, particularly in electronics and vehicle production. The UNCTAD report expects projects in these sectors to create around 145,000 jobs in the region.
However, the number of international project finance deals in developing Asia declined by 25 percent with West Asia being the only exception.
Total deals in West Asia increased to 94 in 2023 from 50 in 2022, with values growing by 32 percent to $57 billion. Saudi Arabia, Türkiye and the UAE all saw higher numbers of deals while most countries registered lower numbers. A key trend in the region was a decline in international project finance in renewable energy, in addition to most industrial sectors, and an increase in petrochemical projects.
“Investment facilitation has become a prominent feature of national policies and international agreements. Digital government solutions are proliferating, aiding investors and strengthening governance and institutions. But despite these efforts, finance is not flowing at a sufficient scale, due to high interest rates and geopolitical conditions. That means we must redouble our efforts,” stated António Guterres, secretary-general of the United Nations.
Read: Global FDI down 2 percent to $1.3 trillion in 2023: Report
FDI flows to developing Asia decline
Despite the rise in greenfield projects, FDI flows to developing Asia saw a decline in 2023 but remained high, at $621 billion. The region was the largest recipient of FDI with almost 50 percent of global inflows. East and Southeast Asia were the main recipients of global inflows despite a decline in East Asia, particularly due to a significant decline in China. In South-East Asia, however, inflows remained stable due to robust economic growth and extensive global value chain linkages.
For her part, Rebeca Grynspan, secretary general of UNCTAD, stated: “Geoeconomic fragmentation is reshaping the landscape of global investment. Trade networks are fragmenting, regulatory environments are diverging and international supply chains are being reconfigured. These shifts create both obstacles and isolated opportunities, with some countries benefiting from investments in global value chain-intensive manufacturing while others struggle to participate in the global economy.”
In West Asia, the decline in inflows remained moderate. Meanwhile, South and Central Asia registered notable declines, especially in India and Kazakhstan.
Merger and acquisition sales, which usually constitute 10 to 15 percent of foreign direct investment (FDI) in developing Asia, declined by almost $30 billion in 2023 to $57 billion, representing about 50 percent of the total decline in FDI inflows to the region.
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