In particular, the Thai Exim Bank and the Board of Investment have been providing facilities (e.g. information, outward investment missions) to help Thai firms venture abroad.

There are limits to outward investment, lack of insurance for outward investment, and exchange rate controls.

Asian corporations have led the field in investing abroad.

Obstacles to OFDI

Examples of the latter could include provisions aimed at enterprise development, OFDI promotion programmes and outbound investment missions in conjunction with investment promotion authorities.

In the case of China, OFDI approval procedures have been simplified and the Investment Promotion Agency, established under the Ministry of Commerce, provides support in helping Chinese enterprises to invest abroad.

Drivers and motivation of OFDI

Does OFDI increase competitiveness of firms and how could competitiveness from OFDI be measured?

Impact of investing abroad on enterprise competitiveness Selected cases an indicators

In terms of outward FDI policies, several developing countries have established outward investment agencies (OIAs), whose primary function is to promote and facilitate investment abroad by helping domestic enterprises develop international business links and pursue overseas business opportunities.

Policy measures that support OFDI 13

OFDI and enterprise competitiveness

Recent trends in OFDI from developing countries

Much of African OFDI takes place in neighbouring countries.

These institutional frameworks are perhaps more effective in supporting OFDI than are OFDI incentives per se.

However, these enterprises face a number of challenges in investing overseas.

China is providing investment insurance and tax breaks to companies that invest abroad.

The additional risks of investing and operating in a foreign country have hampered OFDI by developing country firms, as have the lack of information on overseas investment opportunities and the lack of access to finance.

The main factors that motivate firms from the South to invest abroad are similar to those that motivate FDI from developed countries.

OFDI and enterprise competitiveness 11

Table 2. Singapore OFDI stock, by industry and activity abroad, 1990, 1995, 2000, 2002, 1990 2002

Its OFDI stock reached 29 billion in 2004 and accounted for 67 per cent of the region's OFDI stock (see table 1).

OFDI from the BRIC countries Brazil, Russia, India and China is now growing rapidly and looks set to dominate OFDI activity from developing countries in the future (Sauvant 2005).

OFDI from Singapore Trends and development

Drivers and motivations of Singapore OFDI

Promoting OFDI Key laws and regulations

One is that Governments have been supporting FDI outflows.

Other supportive measures include streamlining OFDI approval procedures and the conditions governing equity ownership of affiliates abroad.

Meanwhile, outward foreign direct investment yields 20 annually, on average.

) To the extent that these agreements protect investment and open up industries for FDI, they facilitate OFDI from developing countries.

FDI by SMEs involved evaluation of investment locations based on a set of variables which could be clustered under markets, costs, natural resources, infrastructure framework, policy framework and business promotion and support factors.

Internationalization of Developing Country Enterprises

There is notable OFDI from Argentina.

How can OFDI benefit economic development? How does OFDI affect enterprise competitiveness, and how can it be measured?

OFDI from Singapore Trends and development 4

Impact of OFDI on competitiveness of Singaporean enterprises 14

Some experts stressed that policies had been traditionally oriented to attract FDI and were not really defined as promoting outward FDI.

Investment opportunities and privatization in the continent also encouraged South African and other African countries' OFDI in the region.

But the most notable development of recent years has been the surge in China s outward FDI since the government adopted its go global policy in 2000, encouraging Chinese firms to invest overseas. China s outward FDI more than doubled in 2005 2007, from 12 billion to 27 billion, and then more than doubled again in 2008, to 56 billion.

Following is a discussion of the main OFDI trends and players.

Third, the Singapore Government plays a significant role in promoting OFDI.

More importantly, developing country (home) governments can enhance the ability and capacity of their countries' enterprises, particularly SMEs, to internationalize through OFDI.

Impact of OFDI on competitiveness of Singapore enterprises

African OFDI is mainly from South Africa. SMEs from Uganda are investing abroad, facilitated by a joint venture arrangement with TNCs, in response to competition and to strengthen trade channels.

Assistance to smaller firms with little experience in investment projects abroad and with limited financial means is particularly important, especially in the first stages of the investment process.