ASEAN members attract over 10% of FDI since 2018, US leading investor

The United States continues to be the leading investor country in the region, accounting for 19 per cent of the stock of foreign direct investment (FDI) in ASEAN countries, compared with just 3 per cent for China (8 per cent if Hong Kong is included), the central bank said.

To continue to attract FDI and boost trade integration, ASEAN countries need to work together to maintain an investment-friendly environment for foreign investors. However, these countries differ widely in terms of their political, institutional and regulatory frameworks, it noted.

Reducing internal political risk is also a prerequisite for more effective integration. Moreover, while it is possible to ease the restrictions on FDI, governments need to act together to make environmental, social and corporate governance standards more effective, it commented.

The boom in socially responsible investment is also a key issue in which FDI has a specific role to play, especially in terms of greening the economy and financing the climate transition. As such, data do not yet provide any tangible proof of such a boom, it said.

The pandemic resulted in a 30 per cent decline in FDI flows in 2020, followed by a return to 2019 levels in 2021. RCEP signatory countries accounted for 30-40 per cent of FDI received by the ASEAN community when flows between signatory countries are included, a significant proportion but still a minority when compared with flows from third (mainly non-Asian) countries, which continue to provide the bulk of all flows.

FDI flows include both greenfield investments and mergers and acquisitions.

Fibre2Fashion News Desk (DS)