Chart : FDI (balance payments), per quarter, (from Q1 2004 to Q2 2007)

Let’s talk about FDI (Foreign Direct Investments), but from a central bank point of view.

A quick reminder : “Direct investment reflects the lasting interest of a
non-resident of an economy in a resident entity.”

We have 2 flows : inward (money coming into Thailand) and outward.

It’s easy to follow these flows, with the balance of payments.

Check the datas of the BOT, here.

Here is a document (PDF), from the BOT, explaining the statistics of FDI.

On this chart (from Q1 2004 to Q2 2007), you’ll see the value in millions THB of FDI coming into Thailand per quarter, and the % of change year on year.

How to read it ? On Q2 2007, we had 60 191 millions THB, which represents a decrease of 23,35 % compare to Q2 of the previous year.

Few comments : we can see the peak of Q1 2006, with the huge Shin Deal (80 billions THB in january 2006, Temasek from Singapore bought the group of the prime minister Thaksin).

Since then… well the % of change y-o-y show us that there is a decline. One year of flat line, in negative territory.

Is it a simple pause, due to the political instability ? Or is it the beginning of a negative trend, that would show a defiance against Thailand ? Or have we reached a kind of ceiling (the FDI won’t grow anymore) ?

To go a bit further, here is a document from IMF about the statistics of FDI. It gives some usefull details about definition.

“There are a number of popular misconceptions about what FDI is.
-FDI does not necessarily imply control of the enterprise, as only a 10 percent
ownership is required to establish a direct investment relationship.
-FDI does not comprise a “10 percent ownership” (or more) by a group of “unrelated” investors domiciled in the same foreign country—FDI involves only one investor or a “related group” of investors.
-FDI is not based on the nationality or citizenship of the direct investor—FDI is based on residency.
-Borrowings from unrelated parties abroad that are guaranteed by direct investors are not FDI.“