World Investment Report 2009: Transnational Corporations - Unctad

86 World Investment Report 2009: Transnational Corporations, Agricultural Production and Development
Table II.31. Developed countries: value of crossborder
M&A sales and purchases, by sector/industry,
2007–2009 a
(Millions of dollars)
Net sales of companies in
developed countries b
Net purchases by
developed countries’
companies worldwide c
Sector/industry 2007 2008 2009 a 2007 2008 2009 a
Total 903 430 551 847 102 313 841 999 539 598 99 936
Primary 55 806 80 514 8 294 80 890 33 519 - 3 343
Mining, quarrying and
petroleum
54 895 78 604 7 823 80 483 29 826 - 3 448
Secondary 311 264 261 139 18 967 128 754 209 539 14 465
Food, beverages and
tobacco
45 629 107 922 1 623 29 662 75 743 1 624
Chemicals and chemical
products
111 800 66 611 9 440 80 988 59 943 8 815
Non-metallic mineral
products
34 933 11 926 - 460 372 20 553 74
Metals and metal products 64 488 9 877 291 - 1 872 3 660 - 236
Machinery and equipment 17 704 13 236 184 2 945 5 788 207
Electrical and electronic
equipment
21 894 10 537 5 628 34 370 23 786 561
Precision instruments - 17 165 22 980 1 996 - 9 868 7 140 2 777
Services 536 360 210 194 75 051 632 143 296 497 88 814
Electricity, gas and water 91 681 34 998 48 990 41 405 13 978 26 725
Hotels and restaurants 8 188 3 155 539 - 11 652 636 233
Trade 42 335 10 847 - 2 890 - 3 113 191 1 990
Transport, storage and
communications
53 862 20 766 2 067 28 011 - 7 117 7 747
Finance 214 827 33 794 21 358 567 124 270 740 54 455
Business services 88 666 96 833 3 963 11 817 21 631 - 1 049
Source: UNCTAD cross-border M&A database (www.unctad.org/
fdistatistics).
a For 2009, January–June only.
b Net sales in the industry of the acquired company.
c Net purchases by the industry of the acquiring company.
Note: Net cross-border M&A sales in a host economy are sales of
companies in the host economies to foreign TNCs (excluding
sales of foreign affiliates in the host economy). Net crossborder
M&A purchases by a home economy are purchases of
companies abroad by home-based TNCs (excluding sales of
foreign affiliates of home-based TNCs). The data cover only
those deals that involved an acquisition of an equity stake of
more than 10%.
introduced a tax reduction for repatriated foreign
income by Japanese TNCs to stimulate domestic
investment in Japan. Concerning outward FDI, the
Japan Bank for International Cooperation can now
extend loans to Japanese firms that invest in other
developed countries so as to reduce the impact of
the credit crunch due to the financial crisis in those
countries. Previously it could only extend loans to
just those investing in developing countries.
At the international level, developed countries
concluded 38 new BITs, most of which were with
developing countries (26 BITs). As far as DTTs are
concerned, 63 new agreements were concluded by
developed countries in 2008, bringing their total
number of DTTs to 2,148. In terms of IIAs (other
than BITs and DTTs) involving developed countries,
15 agreements were concluded in 2008 (for example
the FTAs between Canada and Colombia, Canada
and Peru, China and New Zealand, and ASEAN and
Japan).
4. Prospects: FDI flows
expected to fall further
The short-term prospects for FDI flows to
and from developed countries have deteriorated
sharply. In 2009, developed countries fell into the
severest economic and financial crisis in several
decades. An end of the economic downturn
and a recovery of developed economies are not
foreseeable in the near future. The real GDP of
developed countries as a group is expected to
decline by 3% in 2009, with the real GDP of the
United States forecast to decline by 2.5%, of the
EU by 3% and of Japan by 2% (IMF, 2009a). In
addition, access to bank financing of cross-border
M&As remains difficult. Several bank lending
surveys point in this direction (ECB, 2009).
Banks have tightened credit standards, and risk
premiums have risen considerably. Private equity
funds and other collective investment funds that
were important drivers of the previous M&A boom
have been seriously hurt by the crisis. Financing
for large leveraged buyouts is hard to find. As a
result, TNCs are cutting back their investment
plans. For example, while in 2008 Japanese TNCs
were very active abroad, as noted, their FDI is
expected to fall by as much as 33% in fiscal year
2009 (ending March 2010), and this fall will be
mostly in developed countries, ranging between
40% for EU countries and 44% for the United
States; China, on the other hand, is expected to see
only a small decline in Japanese FDI, of 3%. 121
FDI flows, both outward and inward, could fall by
30–50% in 2009.
In UNCTAD’s World Investment Prospects
Survey 2009-2011, respondent firms indicated a
decline in planned investments in the medium term,
in all sub-groups of developed countries except “other
Europe” and “other developed countries” (figure
II.29). Almost 42% of European investors indicated
they would reconsider the way they propose to expand
their international operations and FDI activity in 2009.
Non-cash mergers and consolidation are likely to be
the preferred modes, as companies seek to survive the
financial turmoil by optimizing assets and combining
with competitors to cut costs (Ernst & Young, 2009).
In the ����� ������� ������� ���� ������� (2009) by
PricewaterhouseCoopers, pessimism prevails across
all geographic regions, business sectors and levels of
economic development: nearly 70 per cent of CEOs
mentioned that they would delay planned investments
due to higher financing costs.