ASEAN HEADLINE: Singapore, ASEAN neighbours see significant FDI boost
ANN/THE STRAITS TIMES – Singapore and five other ASEAN nations have attracted significant investment flows as businesses diversified their supply chains and implemented a China-plus one strategy, economists reported.
Foreign direct investment (FDI) inflows into Indonesia, Malaysia, the Philippines, Thailand, Singapore and Vietnam have been on the rise, despite some sector and country-specific variations, they noted.
In 2023, the region saw inflows increase to USD236 billion, up from an annual average of USD190 billion between 2020 and 2022.
Key sources of these investments were the United States (US), Japan, Europe, mainland China and Hong Kong, drawn by the region’s strong domestic reforms and improving macroeconomic conditions.
In the wake of the COVID-19 pandemic, numerous companies have restructured their operations to reduce dependency on China.
According to a survey by the American Chamber of Commerce in Shanghai, 40 per cent of respondents last year had either redirected or planned to redirect investments originally designated for China.
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For these companies, South-east Asia was the most preferred destination, with technology hardware, software and services companies looking at Singapore. The US was the second most preferred destination, followed by Mexico, the survey showed.
In its latest report on ASEAN, penned by its economists Lavanya Venkateswaran, Ahmad Enver and Jonathan Ng, OCBC Bank said Singapore received the bulk of the inflows, followed by Indonesia, Vietnam, the Philippines, Malaysia and Thailand.
Most investments into the region went into manufacturing, financial and insurance, transportation, construction and wholesale sectors.
FDI inflows from China into the region, which tumbled during the pandemic, have since rebounded, but the nature of its investments into ASEAN has shifted from infrastructure to electronics, resources and food industries.
The manufacturing, wholesale and retail trade, finance and insurance, real estate and professional services sectors have seen higher FDI inflows from China too.
China has become one of the top contributors to FDI inflows in Indonesia, surpassing the US and Japan.
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