Sharp fall in FDI in most parts of Asia

[GoFlyKiteNow]

FDI Drops by 77 Percent for First Half of the Year for Vietnam,
one of the hottest FDI destinations last year.
One can imagine how other nations in Asia may be faring !

Jun. 25 – According to a Vietnamese foreign investment official, foreign direct investment (FDI) in the country plunged by 77.4 percent to US$8.87 billion for the first 6 months of the year.

Figures compiled by the agency showed that only US$4.7 billion worth of new projects were licensed during the period, a 86.7 percent in value over the same period last year.

Another US$4.1 billion was poured into 68 operational projects, an increase of 13.8 percent. The agency head, Phan Huu Thang told Thanh Nien News added that the FDI result was still positive given the extent of the current economic slowdown.

He added that the figures showed that investors believed in Vietnam’s moves toward a quick economic recovery and future development.

By the end of 2008, Vietnam reported US$71.7 billion worth of FDI broken down as US$66.4 billion coming from new projects while the rest was from operational projects.

The agency also said that there are currently 187 projects in negotiations worth an estimated US$85.4 billion set for this year to next.

The country is forecast to attract US$20 billion worth of FDI by the end of the year. As for disbersal, some US$8 billion worth of FDI is estimated to be released and by 2010, that disbursal is seen to climb to US$9 billion.

 

[longbow]

No doubt about it. With more supply than demand no reason for companies to build large factories. Also the tight credit situation delays investments.

Here are some facts:

For period from Jan to Jul China attracted $48.3B in FDI.

http://online.wsj.com/article/SB125047781996935959.html

For the same period, Jan to Jul2009 India attracted $16.6B in FDI

http://dipp.nic.in/fdi_statistics/india_FDI_July2009.pdf

If you read the break down of FDI for India, 44% of all FDI (44% of that $16.6B) came from Mauritius. The number 2 spot is held by Singapore with 9%. This got me curious. What hitech manufacturing does Mauritius have? Then I looked further.

Mauritius is a tax haven for Indians to evade taxes. India's corruption is very very bad and most of the money is sent to Mauritius. SO would not be surprised if some of this indian money is coming back into Indian economy to buy real estate and stocks. Same too for Singapore. What type of large manufacturing know how does Singapore have? After all we too are just a hub for MNCs.

But Singapore has an active private banking/haven scene.

What do you think Goflykite. Quite interesting right?

 

[GoFlyKiteNow]

No doubt about it. With more supply than demand no reason for companies to build large factories. Also the tight credit situation delays investments.

Here are some facts:

For period from Jan to Jul China attracted $48.3B in FDI.

http://online.wsj.com/article/SB125047781996935959.html

For the same period, Jan to Jul2009 India attracted $16.6B in FDI

http://dipp.nic.in/fdi_statistics/india_FDI_July2009.pdf

If you read the break down of FDI for India, 44% of all FDI (44% of that $16.6B) came from Mauritius. The number 2 spot is held by Singapore with 9%. This got me curious. What hitech manufacturing does Mauritius have? Then I looked further.

Mauritius is a tax haven for Indians to evade taxes. India's corruption is very very bad and most of the money is sent to Mauritius. SO would not be surprised if some of this indian money is coming back into Indian economy to buy real estate and stocks. Same too for Singapore. What type of large manufacturing know how does Singapore have? After all we too are just a hub for MNCs.

But Singapore has an active private banking/haven scene.

What do you think Goflykite. Quite interesting right?

Mauritius and India have a special double taxation avoidance treaty setup in the 80s due to close political cultural ties between the two countries.

FDI usually take this Mauritius route to get special tax incentives from subsequent profits generated in India.

India gets perhaps 2 times or more of the official FDI mentioned amounts through Dubai, Bahrain, Saudi, Kuwait and Middle East channels because of the large business and trading presence of Indians there. These are not considered as FDI, but as inward remittances..and is more than that of China.

These have much more inherently strong down stream effects on Indian industries driven by the middle east economies.

 

[GoFlyKiteNow]

Take a look at this report...with an objective eye. This kind of report is a more comprehensive credentials indicator of a nation's overall longterm health compared to touting mere annual GDP reports....It is a colossal mistake to assess a country like they do with a company..using its annual auditor report or AGM statements.
-----------------

Indians beat Chinese at prosperity game
27 Oct 2009, 0426 hrs ET Bureau

India fares better in overall prosperity, despite weak economic indicators, and is ranked 45th in the world, ahead of China’s 75th rank, according to indices compiled by global think tank, Legatum Institute.

The composite prosperity index is compiled based on nine parameters, including factors such as economic fundamentals, environment for entrepreneurship and innovation, access to quality education, democratic institutions, governance, health, personal freedom, social capital and security. The index ranks world’s 104 countries, covering 90% of the world’s population.

