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The Changing FDI Landscape in ASEAN
- Source: Transnational Corporations, Volume 22, Issue 1, Dec 2015, p. 59 - 76
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- 14 Dec 2015
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Abstract
In 2011, FDI flows to ASEAN rose to a record level of $114 billion and inward FDI stock exceeded $1 trillion for the first time. Growth in FDI flows to the region is likely to have slowed in 2012 against the backdrop of a significant global FDI decline, but the medium-term prospect remains positive. Strong growth in FDI flows has been due to favourable economic conditions, regional integration and an improving policy environment. ASEAN is a key player in global supply chains in an increasing range of product categories. ASEAN’s FDI landscape is fast changing with a number of significant developments, most notably regional integration. Zero tariffs on intra-ASEAN trade reduce costs of doing business and facilitate regional production networks. FDI landscape in ASEAN is changing as the sectors and source economies have diversified. The development of the M&A environment is leading to a rapid growth in the number and value of M&A transactions. Enterprise regionalization rose to a new record level, with $26 billion of intra-regional investments. The list of regional players is expanding and covering a wide range of industries. ASEAN TNCs are internationalizing through M&As, which highlight their growing financial capacity. The key drivers and motivations of ASEAN enterprise regionalization and internationalization are the need to maintain and increase their competitiveness.
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