Last week the OECD published their latest global FDI data for 2022, and the key take-away is that attracting investment is not going to get any easier in 2023. Just as COVID-19 recedes into the distance, so it seems there are no shortage of replacements for our attention including rising energy costs, inflation, war, protectionism, and geopolitical tensions.
The OECD figures show that global FDI flows dropped by 5% in 2022 compared to the previous year*. While this is an improvement on those pandemic years it is still one of the lowest levels of FDI flows in the last 15 years.
The outlook for 2023 suggests a difficult year ahead. Cross-border M&A data has already been published for the first quarter of 2023 and it shows a downward trend. Given that greenfield projects rarely deviate from the M&A trend, it is fair to expect a decline here and a difficult start for FDI flows in 2023.
So, what advice do we have for IPAs looking at another year of fierce competition for investment?
With fewer FDI projects expected in 2023, now is the time to build your story and tell it to the decision-makers who matter. Here are three ideas to maximise your potential.
- Firstly, develop your story: build a clear understanding of how the strengths in your region align with the new world of digital and sustainable companies and consumers. Then develop your story to sell the opportunity. This could be your skills, R&D capabilities, clusters, or market opportunity.
- Secondly, tell your story: identify which companies in your most important sectors are most likely to be investing in the future. Then find a way to tell them your story – not who you are but what you can do for them. This can be face-to-face, text, audio or visual but it needs to be engaging and selling an opportunity.
- And finally, don’t forget to keep your friends close: aftercare is essential to keep your best companies and encourage them to invest more. In 2022 as expansions accounted for a quarter of all FDI projects in 2022.
OCO Global are experts at developing strategies, and critically we have the people in the markets that matter to help you tell your story. To learn more about our offer click here.
*While the total drop in FDI flows 2022 was reported as 24%, large withdrawals of capital by a telecommunication MNE operating in Luxembourg distort the figures. Excluding Luxembourg, global FDI flows declined by 5% in 2022 compared to the previous year.