Southeast Asia: Foreign investments resilient despite global economic uncertainties

Geneva, 9 October 2024

The ASEAN Investment Report 2024, themed "ASEAN Economic Community 2025 and foreign direct investment " is launched on 9 October at the bloc's Business and Investment Summit held in Vientiane, Lao PDR.

Prepared under a technical assistance programme supported by UN Trade and Development (UNCTAD), the report provides a comprehensive analysis of foreign direct investment (FDI) trends since 2016, against the region's Economic Community Blueprint 2025.

ASEAN - the Association of Southeast Asian Nations - represents more than 650 million people across a combined market size of $3.8 trillion.

The bloc currently comprises 10 member countries: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam.

Surge in foreign investments

ASEAN has seen a significant surge in FDI inflows over the past decade. Annual inflows averaged $170 billion since 2016, nearly double the figure of $92 billion recorded between 2006 and 2015.

Between 2021 and 2023, foreign investments averaged an impressive $220 billion per year, solidifying ASEAN's status as among the top FDI recipients among developing economies for three consecutive years.

By 2023, ASEAN's share of global FDI soared to 17%, a leap from an average of 6% between 2006 and 2015. This rapid influx has driven FDI stock in the region to $3.9 trillion by 2023, up from $1.7 trillion in 2015.

Policy driving success

The report attributes ASEAN's strong performance to deeper regional integration, an improved investment climate, expanding opportunities and more positive sentiment among investors and business associations.

The ASEAN Economic Community Blueprint 2025 also plays a pivotal role in improving the investment policy environment across the region.

This includes implementing regional agreements and frameworks aimed at enhancing economic integration and stimulating growth in strategic sectors.

Besides, numerous national investment policy measures and multilateral partnerships were adopted to promote and facilitate FDI.

Emerging investment trends

The report highlights emerging trends, such as increasing financial flows into renewable energy, manufacturing, and strong investment growth from major economies such as China, the United States and the European Union.

Additionally, increasing production networks and supply chain activities among firms also help strengthen the industrial ecosystem, which in turn boosts FDI.

Recommendations to unlock greater investments

Looking ahead, the report is optimistic about ASEAN's investment prospects beyond 2025.

With a favorable investment climate, continued regional integration, and stable GDP growth, the region is poised to continue attracting significant investment.

However, some policy gaps remain, such as the need to further strengthen ASEAN's investment facilitation framework.

To further stimulate FDI, ASEAN can tap into intraregional investments and facilitate small businesses to expand their operations across the region.

ASEAN also has the potential to attract greater investment in emerging industries and sectors linked to sustainable development.

Some examples are infrastructure, the digital economy, electric vehicle supply chain, renewable energy value chain and the development of supply chain networks.

To keep up FDI momentum, the report recommends deeper regional cooperation, investment in skills development and advancing public-private partnerships to strengthen industrial ecosystems.

It also highlights that now and into the future, ASEAN should continue to leverage the symbiotic relationship between FDI, industrial development and regional integration.

Decadelong collaboration with UN Trade and Development

The 2024 edition builds on previous publications of the ASEAN Investment Report series, examining topics such as investment facilitation, Industry 4.0, health care, the digital economy, economic zones development, regional value chains, and infrastructure investment and connectivity.

UN Trade and Development has been supporting ASEAN in the preparation of this report series since 2012.

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