SA among top 20 FDI targets

The Foreign Direct Investment Confidence Index, compiled by global strategic management consulting firm AT Kearney, has been conducted each year since 1998 except 2006. It surveys representatives of 1 000 companies from 40 countries and 17 industries and reflects investor confidence in countries, but not actual levels of investment.

This is the first time that South Africa has been included in the list of 25 countries and was placed 18th behind Other Gulf States (Bahrain, Kuwait, Oman and Qatar).

While China and India continue to rank first and second in the 2007 Index, 15 of the most attractive 25 FDI destinations are developing markets, says AT Kearney.

Brazil, the United Arab Emirates and Russia all rank among the top 10. South Africa and Other Gulf States made their debut in this year's index, while Vietnam, Malaysia and Indonesia are returning to the index's top 25 most attractive destinations.

AT Kearney says the assessment of senior executive sentiment at the world's largest companies found corporate investors optimistic about the prospects for developing nations and increasingly targeting them for more corporate investment in the years ahead.

SA has been experiencing an economic boom with economic growth jumping to 5.4% in 2006 - its fastest rate since 1981. But there are concerns over the direction of policy after a crucial ANC conference which seems likely to choose Jacob Zuma as the ruling party's new leader.

AT Kearney says emerging markets have registered the strongest investor optimism, with India, China, Brazil, the United Arab Emirates and Vietnam experiencing the most positive change in investment outlook during the last year, according to executives.

"While China and India remain the top destinations for first-time investments overall, developing country investors are more bullish about new markets such as Vietnam, Brazil and South Africa, while developed market investors tend to stick to familiar markets," said Janet Pau, manager of the FDI Confidence Index.

"Developing country investors also are likely to be responsible for more than half - 54% - of the investments greater than $500m over the next three years," Pau adds.

Despite the subprime-related turmoil that the US has experienced, the economic powerhouse still emerged in third place - this despite concerns from executives about the slowing US economy (55%), volatility of the dollar (45%), rising interest rates (39%), increased government regulation (38%) and the volatility of energy prices (37%) as the top concerns facing the world economy.

"The world's economic centre of power continues its perceptible shift from developed to developing markets," said Paul Laudicina, managing officer and chairperson of AT Kearney.

"Developed countries are competing with developing countries for investment capital, and developing countries are increasingly winning out."

The Index provides a unique look at the present and future prospects for international investment flows. Companies participating in the survey account for more than $3.8 trillion in annual global revenue.

The 25 most attractive FDI destinations according to corporate executives:

1. China
2. India
3. United States
4. United Kingdom
5. Hong Kong
6. Brazil
7. Singapore
8. The United Arab Emirates
9. Russia
10. Germany
11. Australia
12. Vietnam
13. France
14. Canada
15. Japan
16. Malaysia
17. Other Gulf States
18. South Africa
19. Mexico
20. Turkey
21. Indonesia
22. Poland
23. Central Asia
24. South Korea
25. Czech Republic

- Fin24/FDI Confidence Index