US direct investments in S'pore climb to US$154b

[SINGAPORE] American companies have continued to invest more in Singapore, drawn apparently by yet more profits made here.

US direct investments in Singapore are already the second biggest American investments in the Asia-Pacific region, after Australia, but this hasn't stopped US companies from raising their stakes further.

US investments in Asia-Pacific saw a US$43.7 billion jump in 2013 to a book value of US$695.29 billion - the second biggest dollar rise in overseas US investments last year after Europe. The US Department of Commerce notes: "The largest increases were in Australia, Singapore and China."

US investments in Singapore climbed from US$139.71 billion in 2012 to US$154.44 billion last year, according to the Commerce Department's latest data. They rose from US$53.74 billion to US$61.53 billion in China, and from US$143.25 billion to US$158.99 billion in Australia.

At the same time, according to the data, Singapore also yielded the largest investment income for US companies in the region: US$22.67 billion (without current-cost adjustment). That's up from US$21.12 billion in 2012, US$21.44 billion in 2011, US$16.14 billion in 2010 and US$10.29 billion in 2009.

US investments in Australia gave the next biggest dollar return in the region in 2013 - US$13.75 billion - followed by China (US$8.99 billion) and Japan (US$6.56 billion). New Zealand (US$0.44 billion) provided the lowest return.

Globally, US companies last year made US$439.09 billion in profits with US$4,660.91 billion in investments. The dollar returns were biggest in Europe (US$224.37 billion) and the third biggest were in Asia-Pacific (US$75.19 billion).

By country, only the Netherlands (US$73.32 billion), Luxembourg (US$36.2 billion), Bermuda (US$33.85 billion), Ireland (US$33.68 billion) and the UK (US$32.53 billion) offered higher returns than Singapore last year.

In terms of the rate of return (income divided by investment) for US investments, the global figure in 2013 was 9.43 per cent. Singapore's was 14.68 per cent, against 10.81 per cent for Asia-Pacific.

Within the region, only Indonesia (27 per cent), Malaysia (20.05 per cent), the Philippines (18.72 per cent) and Thailand (18.57 per cent) yielded higher rates of return.

Overall US investment growth abroad slowed from an annual average of 10.5 per cent in 2002-12 to 6.3 per cent last year, when the total value rose to US$4,660.9 billion.

Reinvestments of earnings, which surged 17.8 per cent, contributed to most of the growth.

"The strong growth in reinvestment of earnings resulted from relatively modest growth in foreign affiliate earnings and sharply reduced distributed earnings," the Commerce Department says.

Five host countries - the Netherlands, the UK, Luxembourg, Canada and Bermuda - accounted for over half of the US investments abroad as at 2013.

The Netherlands continued to be the biggest recipient of US investments for the fifth straight year, with US companies sinking US$722.8 billion in the country, or 15.5 per cent of the global total. Four-fifths of the investments are in holding companies which "likely invested the funds in other countries".

In Singapore, over half of the US investments have gone into holding companies. For Asia-Pacific as a whole, the slice is a quarter - still bigger than all the other industries singly.

Manufacturing (21.3 per cent) accounts for the next biggest share of the US investment pie in the region, followed by finance and insurance, excluding banks (18.7 per cent).

Globally, 46.2 per cent of US investments abroad are in holding companies.

US pharmaceutical and computer manufacturers are the biggest owners of the holding companies in Europe, but the exact ownership is unclear in the Asia-Pacific region.