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Restructuring Foreign Direct Investment in ASEAN+3
There is substantial evidence of changing FDI dynamics between the United States and China. Both countries are reducing investments in each other's markets, notably with China cutting back more significantly.
The paper analyzes changing FDI patterns in ASEAN+3, highlighting ASEAN’s rise as a leading FDI destination, shifting investments between the US and China, and diversification of supply chains.
Shifting Global FDI Patterns
Global Foreign Direct Investment (FDI) patterns are undergoing notable changes, which significantly influence economic growth and development. In this context, the paper explores FDI reconfiguration in the ASEAN+3 region, emphasizing both immediate and ultimate investor perspectives. To present a clearer analysis, data has been adjusted for “phantom” FDI and “round-tripping,” revealing evolving stocks and flows. The findings indicate that ASEAN+3 has become a premier destination for FDI, surpassing other global regions in attracting long-term business financing. This trend underscores the region’s strategic importance in the global FDI landscape.
U.S.-China FDI Reconfiguration
There is substantial evidence of changing FDI dynamics between the United States and China. Both countries are reducing investments in each other’s markets, notably with China cutting back more significantly. This reconfiguration is influenced by rising geopolitical tensions and economic strategies. Concurrently, ASEAN nations have surpassed China in receiving FDI, particularly in strategic sectors. This shift is largely driven by global strategies aiming to diversify supply chains, marking ASEAN as a critical player in attracting significant foreign investments.
Proactive ASEAN+3 Policies
For ASEAN+3 economies to maintain their attractiveness as a global FDI hub, a proactive approach in implementing targeted and effective policies is essential. Amid rising geoeconomic fragmentation, these economies need to foster an environment that continuously appeals to global investors. By addressing challenges and leveraging opportunities, ASEAN+3 can ensure sustained FDI inflows, which are vital for regional economic prosperity. This strategic focus will reinforce its position as a lead investment destination in a rapidly changing global economic landscape.
Source: ASEAN+3 Macroeconomic Research Office
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