New Delhi: India accounted for the bulk of USD 39 billion foreign direct investment (FDI) that flowed into South Asia in 2011 followed by Iran and Pakistan, said a UN report on Thursday.
"The recovery took place mainly as a result of the good performance of India, which is the largest FDI recipient in South Asia and accounts for more than fourth-fifth of total FDI inflows to the region," said UNCTAD's World Investment Report 2012 -- Towards the New Generation of Investment Policy.
FDI Inflows into India surged to USD 32 billion during he year, it said, adding, "FDI inflows to South Asia rose by 23 percent to USD 39 billion in 2011 following declines in 2009 and 2010."
According to the report, Iran and Pakistan were the second and third largest FDI recipients. While the former attracted USD 4.2 billion, the latter received USD 1.3 billion. Bangladesh received USD 1.1 billion.
The report, however, pointed out that countries in South Asia face different challenges such as political risks and obstacles to FDI, which need to be tackled to build an attractive investment climate.
"Nevertheless, recent developments have highlighted new opportunities. For example, the political relationship between India and Pakistan, has been moving towards greater engagement," it added.
It also said that in Afghanistan, significant FDI has been flowing into extractive industries, despite the country’s continuing internal conflict.
In 2011, the report said, about 145 cross-border mergers and acquisitions and 1,045 greenfield FDI projects by foreign firms were recorded in South Asia. "Cross-border M&As rose by 131 percent in value, and the total reached USD 13 billion in 2011, surpassing the previous record set in 2008," it said, adding, the increase was driven mainly by large transactions in extractive industries.


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