Brazil and India trail in attracting investments
Print Edition
The British Virgin Islands got more foreign direct investment last year than the major emerging economies of India and Brazil combined, a United Nations survey has showed.
The Caribbean archipelago, a tax haven otherwise dependent on tourism, has jumped up the league table of top investment destinations in the past five years.
It welcomed US$92 billion of foreign cash last year, according to preliminary figures compiled by the UN trade and economy think tank UNCTAD.
That was the fourth-biggest haul of investment globally. The world’s biggest economy, the United States, attracted US$159 billion.
China, the world’s second-biggest economy, got US$127 billion, while major oil and metals producer Russia took in just US$2 billion more than the British Virgin Islands.
Brazil received US$63 billion and India garnered US$28 billion.
For most countries, foreign direct investment mainly consists of companies spending on cross-border corporate acquisitions and new overseas projects.
But for the British Virgin Islands, most of the money is transferred quickly in and out of the country or cash moved through the treasury accounts of large firms, which UNCTAD terms “transnational corporations” or TNCs.
“In the British Virgin Islands there are some financial companies that perform the role of treasuries of the TNCs, as a kind of profit unit or profit center,” said James Zhan, director of UNCTAD’s investment and enterprise division.
“The TNCs’ revenues basically flow from their foreign affiliates in countries with higher tax rates to there,” he said.
The islands’ annual inflow of foreign investment was 40 percent up from a year ago and continues a trend that took off after the economic crisis struck and governments began cracking down on tax avoidance.
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