Asia-Pacific becomes largest destination and source of foreign direct investment

For the first time, the Asia-Pacific region has become the largest destination and source of foreign direct investment (FDI) globally, according to a new report launched by the United Nations (UN) Economic and Social Commission for Asia and the Pacific (ESCAP).
The study ‘Foreign Direct Investment Trends and Outlook in Asia and the Pacific’ finds that the region is expected to maintain steady inflows and outflows of FDI in 2019 and 2020. In 2018, it attracted 45 per cent of global FDI inflows and was responsible for 52 per cent of global outflows. Developing countries in the region attracted 40 per cent of global FDI inflows and were responsible for 37 per cent of global FDI outflows. Despite escalating trade tensions, inflows to China increased from $134 billion in 2017 to $139 billion, making it the largest recipient of FDI inflows to region for the third consecutive year.
The sheer scale of outward FDI in the region raises important questions about its impact on the sustainable development of source countries. The analysis in the study is expected to help policymakers maximize the potential of FDI to contribute to the 2030 Agenda for Sustainable Development and implement sustainable investment promotion strategies for both inward and outward FDI.
One important consideration is the holistic analysis of the region’s FDI flows amid broader economic trends. Despite continuous movement of FDI, sluggish growth in inward greenfield investments may hamper the region’s ability to attract the same levels of investment in 2019, and a decline in investment flows in 2020 is expected if both the uncertainty related to international trade continues and companies consolidate their value chains. Therefore, investment prospects for the region remain tied to unfolding risks of ongoing global political and economic disturbances.
As intraregional FDI flows continue to grow in significance, more opportunities will arise for investment cooperation in the name of sustainable development between the sources and recipients of FDI in the region. During the past decade, the share of intraregional greenfield inflows increased from 40 per cent in 2009 to 53 per cent in 2018. ASEAN member countries attracted the largest share of intraregional flows in 2018, while countries from the East and North-East Asia subregion were the largest sources of intraregional FDI.
The findings of the report were discussed at the 9th Asia-Pacific FDI Network meeting. The FDI Network meeting brings together FDI policymakers, practitioners and experts from around the region and beyond to discuss FDI issues to ensure that FDI better supports the achievement of the 2030 Agenda and increase their knowledge through exchange of experiences and interaction with FDI experts.
The report is the first brief in a new annual publication series by ESCAP called Asia-Pacific Trade and Investment Trends. This will be an annual series which draws on ESCAP’s expertise in trade and investment analysis to highlight the most important trends and forecast their impact in these two areas. The briefs will equip policymakers with the necessary information they need to make timely decisions on trade and investment policies and enable inward and outward FDI cooperation among its member states.

Tourist arrivals increase in Asia-Pacific

Data for foreign arrivals into 46 Asia Pacific destinations confirmed the overall continuation of solid growth in 2018, achieving a 7.3 per cent annual increase compared to 2017 and reaching a new record high of nearly 708 million international visitor arrivals (IVAs).
According to the Annual Travel Monitor 2019 Final Edition (ATM) released by the Pacific Asia Travel Association (PATA) today, over the five years between 2014 and 2018, the 46 Asia Pacific destinations covered in the report have collectively seen their IVAs increase by almost 24 per cent, adding more than 136 million additional arrivals to the collective foreign inbound count in the process.
In percentage increase terms between 2017 and 2018, Asia had the strongest annual increase at 8.7 per cent, followed by the Pacific at four per cent and the Americas at 3.5 per cent, it reads. “By annual increase in the absolute volume of foreign arrivals between 2017 and 2018 however, these positions changed somewhat, with Asia receiving close to 41.6 million additional foreign arrivals, followed by the Americas with a gain of over 5.4 million and the Pacific with just over one million additional foreign arrivals received over that period.”
Within the Americas, North America showed the strongest incremental increase in foreign arrivals between 2017 and 2018, capturing more than 55 per cent of the 5.446 million increase over that period, followed next by Central America.
Across Asia it was Northeast Asia in particular that captured the largest proportion of additional foreign arrivals into the region between 2017 and 2018. While in the Pacific, Polynesia and Oceania dominated that landscape.
At the individual Asia Pacific destination level, destinations with the strongest annual percentage growth rates in 2018 ranked as All told, 24 per cent of the 46 destinations covered in this report had annual growth rates in excess of 10 per cent between 2017 and 2018, while 65 per cent grew by five per cent or more.
Nevertheless, the strong collective performance of Asia Pacific destinations in 2018 appears to be changing into 2019. According to PATA chief executive Dr Mario Hardy, “Preliminary results for early 2019 show a slight softening in the collective annual increase in foreign arrivals into 37 Asia Pacific destinations, reducing to 6.2 per cent year-to-date, year-on-year.”
“Even so, this growth rate has added almost 17 million additional arrivals to the total inbound count during the first periods of 2019 relative to the same period of last year,” he said, adding that the impacts of various geo-political and natural changes appear to be affecting the global travel and tourism sector and we expect some significant changes in the Asia Pacific 2019 picture by the end of the year.
Early 2019 data for foreign arrivals into 37 Asia Pacific destinations shows a general softening of growth relative to the same periods of 2018, dropping from a 7.3 per cent increase in early 2018, to 6.2 per cent in early 2019. Despite this, close to 17 million additional IVAs have been received between early 2018 and early 2019, reaching another record high of almost 288 million arrivals.

