Singapore, China, India among the top 10 markets for foreign investment in 2016

Photo credit: AT Kearney Foreign Direct Investment (FDI) Confidence Index in 2016, jumping up five places since last year to reach tenth, and narrowly failing to reclaim the number 9 spot it held in 2014.

The FDI Index is a barometer of how a country’s political and financial developments will impact foreign direct investment going into it – that is, how likely companies from one country are to invest in companies based in another.

FDI increased globally by 36 percent to an estimated US$1.7 trillion in 2015.

Management consulting firm AT Kearney has been compiling the Index every year since 1998 by surveying senior executives from international corporations with annual revenues of more than US$500 million.

Participating executives are quizzed about their likelihood of investing in a market over the next three years. Responses about a particular market must come from companies that aren’t headquartered there. For example, Singapore’s index value doesn’t take into account responses from Singapore-headquartered companies. From responses of high, medium, and low likelihood, an average is used to calculate the Index for each country.

Ease of doing business, lack of corruption, presence of several international companies, and a strong ASEAN connection largely contributed to Singapore’s position in the top ten, according to Soon Ghee Chua, AT Kearney partner and head of Southeast Asia.

Global outlook

The US topped the list and China retained the number 2 spot for the fourth year in a row, although expectations for the Asian colossus are more negative this year due to market volatility.

Japan climbed to sixth place after it leaped 12 places from 2014 to find itself at number 7 last year. India claimed ninth place, up from 11th in 2015, while Australia reached number 7, up three places from 2015. Taiwan and Thailand entered the 25-country Index for the first time in 2016, placing 15th and 21st respectively.

FDI increased globally by 36 percent to an estimated US$1.7 trillion in 2015, according to the report. Over 70 percent of responders to the survey said they plan to increase their FDI over the next three years. AT Kearney speculates this is caused by protectionist attitudes in many countries, which make it necessary for firms to establish a greater local presence in order to do business in those markets.

Top 10 countries in the 2016 FDI Confidence Index

1. United States
2. China
3. Canada
4. Germany
5. United Kingdom
6. Japan
7. Australia
8. France
9. India
10. Singapore