The following information about Foreign Direct Investment ( FDI) inflow into and outflow from
Latin America and Caribbean should be of interest to Indian companies which are exploring opportunities for investment in the region.
-FDI inflow into Latin America and caribbean in 2006 was 84 billion dollars, increasing by 11% from 2005.
- 70 billion$ was pure FDI while 14 bn went into offshore financial centres.
-Top recepients of FDI : Mexico-19 bn, Brazil - 18.8 bn, Chile- 8 bn, Colombia-6.3 bn, Argentina-5 bn, Peru-3.5 bn, Panama-3 bn, Ecuador-2 bn.
-Manufacturing received the largest share of FDI at 41%, followed by services 37% and primary sector 21%.
- notable investments: In Peru investment is taking place in oil and gas development. 31 contracts have been signed in the last 2 yrs by Petroperu.. There is a 2.8 bn$ project for development of a petrochemical complex to produce fertilisers and polyethylene. Colombia attracted FDI of 1.8 bn in oil and gas sectorin 2006. In Chile mining investment in 2006 was 2 billion while Peruvian mining sector attracted 1.6 bn. Argentine automobile industry got new investment of 800 million$ in 2006. Volkswagon has announced ( oct 2007) invetsment of a billion dollars in a new pick-up truck plant.
-recent history of FDI in the region: It started increasing from 30 billion in 1995 and reached a peak of over 100 billion in 1999. It declined thereafter dropping to 40 billion in 2003. It went up to 90 bn in 2004, declined to 70 bn in 2005 and had increased to 84 bn in 2006.
- FDI in 2007 is expected to increase moderately, helped by high commodity prices, trade surplus and increase in foreign exchange reserves.- FDI in 2007 is expected to increase moderately, helped by high commodity prices, trade surplus and increase in foreign exchange reserves.
- FDI outflow from Latin America was an impressive 43 bn $ in 2006. Top investor was Brazil with 28 bn followed by Mexico with 5 bn, Chile- 3 bn, Argentina-2 bn and venezuela-2 bn.
- Brazil's outward investment of 28 bn $ was the highest-ever in its history. It was more than the FDI inflow in 2006. The largest contributor to this record was CVRD through its acquisition of the Canadian Nickel producer Inco for 17 bn $ . After this, CVRD has become the largest metal mining company in the world in terms of value of production. This is the largest-ever acquisition by a Latin American company.
source: UNCTAD 2007 report