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East Asia and Pacific

Partnership in Political Risk: Singapore Goes Global!

Paul Barbour's picture

On February 22, MIGA partnered with the Singapore Management University (SMU) and International Enterprise Singapore (IE Singapore), to launch the most recent World Investment and Political Risk Report in Asia. The event, at SMU’s downtown campus, focused on the key issues of sovereign and political risk and how foreign investors can mitigate them.

The latest World Investment and Political Risk report is the fourth in a series that we’ve recently launched in London and Washington, DC as well. There are some important nuggets on FDI trends and perceptions this year. The report notes that foreign investors, attracted by stronger economic growth in developing countries while mindful of risks, still remain optimistic about these destinations.

Davos 2013: A Thief Stealing Bells Is Not an Optimist

Kevin Lu's picture

For the past five years, the participants to the Annual Meetings of the World Economic Forum (WEF) have gathered in Davos to discuss urgent global crises the world was facing: subprime lending, the credit crunch, banking, Greece, the euro zone’s woes, and so on. Soul-searching about the political and economic status quo ensued. This year, with leadership transitions in the two largest economies completed, the euro zone no longer facing imminent break-up, and China growing at 7.8%, Davos resumed some normalcy. Some even claimed optimism.

Some of the optimism is based on the growth prospects in Asia and China. For the past five years, while Europe has not grown at all, Chinese GDP has grown 60%. In this year’s Davos, there were no fewer than five public sessions on China, with topics ranging from its rapid growth, transformation of its growth model, and emergence of its soft power. Interests in Asia are high.

On Optimism and Caution: Connecting East Asia

Kevin Lu's picture

It was all about connectivity in the just-concluded World Economic Forum for East Asia that took place in Bangkok last week. Participants pondered many questions related to how we could make this region more connected, in terms of trade, tourism, investments, and even value.

In a session on infrastructure financing, IFC Vice President Karin Finkelston spoke eloquently about the need to mobilize financing for many developing countries in Asia and what IFC has been doing in terms of both investing and advising governments to prepare bankable projects. When Professor Joe Stiglitz on the same panel raised his proposal to establish an ASEAN development bank, it received mixed feedback from the fellow panelists.

MIGA: Beyond "Project of the Year"

Kevin Lu's picture

Today in Singapore, MIGA and IE Singapore co-hosted a seminar:"Managing Global Political Risks: Old Risks, New Moment."

After the welcome speech by IE's Assistant CEO Terence Seow, Michel Wormser, MIGA's Vice President and COO, delivered the keynote speech, which touched upon the current global economic turbulence, potential investment opportunities for Asian investors, the perception of risks, and what role the World Bank Group can play in facilitating private capital into productive projects. Michel noted that—while he understands that many Asian companies tend to invest in nearby countries—there are also plentiful of opportunities in Africa and Latin America.

Parsing Asia: What New World Bank Reports Say about Investment in the Region

Paul Barbour's picture

In the immediate aftermath of the global financial crisis, one obvious truth is that locus of growth has shifted east. While the world frets over the stuttering recoveries in the USA and EU, most Asian economies have rebounded well, including a pick-up of FDI into and from these markets. The latest IMF World Economic Outlook expects growth in developing Asia to be 9.4% in 2010 and 8.4% in 2011. Contrast this with estimates for the USA of 2.6% in 2010 and 2.3% in 2011, and for the EU 1.7% in 2010 and 1.5% in 2011. A similar story will be found in the Global Economic Prospectsreport from the World Bank Development Economics Group to be launched on January 12. 

 

A central question remains, however: Are these high growth rates and the high returns to investment, risk-neutral vis-à-vis investing in developed markets? Or other emerging-market regions? This question is pertinent for both commercial and political risk – but it is the latter to which I now turn.

 

Asia: the Ins and Outs of FDI

Izumi Kobayashi's picture

I recently returned from a visit to seven countries throughout Asia. Although I had visited some of them before, this was my first visit representing MIGA. During my trip, I recognized the value and potential of MIGA’s focus on south/south investment to investors in this region. Of course providing guarantees to support inward investment to Asia is very important to MIGA, especially guarantees for complex infrastructure projects. MIGA can add a lot of value to these types of projects – particularly when it comes to helping manage the environmental and social aspects of projects.  

However, even through this global economic crisis, many private sector companies in Asian middle income countries have become “investors” in other parts of the world. Investments from Asia reach many of the poorest and post-conflict countries. At the same time, risk-mitigation instruments such as political risk insurance are not well known. We see a role for MIGA in sharing experience and working with Asian export credit agencies and Eximbanks to bring Asian investors the risk mitigation tools they need to help continue expanding their investments.