Finland tops the Index, followed by Switzerland, Sweden, and Denmark; the United States is 9th and the United Kingdom is 13th.
India is ranked 5th on measures of social capital, which reflects among others, the percentage of citizens who volunteer, give charity, help strangers, and who feel they can rely on family and friends. In this area, India is ahead of Finland, the US, and the UK which occupy the sixth, seventh and the 11th spot, respectively.

India has outperformed China on several economic indicators as it performed well in the critical non-economic factors, such as personal freedom which encompasses freedom of speech and religion, national tolerance for immigrants and ethnic and racial minorities, for which India ranks 47th globally compared with China’s 91st place.

“Although, China outperforms India on several economic indicators, India is 30 places higher in the final rankings because of China’s poor levels of personal freedom and democracy,” said William Inboden, senior vice-president of the Legatum Institute. “However, there are some areas of concern for India, particularly in the quality of healthcare and education for which India ranks 88th and 86th, respectively,” concluded Mr Inboden.

Interestingly, Austria tops the list as far as health as a parameter is concerned, according to Legatum. While Norway tops the ranking in education, personal freedom and social security, New Zealand tops social capital ranking. While Switzerland tops the rankings for democratic institutions, Hong Kong tops economic fundamentals’ ranking. The United States tops the entrepreneurship and innovation ranking. Denmark, on the other hand, tops in governance.
.

 

[scroobal]

Sometime when I read postings by you guys, I wonder if you really know what is going on in the business world or just avid followers of business news.

1) Bilateral double taxation treaties practically covers the whole world. This is common sense as one can't justify taxing twice the same income. India alone has 79 treaties with other countries. There are also multilateral agreements. There is nothing special. After passport protcol, double taxation avoidance treaty is commonplace in international relations. Again nothing special.

2) Mauritius is indeed a tax haven and its not only India that has flows from it. Practically all financial institutions lending money in Singapore who have no deposit base in Singapore such as the local banks and selected international banks with deposit licence get their money from the money market and let is go thru the likes of Mauritius.

The Toyota that your neighbour has is probably financed by GE Money Singapore who sell their loan products via outlets in Singpost. The funding comes thru Mauritius. The money was raised in the money market either in NY or London.

Want to learn about business, start small and learn the economics. By the way FDI carries a specific meaning and certain conditions must be complied with. What you guys are writing is not FDI. Former PAP MP, Lew Syn Pay was charged in court for corruptions where shares to purchase stake in Singapore went thru Mauritius.

Mauritius and India have a special double taxation avoidance treaty setup in the 80s due to close political cultural ties between the two countries.

FDI usually take this Mauritius route to get special tax incentives from subsequent profits generated in India.

India gets perhaps 2 times or more of the official FDI mentioned amounts through Dubai, Bahrain, Saudi, Kuwait and Middle East channels because of the large business and trading presence of Indians there. These are not considered as FDI, but as inward remittances..and is more than that of China.

These have much more inherently strong down stream effects on Indian industries driven by the middle east economies.

 

[GoFlyKiteNow]

Your comment about double taxation is correct..Mauritius is indeed a tax haven. Been like that for decades.

I was referring to the special tax treaty that India has with Mauritius ( done somewhere in 1980s) that has some special clauses..in the India Mauritius context. Capital brought in through that route do enjoy some benefits. If I am not mistaken there is a review going on now by the India finance ministry to trim down these special advantages.,,mostly due to objections and complaints from various internal and external quarters.

The definition of FDI is clear cut. There is no mystery about that. We were not debating about that definition.

Apart from the quantum of funds defined as FDI, these funds termed as FDI allow investors direct legal control of the company or investment in the host country, depending on the equity participation or percentage. Hence FDI becomes a politically sensitive issue in some countries like India. One circumventing method used by FDI investors into India is to use the Mauritius route--using a Mauritius registered company as the investment vehicle, permitted by the special India Mauritius treaty.
.

 

[longbow]

I think thread was referring to FDI. No idea why you are talking about double taxation as well as prosperity.

Both my links referred to FDI to India and China (both are large FDI recipents in Asia) and they are from India Gov and Dow Jones sources. Scroobal is correct. India has tax treaties with many countries. But the issue of tax havens and corrupt money is a big problem in India. The rich and powerful politicians keep on ripping off the poor.

As for article on prosperity. No idea how they weight the various elements. For example how much weight do they give to political systems.

I think best measure of prosperity is the reduction in poverty (those sruviving on less than $1 a day). In this regards the Chinese have done a lot better than India. No point in trumpeting the democratic political system when you have not solve the problem with poverty.

 

[Zombie]

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