Published September 30, 2008

US investment income here rises 24%

Rate of return hits 22%, highest in 4 years and above Asia-Pac average


ALTHOUGH growth in US direct investments in Singapore is slipping behind elsewhere in Asia, there is no let-up in the returns here - the investment income of US multinationals continues to surge.

Income from US investments here jumped 24.3 per cent from 2006 to a whopping US$18.32 billion (without current-cost adjustment) last year, giving a 22 per cent (income divided by investments) rate of return.

This was the highest return in four years and better than the 15.4 per cent average for US investments in the Asia-Pacific region as a whole.

At the same time, US investments in Singapore rose just 5.3 per cent to US$82.62 billion last year, according to the latest figures released by the US Department of Commerce.

That is less than half the rate for US total investments in the region, which climbed 12 per cent to US$453.96 billion.

Worldwide, US investments went up 13.7 per cent from 2006 to US$2.79 trillion last year, with much of the increase going to Europe.

Investment income rose 12.9 per cent to US$348.79 billion - a 12.5 per cent rate of return.

Non-bank US holding companies in Singapore made over two-thirds - US$12.89 billion - of US investment income here last year.

A sizable US$2.32 billion of this income was posted by US manufacturers.

US finance houses and insurance companies in Singapore, excluding banks, also received significant returns amounting to US$902 million.

US wholesale traders scored US$677 million in investment income.

US investment income from Japan, host to the most US investments in the Asia-Pacific region, dipped from US$8.72 billion in 2006 to US$8.31 billion last year. US investment income also fell in Australia and Malaysia.

Thanks largely to the spike in global commodity prices, US multinationals in Indonesia got the best returns in Asia-Pacific last year - 34.2 per cent. The US has US$10.05 billion sunk there.

Malaysia offered US the second-highest return, although the rate slipped from 25.4 per cent in 2006 to 23.3 last year.

At 22.2 per cent, US multinationals got a more attractive return in Singapore than in China (21.1 per cent) and India (20.1 per cent) - the two hottest emerging markets in the region.

But US investment income from China and India are rising fast - up 29.7 per cent and 62.1 per cent respectively last year.

US multinationals also saw investment income surge in Hong Kong last year - from US$6.05 billion in 2006 to US$8.5 billion, an increase of 40.5 per cent.

But given the huge US investments there - US$47.42 billion - the rate of return was 17.9 per cent, or just above the region's average.