Foreign direct investment drops 7% for 2014

EDWARDS… it is a positive outcome in that there is increased activity from the local financial sector

Increased participation by the Jamaican private sector in big projects has inadvertently resulted in lowering foreign direct investment (FDI).

Its the latest trend in the annual FDI report that of local direct investment (LDI).

“It is a positive outcome in that there is increased activity from the local financial sector. [But] it will impact the FDI figures. So the more you get projects financed locally then the more it will impact FDI,” stated JAMPRO president Diane Edwards on Wednesday at the launch of the World Investment Report 2015 in Kingston on Wednesday.

“We are at an interesting stage of our development,”she added.

Jamaica officially received US$551 million in foreign direct investment (FDI) inflows for 2014 or 7.0 per cent less than a year earlier, according to the report.

JAMPRO which is the state’s marketing agency said that the fall in FDIs partially reflects increased LDI by institutions and banks in projects. JAMPRO facilitated some US$26.7 million in LDIs in 2014/15 compared to US$18.7 million in 2013/14. However no total LDI figure apparently exists which captures all activity. Its a statistic which the technocrats at the launch agreed to measure and study going forward.

However JAMPRO’s statistics indicated that FDI as a share of fixed capital formation (total investment activity) increased from 19.9 per cent to 21.6 per cent year on year. Also FDI as a percentage of gross domestic product (total output) increased year on year from 90 to 96.6 per cent.

“We are starting to see the private sector take on that role of investing….Five years ago you would assume that a US$200 million project would get equity and loans from overseas. You can no longer assume that,” stated JAMPRO chairman Milton Samuda at the launch. “I think it is positive because what has come out of the FDI column has gone into the LDI column. So its not a net loss but a net gain. I want to commend the private sector.”

The report compiled by UNCTAD a United Nations body made FDI inflow adjustments from an earlier preliminary report by another United Nations body ECLAC on FDI for the island.

Global FDI fell 16 per cent to US$1.23 trillion in 2014 according to the report. The report stated that the drop reflected the fragility of the global economy, policy uncertainty for investors and elevated geopolitical risks. China received the largest FDIs followed by Hong Kong and the USA.

Looking beyond 2014 the report’s authors project FDI to grow 11 per cent to US$1.4 trillion in 2015.

Source: http://www.jamaicaobserver.com/business/Foreign-direct-investment-drops-7–for-2014_19152891

Published Date: June 26th, 2015