Robust FDI flows forecast for LAC, but Jamaican data lacking
Published:Friday | June 3, 2011 | 12:00 AM
Steven Jackson, Business Reporter
Foreign Direct Investment (FDI) to Latin America and the Caribbean is expected to hit record levels in 2011, increasing up to 25 per cent year over year, according to a United Nations report released last month.
FDIs, or investments by overseas-based entities, are projected to total some US$140 billion (J$11.98 trillion) which represents a conservative estimate by the report's publishers, the Economic Commission for Latin America and the Caribbean (ECLAC), a regional UN body.
"The prevailing uncertainty surrounding the economic recovery in the developed countries makes it difficult to forecast FDI flows for Latin America and the Caribbean in 2011. On the basis of the region's economic growth prospects, long-term trends in FDI flows and preliminary information, however, ECLAC projects FDI flows into the region could rise between 15 per cent and 25 per cent to reach a new all-time record in 2011," according to the report titled Foreign Direct Investment in Latin America and the Caribbean.
Investments by companies based in the United States, the Netherlands and China will fuel the region's 2011 FDI growth.
Jamaica, the report said, has often benefited from relatively heavy FDI flows, however, its 2011 forecast was constrained by unavailable country data. Contextually, the island is expected to benefit from heavy investment from China totalling some US$400 million for road-work projects alone, in the short to medium term, Government data indicates.
ECLAC noted that investments by mobile provider Digicel across Central America and the Caribbean aided in raising FDIs in 2010.
"In the Caribbean, the Dominican Republic, Jamaica and Trinidad and Tobago have joined the group of countries with major foreign investors in recent years. Investments from these Caribbean countries include those by Digicel Group, an Irish-owned company based in Jamaica, and the mobile telephone provider of Fiji (Digicel Pacific) of US$132 million; and Cervecer'a Nacional Dominicana CxA (Grupo Le—n Jiménez) in the brewery companies St Vincent Brewery, Antigua Brewery and Dominica Brewery & Beverages Ltd for US$31 million. In addition, Bermudez Group of Trinidad and Tobago announced investments in the Costa Rican food sector totalling US$2.5 million," it stated.
Executive Secretary of ECLAC, Alicia Brcena, in launching the report said the region not only remained attractive to foreign investors, but also increasingly dared to conquer other markets by means of Latin-led investment, or "trans-latins".
Nevertheless, the official emphasized that "FDI must help the region to growth with equality" and that countries "need to implement productive development policies focused on innovation and on the strengthening of local capacities to promote the creation of quality employment".
ECLAC stated that in 2010 the region's FDI inflows were 40 per cent higher than in 2009, representing US$112.6 billion, while outgoing FDI almost quadrupled in the same period to reach a historic high of US$43.1 billion.
The region's FDI rise came within the context of a FDI decline by 7 per cent in developed countries. In 2009, FDI fell 42 per cent to US$76.68 billion over 2008 due to the global crisis.
United States remained the main investor in the region and was responsible for 17 per cent of the FDI received in 2010, followed by the Netherlands (13 per cent), China (nine per cent) and Canada and Spain (both four per cent).
The 13th version of this ECLAC report highlighted the emergence of the Asian giant, China. In 2010, Chinese companies invested almost US$15 billion in Latin American and Caribbean countries, fundamentally in the form of mergers and acquisitions.
More than 90 per cent of confirmed Chinese investment in Latin America has targeted the extraction of natural resources.