M&A deals in ASEAN surge in 2017

Chinese mergers and acquisitions (M&As) in countries that are part of the Association of Southeast Asian Nations (ASEAN) soared in 2017 despite a slump in overall outbound investment, thanks largely to the Belt and Road initiative (B&R), according to a report.

The deal value rose 268 percent to $34.1 billion and representing one-quarter of the total value of disclosed Chinese M&As, accounting firm Ernst & Young (EY) said in a report on Monday.

“Taking advantage of its geographic location as a trade hub under the B&R initiative, ASEAN has achieved steady growth in recent years,” said Andrew Choy, EY’s greater China international tax services leader.

China and ASEAN are expected to further improve their relationship and expand broader cooperation under the B&R initiative, Choy said.

Proposed by China in 2013, the B&R initiative aims to build trade and infrastructure networks connecting Asia with Europe and Africa along ancient Silk Road trade routes.

Singapore was China’s biggest M&A destination in 2017 as M&A activities by Chinese enterprises surged, according to the report.

Investment was mainly focused on sectors such as transportation, technology, telecommunications and life sciences.

Situated along the B&R routes, Malaysia and Indonesia offer plenty of investment opportunities, and both countries have drawn up incentives to attract foreign investment, the report said.

China’s outbound direct investment (ODI) slid in 2017 amid government efforts to curb irrational overseas investment.

Data from the Ministry of Commerce showed that non-financial ODI fell 29.4 percent year-on-year to $120 billion last year.

Non-financial ODI in countries involved in the B&R initiative totaled $14.36 billion, accounting for 12 percent of the total, up from 8.5 percent in 2016.