Singapore top Asian investor in US after Japan, with US$73.6b of FDI

Singapore

SINGAPORE'S direct investments in the US has turned out to be a classic case of the tortoise and the hare.

While the yearly investment flow data may not show it, cumulatively, Singapore is now the biggest Asian investor in the world's biggest economy after Japan, according to the US Department of Commerce.

The latest figures released by the department's Bureau of Economic Analysis also revealed that Singapore is one of the fastest-growing sources of foreign direct investments (FDI) in the US in recent years.

From 2011 to 2016, investments by Singapore companies in the US jumped at a compound annual growth rate of 36.9 per cent, behind only Thailand (55.5 per cent), Argentina (46.4 per cent) and China (44.7 per cent).

Yet, until the start of this decade, the pace of Singapore investments in the US has been rather sedate, with even dis-investments in some years.

In any case, Singapore's FDI in the US, rarely exceeding US$1 billion a year, was insignificant compared to the multi-billion-dollar FDI pumped into the country by major economies like the United Kingdom, Japan and Germany. But over time, Singapore has caught up with and even overtaken some of the rabbits.

The FDI Singapore companies sank into US manufacturing, services as well as banks and other financial institutions, directly and indirectly, has swelled from US$26.21 billion in 2008 to US$73.68 billion as of end-2016. This accounted for 2 per cent of the total FDI stock and the ninth largest FDI in the country - larger than the investments of China (US$58.15 billion) and Australia (US$54.32 billion), among Asian FDIs.

The UK (US$598.32 billion) is the biggest foreign investor in the US, followed by Canada (US$453.64 billion), Japan (US$424.35 billion) and Germany (US$372.78 billion).

Bureau of Economic Analysis figures show Singapore's FDI stock in the US actually slipped from US$26.21 billion in 2008 to US$15.30 billion in 2011, as Singapore companies pulled out their money and put them in more lucrative emerging markets like China and India.

(Singapore is now the biggest investor in these two countries.)

Singapore's FDI in the US started to recover in 2012, raising its FDI stock in the US to US$17.44 billion. The momentum picked up further in 2014 when Singapore's FDI stock was bumped up from US$19.29 billion to US$33.68 billion.

Then in 2016, Singapore's cumulative investments in the US nearly doubled from US$37.35 billion in 2015 to US$73.68 billion.

The US Department of Commerce offers no explanation for the big jump in Singapore FDI stock, other than to note that Singapore has in recent years been one of US's fastest-growing sources of FDI.

The latest official data shows the US manufacturing sector - especially chemicals, transportation equipment, food and machinery - continued to be the biggest beneficiary of FDIs, accounting for 41 per cent of the total FDI.

Almost one fifth of the FDI have gone into the banking, finance and insurance business and 10 per cent into wholesale trade.

Singapore companies, led by government-linked firms like Government of Singapore Investment Corporation, have traditionally pumped money into safer investment projects like real estate. But over the years, Singapore FDI in the US also has a big presence in manufacturing, wholesale trade as well as banking and other financial services.