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| Source: ASEAN Secretariat. |
This year, the annual ASEAN Investment Report reviews the rise of foreign direct investment (FDI) flows into ASEAN and highlights the role of corporate players in infrastructure development and regional connectivity.
In 2014, ASEAN became the largest FDI recipient in the developing world. FDI flows into the region rose for the third consecutive year from US$117.7 billion in 2013 to US$136.2 billion in 2014 – despite a 16% decline in global FDI flows and uneven global economic growth. The improvement of the region's investment environment, as well as regional integration process to establish the ASEAN Economic Community (AEC) by the end of 2015 contributes to the attractiveness of the region for FDI – in addition to the strong regional economic fundamentals and market growth. FDI flows from the majority of ASEAN's Dialogue Partners have been strong, while intra-ASEAN investment also rose by 26% to US$24.4 billion in 2014 from US$19.4 billion in 2013, making ASEAN the second largest investor in the region after the European Union in 2014.
ASEAN Member States are economically connected through the operations of MNEs and ASEAN companies that involve regional value chains and regional production networks. ASEAN Member States are also increasingly physically interconnected through infrastructure development at national, subregional and regional levels. Huge national infrastructure plans have been announced to meet rapidly growing economy. At least US$110 billion a year will be needed in the region through to 2025 – which covers transport, power, ICT, and water and sanitation developments. The private sector has been an important player in both physical and economic connectivity in the region and will need to play a greater role in building infrastructures that will further connect the region.
The ASEAN Investment Report is prepared under a technical cooperation arrangement between the ASEAN Secretariat and the United Nations Conference on Trade and Development (UNCTAD), and supported by the Government of Australia through the ASEAN-Australia Development Cooperation Phase II (AADCP II).
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