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The ASEAN Investment Report 2024, published by the United Nations Conference on Trade and Development (UN Trade and Development), reveals that Foreign Direct Investment (FDI) in ASEAN reached USD 230 billion in 2023. This reflects an increase from 2022’s USD 229 billion. ASEAN remains the largest FDI recipient among developing countries, accounting for 17% of global FDI. This growth trend has been consistent over the past three years.
In 2023, FDI in ASEAN diversified across multiple key sectors:
1. Financial Sector: FDI in this sector amounted to USD 91.9 billion, representing 53% of total investment. This growth is largely due to the expansion of financial activities such as banking, insurance, and investment funds managed by major multinational corporations.
2. Manufacturing: While slightly reduced, manufacturing continued to play a significant role, attracting USD 50.5 billion, or 22% of total FDI.
3. Research and Development: Investment in research and development (R&D) saw notable growth, increasing from USD 0.3 billion in 2022 to USD 20.7 billion in 2023, with a high concentration in Singapore.
4. Wholesale and Retail Trade: This sector received USD 25.1 billion, a slight decrease from 2022.
5. Logistics: Logistics investments totaled USD 14.8 billion, marking a small decline compared to the previous year.
– Singapore: Singapore received the highest FDI in ASEAN, primarily in the financial, R&D, and digital services sectors. As a hub for regional headquarters of multinationals and a global financial center, it attracts substantial foreign investment.
– Indonesia: Investment in Indonesia focused on manufacturing and renewable energy, with particular attention to the electric vehicle (EV) sector and solar and wind energy development.
– Malaysia: Malaysia maintains its position as a manufacturing hub in ASEAN, with increased FDI in electronics and semiconductors, as well as expansion in science and technology R&D.
– Vietnam: FDI in Vietnam remained robust, especially in manufacturing and industrial development, with a focus on electronic goods and digital infrastructure.
– Thailand: Investment in Thailand is concentrated on automotive manufacturing, particularly electric vehicles, as well as renewable energy and digital infrastructure expansion.
– Philippines: FDI growth in the Philippines was observed in digital services and infrastructure development.
The report provides policy recommendations for ASEAN member states to improve competitiveness and attractiveness for investment:
1. Promoting Green Technology and EV Investment: ASEAN governments should develop infrastructure to support renewable energy and EV industries, such as creating charging systems for vehicles and encouraging investment in clean energy-related industries.
2. Encouraging Intra-ASEAN Investment: Strengthening intra-ASEAN investment is suggested to enhance economic resilience and reduce reliance on investment from outside the region.
3. Digital Infrastructure Development: ASEAN countries should increase investments in digital infrastructure, including 5G networks and data centers, to support the growth of the digital economy.
4. Labor and Skills Development: Developing a technologically skilled workforce is crucial to support knowledge-intensive investments. ASEAN members are encouraged to collaborate on training and personnel development in essential fields.
The report highlights the need to link FDI policies with sustainable development goals by prioritizing investments that foster sustainability and positively impact society. This includes promoting the role of women in industries, fostering economic equality, and supporting high-value-added service sectors such as R&D, scientific, and technical services to enhance ASEAN’s technological and innovation capabilities.
Author:
Mr. Wimon Punkong
Deputy Executive Director (Academic)
International Institute for Trade and Development (Public Organization)
www.itd.or.th
Publication: Bangkok BIZ Newspaper
Section: First Section/World Beat
Volume: 37 Issue: 12761
Date: Wednesday, Oct. 30, 2024
Page: 8 (bottom)
Column: “Asean Insight”
