Still another negative fallout from increased lending to high-net-worth foreigners would be its crowding-out effect on domestic investment, either denying local investors adequate access to bank finance, or hardening their terms. It is abundantly clear that the quality of FDI does matter.
FDI should be strongly linked to local enterprise development and not confined to small enclaves as the benefits of FDI do not accrue automatically and are not uniform across sectors and countries. Experience shows that the authorities need to go beyond traditional liberal FDI policies.