New UN report warns of a new climate reality where economic losses are set to quadruple

The relentless sequence of natural disasters in Asia and the Pacific the past two years was beyond what the region had previously experienced or was able to predict and this is a sign of things to come in the new climate reality, according to the latest report by the United Nations (UN) Economic and Social Commission for Asia and the Pacific (ESCAP).
The Asia-Pacific Disaster Report 2019 launched today reveals that recent disasters, especially those triggered by climate change and environmental degradation, have deviated from their usual tracks and are growing in intensity, frequency and complexity. It is now more difficult to determine which areas should prepare for what kind of disaster.
In 2018, almost half of the 281 natural disaster events worldwide occurred in the region, including eight out of the ten deadliest. An average of 142 million people in the region have been affected annually, since 1970, well above the global average of 38 million.
For the first time, the Asia-Pacific Disaster Report includes the costs of slow-onset disasters, notably drought which results in a quadrupling of annual economic losses as compared to previous estimates. The annual economic loss for Asia and the Pacific is now $675 billion, or around 2.4 per cent of the region’s GDP, of which $405 billion or 60 per cent are drought-related agricultural losses, impacting the rural poor disproportionately.
“Countries across the region have committed themselves to the Sustainable Development Goals (SDGs) by 2030 to ensure that no one is left behind,” said UN under-secretary-general and executive secretary of ESCAP Armida Alisjahbana at the report launch in Bangkok.
“But they cannot achieve many of the SDG targets, if their people are not protected from disasters that threaten to reverse hard-won development gains,” Alisjahbana said, adding that it means not just building resilience in the priority zones but doing so across the entire region, reaching the most marginal and vulnerable communities. “Vulnerable and marginalised communities are among the hardest hit by disasters in the region.”
Almost 40 per cent of disaster impacts are on the social sectors resulting in deeper inequalities of opportunity that are transmitted over generations. Disasters are also set to slow down poverty reduction. Furthermore, the number of people living in extreme poverty (under $1.90 a day) is projected to be 56 million by 2030. However, with unmitigated disaster risk, the number more than doubles to 123 million. 
“However, this is not inevitable,” Alisjahbana, said, adding that governments can break this vicious cycle by investing to outpace disaster risk as the report also shows that investments will be far smaller than the damage and losses from unmitigated disasters. “Moreover, these same investments will deliver co-benefits, in the form of better education, health, social and infrastructure services, and higher agricultural production and incomes.
The report identifies four distinct hotspots in the region where fragile environments are converging with critical socioeconomic vulnerabilities. They include the transboundary river basins of South and South-East Asia, the Pacific Ring of Fire in South-East Asia and East and North-East Asia, sand and dust storm corridors in East and North-East Asia, South and South-West Asia and Central Asia, and climate-related hazards in the Pacific Small Island Developing States. A person in the Pacific is found to be three to five times more at risk than those in other parts of the region.
The report also calls for transformative change, with social policies and disaster resilience no longer treated as separate policy domains. It highlights how policymakers can enhance the quality of investments through policy reforms for more inclusive and empowered societies, to ensure that poor and vulnerable groups are not excluded from the benefits of investments due to barriers in accessing land, reliable early warning systems, finance and decision-making structures.
Similarly, the report explores how emerging technologies such as big data and digital identities can be used to ensure the poorest and most vulnerable groups are included in policy interventions. The report also points out that many of the region’s disaster hotspots extend across national boundaries and proposes a set of regional policy actions to be implemented through the Asia-Pacific Disaster Resilience Network, supported by ESCAP.
The Asia-Pacific Disaster Report is a bi-annual flagship publication of ESCAP which aims assist policymakers, in both public and private sectors, to better understand disaster risk and resilience and take the many opportunities for action.