Developing economies in Asia are home to 60% of the world’s megaprojects, according to UN research
The World Investment Report from UN Trade & Development shows these economies saw a 44% rise in the overall value of greenfield investment announcements in 2023.
Asia’s developing economies also recorded a 22% rise in the number of such announcements where companies established or expanded their operations overseas.
More broadly, while foreign direct investment (FDI) flows to developing Asia receded in 2023, they remained high at $621bn.
The continent, led by East and Southeast Asia, continued to be the world’s largest recipient of FDI, accounting for nearly half of global inflows.
Cross-border mergers and acquisitions (M&A), which usually constitute 10% to 15% of foreign investments in developing Asia, declined by almost $30bn to $57bn in 2023. This decline accounted for about half of the total drop in FDI inflows to the region.
China and its Hong Kong Special Administrative Region (SAR) continue to be the largest investors in the region by total FDI stock, followed by the United States, Japan and Singapore.
Subregional trends
In East Asia, FDI inflows fell by 9%, primarily due to declines in China and Hong Kong SAR.
While the estimated value of greenfield announcements shot up by 65%, overall growth was offset by a 58% decline in the value of project finance deals.
FDI inflows to Southeast Asia remained stable, with an increase in M&A sales.
The number of greenfield announcements surged by 42%, adding $62bn more in value.
However, this gain was countered by a $64bn fall in the value of international project finance deals.
The decline in FDI inflows to South Asia is mostly explained by a 43% decrease in India, while flows to other countries remained relatively stable.
In West Asia, FDI dropped by 9% due to lower M&A sales.
However, the region posted growth in both the number and value of greenfield investments and project finance deal announcements, particularly in Saudi Arabia, Türkiye and the United Arab Emirates.
In Central Asia, FDI receded by 27%. However, stable performance in greenfield investment announcements and international project finance deals gives optimism for improved prospects in 2024.
Investing in sustainable development
Across developing Asia, investment in sectors linked to the Sustainable Development Goals rose modestly.
The number of announced greenfield projects in these sectors grew by 30% to 1,225 projects with a 54% rise in value, notably in renewable energy, transport and telecommunication.
By contrast, the number of international projects finance deals dipped by 17%, partly offsetting gains in greenfield FDI for sustainable development.
