Asia’s emerging economies are home to 60 percent of the world’s megaprojects: Report

Asia continues to position itself as an attractive destination for Greenfield projects with six of the 10 largest projects worldwide located in the continent’s developing countries. The latest UN Trade and Development (UNCTAD) World Investment Report 2024 also reveals that of the six projects, four were located in Southeast Asia.

Indonesia leads green projects by value

The UNCTAD report reveals that Indonesia was a top destination for greenfield project announcements by value. Notable projects in the country included upstream investments from Chinese glass and solar manufacturer Xinyi Group totaling $11 billion. In addition, a consortium of European and Indonesian companies is developing a $9 billion battery supply chain for electric vehicles in the country.

Greenfield project announcements increased significantly

The overall value and number of greenfield project announcements in developing Asia increased significantly in 2023, by 44 percent and 22 percent, respectively.

Southeast Asia saw a 42 percent increase in announcements, particularly in electronics and auto manufacturing. The UNCTAD report expects projects in these sectors to create around 145,000 jobs in the region.

However, the number of international project finance agreements in developing Asia fell by 25 percent with the sole exception of West Asia.

Total deals in West Asia rose to 94 in 2023 from 50 in 2022, with values ​​rising 32 percent to $57 billion. Saudi Arabia, Turkey and the United Arab Emirates all saw higher deal numbers while most countries recorded lower numbers. A major trend in the region was a decline in international project financing in renewable energy, except for most industrial sectors, and an increase in petrochemical projects.

«Investment facilitation has become a prominent feature of national policies and international agreements. Digital government solutions are proliferating, helping investors and strengthening governance and institutions. But despite these efforts, finance is not flowing in sufficient quantities, due to high interest rates and geopolitical conditions. This means we must redouble our efforts,» said António Guterres, Secretary-General of the United Nations.

Read: Global FDI falls 2 percent to $1.3 trillion in 2023: Report

FDI flows to emerging Asia decline

Despite the increase in greenfield projects, FDI flows to developing Asia saw a decline in 2023, but remained high, at $621 billion. The region was the largest recipient of FDI with almost 50 percent of global inflows. East and Southeast Asia were the main beneficiaries of global inflows, despite a decline in East Asia, particularly due to a significant decline in China. In Southeast Asia, however, inflows remained stable due to robust economic growth and extensive global value chain linkages.

For her part, Rebecca Grynspan, secretary general of UNCTAD, stated: «Geoeconomic fragmentation is reshaping the global investment landscape. Trade networks are fragmented, regulatory environments are changing and international supply chains are being reconfigured. These shifts create isolated barriers and opportunities, with some countries benefiting from investment in intensive global value chain production, while others struggle to participate in the global economy.

In West Asia, the decline in inflows remained moderate. Meanwhile, South and Central Asia saw notable declines, particularly in India and Kazakhstan.

Merger and acquisition sales, which typically account for 10 to 15 percent of foreign direct investment (FDI) in developing Asia, fell by almost $30 billion in 2023 to $57 billion, representing about 50 percent of the decline total FDI inflows in the region.

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