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ANNUAL REVIEW

Foreign Investment 2015

March 2015  | FINANCE & INVESTMENT

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Foreign direct investment is a key component of the global financial system, helping to stimulate growth and competitiveness. Indeed, there is a strong relationship between levels of foreign investment and the strength of a country’s economic growth. Large inflows of foreign investment are needed for a country to achieve sustainably high levels of economic growth. As the global economy has continued to expand over the course of the last few decades, foreign investment has become ever more important.

 

UNITED STATES

Anshu Pasricha

Koley Jessen

“The US has seen a robust amount of inbound activity over the last 12 months, which is the result of a slow and steady climb in dealmaking since 2009. The fundamentals of the US economy have been positive of late, comparing favourably with the economies of Europe and Asia. This has given buyers the confidence necessary to pursue transactions that fit within their long-term strategic plans.”

 

ARGENTINA

Laura Lavia Haidempergher

M. & M. Bomchil

“Even though some Latin American countries saw an increase in their foreign investment in 2014, investment in Argentina continued to decrease. During the first half of 2014, foreign direct investment reduced by 24 percent compared with the same period in 2013. In recent years, the country has faced many de facto restrictions in the currency market and has also passed a number of laws which have had a wholly negative impact on investment. In addition, the country has been affected by a number of other factors, such as economic uncertainty, devaluation and a lack of clear rules. As a consequence, local players have taken the lead with regard to transactions in Argentina, replacing foreign investors.”

 

ROMANIA

Adriana Gaspar

Nestor Nestor Diculescu Kingston Petersen

“In a nutshell, 2014 closed at an inbound foreign investment value down by 10.6 percent compared with 2013. This was a notable disappointment considering Romania’s attractive capital injection absorption capacity, as well as its prospects for offering good returns on investment. During the period preceding the presidential elections in November 2014, Romania was confronted with a number of obstacles which had a markedly negative effect on the country’s ability to manage ongoing projects and foster new strategic developments for the economy. These obstacles acted as a roadblock to much needed funding inflow. As a result, large value-added and speculative investment opportunities have remained untapped.”

 

AUSTRALIA

Karen Evans-Cullen

Clayton Utz

“It would be wise to preface these comments with the observation that reliable comparative data on inbound foreign investment is generally a lagging indicator. Given the speed with which investments decisions can be made, that means that official statistics may not always reflect the current reality. With that caveat, it’s fair to say that there are no definite signs that the traditionally high levels of inbound foreign investment into Australia, both in terms of the numbers and size of investments, aren’t showing any signs of easing. 2015 has certainly started well, with some significant inbound foreign investment deals already announced, and with the decline in the Australian dollar over the last 12 months, we expect this will continue.”

 

NEW ZEALAND

Tim Tubman

Chapman Tripp

“There were good levels of M&A activity in 2014, with highlights being the sale of Transpacific Industries to China’s Beijing Capital for $950m and the sale of Carter Holt Harvey’s pulp, paper & packaging businesses to Japanese firm Oji for $1.037bn. With a stable political, economic and regulatory environment, New Zealand remains an attractive destination for investors from Asia, particularly China, Japan, Hong Kong and Singapore, as well as Australia, the US, the UK and Europe.”

 

CHINA & HONG KONG

Andrew McGinty

Hogan Lovells International LLP

“Foreign investment into China rose in 2014 but at a slower pace compared to 2013. The continued sluggishness of the global economy and reduced output in manufacturing contributed to the slowing economy, as China tries to shift away from an export-centred model towards a more services-driven economy. Rising labour costs continue to be a critical factor, although the appreciation of the Renminbi slowed in 2014. Highly publicised antitrust and bribery investigations into foreign investors suggest that foreign investors may have been specifically targeted, though there may have been similar investigations on Chinese companies without the accompanying headlines. Notwithstanding all this, China attracted the highest amount of foreign investment in 2014, surpassing the US, which underlines the importance of the Chinese market to foreign investors.”

 

MONGOLIA

Sebastian Rosholt

Minter Ellison

“FDI into Mongolia has slowed markedly over the past 12 months. This continues a trend which began in the second half of 2012 with the passage of the Strategic Entities Foreign Investment Law, or SEFIL Law, which effectively placed an embargo on the sale of shares in company’s which were operating in ‘sectors of strategic importance’ – industries such as the mining, banking and finance and communications and media sectors – to foreign investors. This was compounded by the government’s attempts to reopen negotiations on an investment agreement concluded with Rio Tinto in 2009 relating to the giant Oyu Tolgoi copper and gold project..”

 

INDONESIA

Dini Retnoningsih

Lubis Ganie Surowidjojo

“Indonesia’s economy is on the rise and the country has set its position as a major destination for foreign investment. Indonesia benefits from, among others things, abundant natural resources, a young and technically trained workforce, a large and growing domestic market, an improving investment climate, stable economic growth and a higher global profile, which make it the perfect country to consider for foreign investment. Foreign corporations and individuals are increasingly investing in Indonesia, realising the country’s potential. In the middle of 2014, Indonesia completed another round of peaceful and successful legislative and presidential elections.”


CONTRIBUTORS

Chapman Tripp

Clayton Utz

Hogan Lovells International LLP

Koley Jessen

Lubis Ganie Surowidjojo

M. & M. Bomchil

Minter Ellison

Nestor Nestor Diculescu Kingston Petersen


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