ransnational corporations (TNCs) will favor Germany, the United Kingdom and France when they invest in Western Europe during the next three years. This prediction is among the findings of a recent survey of 129 TNCs conducted by the United Nations Conference on Trade and Development (UNCTAD), the Invest in France Agency and Andersen, the U.S. consulting firm. The United States also will benefit, as will China in Asia, Brazil in Latin America, Poland in Eastern Europe and South Africa on the African continent.
        The survey says that TNCs plan to continue international expansion at a sustained pace. Expansion plans will focus on production and distribution facilities, with companies primarily entering markets through cross-border mergers and acquisitions in developed countries and making greenfield investment in developing countries.
        Conducted during the largest downturn of foreign direct investment (FDI) flows in 30 years -- an estimated 40 percent drop from the previous year -- the survey gauges the attitudes of major TNCs for the medium term, although direct investment typically is motivated by longer-term considerations. UNCTAD notes, however, that the findings must be interpreted with care, because the full impact of the Sept. 11 attacks is yet to be determined. There are indications that those events may not have a lasting impact on the mid-term FDI plans of TNCs -- a finding consistent with a recent survey, according to which CEOs were sticking to their original FDI plans. Of the 28 respondents who were asked by UNCTAD and Invest in France in November if they would cut back on their investment plans for the next three to five years as a result of the attacks, only a small number said they would consider delaying or canceling investment projects.

EY Report Details Asia's Need for Economic Reforms The worldwide economic slowdown and continuing repercussions of the Sept. 11 attacks have the potential to worsen Asia's mounting problem loan crisis, Ernst & Young reports in its Nov. 1 "Nonperforming Loan Report: Asia 2002." The study notes that in the last two years, the estimated amount of nonperforming loans (NPLs) held by Asian financial institutions and governments leapt by 33 percent to US$2 trillion. The total level of NPLs in Asia represents roughly 29 percent of the region's combined gross domestic product, rather than the 17.3 percent reported by official government estimates.         Though changes have taken place in the past two years to solve the problem loan situation, the change has not been nearly enough to keep up with the problem. "Today, loans held by Asian financial institutions are turning bad at an alarming rate," explains Jack Rodman, managing director of EY Asia Pacific Financial Solutions Group.         The disposition pace for problem loans remains slow. Since 1997, Japanese banks have sold about $300 billion of NPLs, but EY reports that Japanese banks still hold about $1.3 trillion of NPL -- approximately the same level EY identified two years ago.         What's the solution? First, Asian regional economies need to adopt a practical government-led program to address financial restructuring and then follow through with consistent NPL disposition strategies. Second, those programs have to recognize the view of the international banking community, ratings agencies and analysts that a final resolution of each NPL won't be achieved without outright sale of the assets to the private sector. "If these two conditions are met," Rodman says, "the third essential part of a solution to the NPL problem will occur: Foreign investors will step up and buy loans in even bigger numbers."         Failing to solve the NPL problem will result in the "NPL Effect" -- reduced economic growth over the next few years, resulting in slower growth in standards of living, business investment, tax revenue and other economic problems. "Asia has to accept some short-term pain in order to achieve a long-term gain," Rodman says. "There is a market developing throughout the world where participants such as opportunity funds, private investors and others are willing to take the risk of investing in NPLs in order to achieve high returns for their capital. In fact, there is plenty of opportunity for Asia banks and governments and for foreign investors to make money as long as Asia grasps the bull by the horns and makes a concerted and sometimes painful effort to clean up the NPL problem once and for all."

Canada Bolsters Marine Sciences Industry in Bas-Saint-Laurent

Industry clusters are not a new concept in economic development, but they are emerging as a potent force in the site-selection decision-making process. The province of Quebec certainly has realized the wisdom of fostering industry clusters. It already has in place a biotech center in Montreal and an optic-photonics region in Quebec City. Most recently, Canada's federal government has set forth an initiative to develop the marine biotechnology sector in Quebec's Bas-Saint-Laurent region over the next four years.
        Financial support totaling more than US$1.7 million has been awarded to three major marine science and technology projects: $44,000 to the Centre de recherché sur les biotechnologies marines for the development of a business plan; $473,000 to the Centre Innovation maritime; and $1.14 million to the Technopole maritime du Quebec.
        The Marine Technopole concept was announced in 1999 within the framework of the Eastern Quebec Regional Strategic Initiative, an undertaking that will benefit from an $11.3 million budget over four years. The Centre de recherché sur les biotechnologies marines, the Centre de cartographie des oceans, the incubator for enterprises in the marine science and technology sector are major initiatives in the second phase of the marine Technopole.
        Other activities will be developed in cooperation with marine sector stakeholders from the Bas-Saint-Laurent region and in close collaboration with the Corporation Technopole maritime du Quebec, whose primary mandate is to promote networking among Quebec's marine science and technology stakeholders.
        The region already has an international standing in the field of oceanography with the presence of a number of institutions including The University of Quebec at Rimouski, INRS-Oceanologie, the Maurice Lamontagne Institute in Sainte-Flavie and the Institut maritime du Quebec at the Rimouski Cegep. The INRS also put in place a saltwater research facility at Pointe-au-Pere. In addition, the Institut Maritime du Quebec provides the region with expertise in marine environments and training in underwater maintenance and repair work through its diving and underwater works center.
        The Bas-Saint-Laurent's location along the Saint Lawrence estuary has also played a role in developing a unique maritime industry. Whether through its research and development, shipyards or harbors, the Bas-Saint-Laurent has developed this field through links with the rest of Quebec and Canada.
        Says Martin Cauchon, Minister of National Revenue and Secretary of State responsible for Canada Economic Development, "The Government of Canada's intention is to make the Eastern Quebec region a center for excellence in the marine field by increasing the number of private enterprises and by stimulating the growth of those already in existence."

Report Says Belgium's Best for Logistics, Distribution Belgium tops a list of 16 European countries ranked on their suitability as a location for logistics and distribution. The Healey & Baker unit of Cushman & Wakefield released its European Distribution Report in January, which evaluates the strengths and weaknesses of the countries in terms of cost of land and labor; road, rail, air and sea access; population density; and land supply.         Among the factors putting Belgium at the head of the class are its central location, low occupancy and building costs and good accessibility, the report indicates. Belgium is located within 300 miles of 60 percent of Europe's purchasing power, and Flanders, the northern region, is home to four ports, including Antwerp, which is known for high worker productivity and the lowest handling costs per container of any port in Europe.         Belgium's strong transportation infrastructure will keep the market in good stead in the future as road congestion increases and rail transport becomes more important, the report reveals. Among the multinational companies with logistics and distribution operations already in Belgium are DHL, DaimlerChrysler, Caterpilar and Bose Corp.

Taiwan Government Opens Door to Mainland China Investment

In December 2001, the Taiwanese government introduced a reform that allows companies to invest and therefore manufacture certain products on the Chinese mainland. Effective immediately, the new law will apply to more than 100 high-tech products, including computer hardware, telecommunications, notebook computers, cellular phones and DVD players.

        This is the first relaxation of investment regulations to take place in five years. BBC reports that companies were either prohibited from China-bound investment or placed on a case-by-case review list under previous regulations. Other reforms include removing a US$50 million ceiling on single investments in China.