Foreign direct investment think tank Foresight Economics’, Foresight Economics Energy Index which ranks markets based on how attractive they are to inbound greenfield FDI focused on the energy sector has ranked Singapore third as preferred destination.
The inaugural rankings saw Luxembourg in the top position, followed by Hong Kong with the City State third, while US and China sat at the bottom of the league of 135 markets. This sector-specific index follows the overall FDI attractiveness Index released in February 2022, which saw Singapore ranking as the 2nd-most attractive destination for greenfield FDI globally.
“As we balance at the edge of a global recession because of tectonic movements in energy markets, driven by a grave undersupply situation, the world faces the dual urgency of transitioning towards renewable, sustainable energy while ensuring long-term energy security. Capital flows, and Foreign Direct Investments, in particular, will play a critical role in this, and actionable data is needed to support smart investment decisions.
“As such, we have come up with the Foresight Economics Energy Index to predict how attractive markets are to greenfield foreign direct investment in the sector. Singapore has emerged 3rd globally in terms of attractiveness to greenfield FDI, just one pole position lower than its position as 2nd most attractive FDI market overall. This is due to its high degree of openness and political stability, and we anticipate this trend to continue. We also expect the gap between Singapore and Hong Kong, which ranks higher than Singapore in the FE Energy Index, to continue narrowing,”said Kavi Chawla, Founder, Foresight Economics.
Findings from Foresight Economics, which aims to drive better decision-making on foreign investments, showed that markets such as Singapore with higher degrees of openness, political stability, and green investments, performed better while top oil-producing markets ranked lower.
The FE Energy Index was derived from aggregating publicly available and subscription-based data, across four indicators: Governance and Diversification, Openness, Economic Growth, and Natural Resources Endowment. The data was captured and analyzed using factor analysis and automated machine learning, aggregated to form a composite index of FDI attractiveness, and was then subject to robust back testing using an AI algorithm.
The FE Energy Index launch was accompanied by a white paper providing an in-depth analysis of current global energy developments, trends, and predictions including:
- The US increasingly emerging as an oil and LNG exporting super-power, with more flows from the US and Africa expected to match European fossil fuels demand.
- Asian markets will face stiff price-competition in the near term, especially on the LNG front where incoming volumes are projected to be significantly reduced.
- Energy insecurity is pushing Asian markets to shift in the near-term to locally sourced, dirtier but cheaper substitution fuels including coal
- Aggressive investments into disruptive sustainable energy sources is set to become even stronger in energy insecure markets, and what was originally thought of as a “transition” from fossil fuels to greener alternatives may turn into a straight “jump”
