Asian gateway S’pore not top draw for FDI: survey

Source : Business Times - 4 Jul 2008

209 senior execs polled see S’pore behind Japan, China, HK for HQ, logistics

SINGAPORE is seen as a less attractive investment destination than Japan, China and India, according to a survey by the Japan External Trade Organisation and Ernst & Young.

In the survey, which studied the perceptions of 209 senior executives across various sectors and continents, only 10 per cent voted for Singapore, which shared third position with Hong Kong.

Japan and China are seen as the most attractive locations in Asia for foreign direct investment (FDI), each with 27 per cent of the votes, followed by India with 11 per cent.

But there is a gap between perception and reality. In terms of actual FDI projects last year, Japan ranked fifth in Asia with 166.

China was first with 1,171, India second and Vietnam third. Singapore ranked fourth with 239 projects.

Singapore trails Japan, China and Hong Kong in attractiveness as an Asian destination for headquarters and logistics centres, according to the survey.

And as a potential destination for research and development centres, Singapore’s attractiveness falls behind Japan, China and India.

‘Despite its world-renowned gateway position, our survey indicates that Singapore has been unable to attain the highest attractiveness score for headquarters and logistics activities,’ the survey says.

It also reveals that Asia has become more attractive as an investment destination, with 59 per cent of investors noting an improvement.

Only 6 per cent observed a deterioration of the region’s attractiveness. This compares favourably with investor perceptions of Europe’s attractiveness - only 44 per cent of potential investors see an improvement there.

Satisfaction with Asia is particularly high among investors in the chemical, pharmaceutical and medical equipment manufacturing and life science sectors, with 72 per cent citing satisfaction.

Reflecting a high level of confidence in Asia, 71 per cent of investors expect an improvement in the region’s attractiveness over the next three years, compared with 56 per cent for Europe.

On future investment, 43 per cent of investors say that they are actively considering establishing or developing activities in Asia, with China most cited at 57 per cent, followed by India at 35 per cent and Japan at 18 per cent.