They dwarfed inflows into Singapore, the second largest recipient, at $9.4 billion.

The level of foreign investment between Asian countries was higher than that directed from developed countries to the region.

The world investment report reviews the investment operations of multi-national corporations, market structure and competition policy.

While focusing on the benefits of a liberalised regime, it warns of the danger of monopolies and oligopolies in unregulated markets.

Unctad secretary-general Rubens Ricupero said: 'It is not a potential threat, it is a reality. The reason why they exert control beyond single countries is because these practices take place across many countries.' Mr Ricupero called for international action to develop regulatory policies that could combat anti-competitive practices.

The mainland absorbed more than two-fifths of the $16 billion increase in last year's investment flows.

This was sparked by a rush of investors seeking to establish projects before the enactment of policies that would scrap some of the preferential treatment for foreign investors.

Worldwide FDI last year increased 10 per cent to $349 billion.

Inflows into developing countries rose 34 per cent to a record $129 billion, while inflows into developed countries made modest gains to reach $200 billion.

Mr Ricupero said the recent Thai currency crisis highlighted the important role of FDI in facilitating economic growth.

'The current financial crisis highlights the positive effect of FDI as compared to short-term inflows,' he said.

'Being long-term, it plays a stabilising role. Investment is set, and its staying power is an important insurance for those countries.' He said the global surge in FDI had been aided by worldwide liberalisation of investment.

'The expansion of international production would not have been possible if it were not for the on-going liberalisation of FDI regimes,' Mr Ricupero said.

'But the reduction of barriers to FDI and the establishment of positive standards of treatment for the transnational companies need to go hand-in-hand with the adoption of measures aimed at ensuring the proper functioning of markets, including measures to control anti-competitive practices.' Asia is emerging as a top source of FDI outflows - outflows from Asia rose 10 per cent to $47 billion last year.

Hong Kong companies, such as First Pacific Co and Cathay Pacific Airways, feature among the top 25 multi-national companies based in developing countries.