Singapore has risen from the 18th to 9th ranking in global consulting firm Kearney’s 2023 Foreign Direct Investment Confidence Index (FDICI) — the biggest jump in this year’s index.
The city-state's score increased from 1.74 to 1.87 this year. Kearney notes that this is a testament to Singapore's higher-than-expected GDP growth in 2022 at 3.6%, exceeding the average rate of 2.6% for advanced economies.
Additionally, investors were optimistic about improvements in the country’s tech exports, which appear poised to increase amid rebounding external demand. Other plus points include Singapore’s strong digital infrastructure and open market access.
The country also saw the highest increase in net optimism score compared to last year among all countries, solidifying its reputation as a regional hotspot for FDI.
“As a key investment and business hub in Asia Pacific, Singapore’s continued growth and resilience help bolster optimism for the region as a whole. The nation remains strong on factors that are most important to investors, including government transparency and technological innovation,” says Kearney’s Asia Pacific regional head and chairman Arjun Sethi.
Currently in its 25th year, the FDICI is a survey of investor sentiment regarding future FDI flows.
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The index found that globally, 82% of investors are planning to increase their FDI in the next three years, up from 76% last year.
Meanwhile, 91% of investors in Asia Pacific cited FDI as more important for their corporate profitability and competitiveness in the next three years as compared to the past three years.
The survey also finds that business leaders believe globalisation is and will remain the central focus of FDI.
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Generally, Asia Pacific investors showed the most favourable views on their companies’ ability to benefit from global linkages, with 73% of respondents anticipating an increase in globalisation in the next three years. This is the highest among all regions, with the global average at 66%
The bullish view on globalisation arises due to several driving forces including connected digital infrastructure, growing trade opportunities and limited trade barriers.
“While global investors hold a degree of caution due to a rise in commodity prices, mounting geopolitical tensions and increasing political instability in emerging markets, investor optimism about Asia Pacific remains strong due to the region’s robust post-pandemic recovery, relatively high near-term growth prospects and generally robust dynamism,” says Sethi.
