Foreign direct investment FDI in ASEAN countries Intra-ASEAN Flows

Course summary Foreign direct investment FDI in ASEAN countries:

ASEAN Investment Area (AIA) Council. Investment policy measures and developments in Indonesia, Singapore, Thailand, ...

The goal of the ASEAN Economic Community is to establish ASEAN as a single market and production base that will make ASEAN more dynamic and competitive. In this context, one of the five core elements of an ASEAN single market and production base is the free flow of investments.  A free and open investment regime is key to enhancing ASEAN’s competitiveness and attracting foreign direct investment (FDI) as well as intra-ASEAN investment. In February 2009, the ASEAN Comprehensive Investment Agreement (ACIA) was signed.

In 2008, FDI flows to the region remained resilient even in the face of adverse global circumstances. Since the Asian financial crisis, FDI inflows into ASEAN has regained its strength, tripling from its low of US$ 23 billion in 1998 to a high of US$ 69 billion in 2007. Despite the 2008 global economic and financial crisis, FDI inflows into ASEAN remained strong at US$ 59 billion, this represents 4% of total global FDI. All ASEAN Member States experienced a decline in FDI flows except for Indonesia and Vietnam.

The major recipients of FDI flows in ASEAN remained to be Singapore with US$22.8 billion (38.6% of total ASEAN FDI), Thailand with US$9.8 billion (16.7%), Viet Nam with US$8.1 billion (13.6%), Indonesia with US$7.9 billion (13.4%) and Malaysia with US$7.3 billion (12.4%)

Example of the course Foreign direct investment FDI in ASEAN countries:

In particular, intra-ASEAN FDI flows have proven more robust than anticipated, expanding by an exceptional 13.4% in 2008 to US$ 10.7 billion. The increase in intra-ASEAN flows reflects well on ASEAN integration efforts and the success of trade and investment policies that promote intra-ASEAN liberalisation through strengthened rules for trade in goods, services and investment.

FDI flows from the United States were the most affected, plunging 53% to US$3 billion in 2008. The other big declines came from the Member States of the European Union (EU), which declined by 29% to US$13 billion in 2008, compared with a growth of 73% in 2007. Among the EU Member States with the largest declines in FDI flows to ASEAN, were
Germany which fell sharply by 51.3%, Netherlands by 25.1% and the United Kingdom by 18.4%. The recovery in these economies should see FDI inflows into ASEAN moving upwards in 2009 and 2010.

Sources of FDI flows from Asia also declined - Korea by 48%, China by 9% and Japan by 15%.

FDI flows continued to predominate in the services and manufacturing sector, accounting for 51.0% and 29.7% of total FDI flows into ASEAN or US$ 30.1 billion and US$ 17.5 billion in 2008 respectively. The mining and quarrying sector is also becoming more important, with a share of 5.0% or US$ 2.8 billion in 2008.

Other ASEAN Member States: Brunei Darussalam, Myanmar, the Philippines, Cambodia,  and Laos PDR

ASEAN Free Trade Area (AFTA) - ASEAN Free Trade Agreements FTAs

Topic: Globalization and regionalization