Contraction continues in investment flows to Asean

15.11.17

FOREIGN direct investments (FDIs) that flow into the Association of Southeast Asian Nations (Asean) both from within and outside the bloc continued to weaken, declining by 20 per cent in 2016, the latest official Asean tally showed.

According to the Asean Investment Report 2017, FDI inflows reached $96.7 billion (Bt3.2 trillion) last year, a sharp drop from $120.82 billion in 2015. 

This was larger than the decline seen in 2015 when FDI inflow fell more than 7 per cent, marking its first decline after several years of growth.

FDIs from most Asean dialogue partners such as the United States and Japan and even intra-Asean investments rose in 2016, the report said. However, these gains were not enough to offset the “one-off factors” that caused much bigger outflows.

“FDI flows in Asean remained at a high level in 2016 despite a decline to $96.7 billion. 

“A significant fall in FDI in two member-states dragged down inflows in the region,” the report read.

The actual report, which is available online, did not provide a breakdown of FDI flows for each Asean member-state.

However, a check at Asean Statistics would show that most Asean countries increased their FDIs last year. However, during the year Indonesia’s and Thailand’s FDI flows fell significantly by 78.84 per cent and 68.19 per cent, respectively.

Meanwhile, FDI inflow going to Indonesia decreased to $3.52 billion in 2016 from $16.64 billion in the previous year. 

Inflow to Thailand, on the other hand, dropped to $2.55 billion last year from $8.03 billion in 2015.

The same set of data showed that the Philippines improved its ranking within the bloc last year in terms of being a destination for much-coveted FDIs, rising to fourth place from fifth previously.

 Last year, Philippine FDIs reached $7.9 billion, a 40.7-per cent jump from $5.639 billion in 2015.

“There were some bright spots,” the report read, pointing to the growth in FDI flows from the European Union, China, South Korea and Australia, among others.

This also marked the first time that intra-Asean trade accounted for a quarter of total FDI flows in the region, reaching a record level of $24 billion in 2016.

“The rise in intra-Asean investment in 2016 was driven by a two-thirds increase in investment in manufacturing, to $8.3 billion and a doubling of investment in finance to $5 billion,” the report explained.

Singapore received the biggest FDI inflow in 2016, albeit lower than its 2015 value. 

It received $53.91 billion last year, down from $62.45 billion in 2015.

Apart from FDIs in general, this year’s investment report centred around economic zones, noting that there were more than 1,600 economic zones in the Asean.