Investment promotion agencies (IPAs) are pivotal in shaping the attractiveness of regions for foreign direct investment (FDI). Understanding the evolving trends in site selection can significantly enhance how IPAs support companies in their expansion decisions. Based on findings from the 39th Annual Corporate Survey and the 21st Annual Consultants Survey, here are the key trends and insights relevant to IPAs in 2025.
1. Labor Availability: The Primary Factor in Site Selection
- Skilled labor remains the most influential factor in site selection, with nearly 100% of consultants and business executives ranking it as critical.
2. Economic Incentives and Cost Management
- While economic incentives continue to be important, companies are placing more emphasis on the overall cost structure, including labor costs and energy prices, rather than relying solely on incentive packages.
3. Energy Availability and Costs
- Energy concerns are gaining in importance, especially for energy-intensive industries. High energy prices and the reliability of energy sources are becoming key considerations in site selection.
5. Sustainability and ESG Considerations
- ESG factors are becoming integral to site selection, with half of consultants considering these elements in their recommendations. Companies are prioritizing carbon neutrality and community impact, not just environmental sustainability.
7. Nearshoring and Reshoring Trends
- There is a significant rise in nearshoring and reshoring initiatives as companies aim to diversify supply chains and reduce dependency on regions like Asia. This is particularly evident in manufacturing sectors.
8. Shorter Timelines and Increased Urgency
- Companies are moving forward with site selection projects faster than ever, driven by competitive pressures and changing economic conditions. Consultants report more rapid project timelines as companies seek to capitalize on favorable conditions.
Key Takeaways for IPAs:
- Focus on promoting a skilled labor force and cost-effective operational environments, especially in energy costs and workforce availability.
- Showcase your region’s sustainability initiatives, ESG commitment, and competitive advantage in key sectors.
- Align your region’s offerings with current geopolitical and economic trends, such as reshoring, nearshoring, and the growing demand for sustainable business practices.
- Make site selection processes more efficient by providing quick, actionable information and ensuring that your incentives and infrastructure meet the evolving needs of modern investors.
By understanding these key trends and tailoring your promotional efforts accordingly, IPAs can more effectively attract and retain FDI in 2025.
