FDI flows to the ASEAN region declined by 8 per cent, from $130 billion in 2014 to $120 billion in 2015. Falls in FDI in services, cross-border mergers and acquisitions (M&As) and lower intracompany loans were the main reasons behind this development. The performance of ASEAN Member States differed in attracting FDI; five received higher inflows, two had inflows at a level similar to that of 2014, and three witnessed a decline.

There were some bright spots: FDI in manufacturing rose, equity capital financing of FDI activities was at an all-time high, and regional investment expansion by MNEs remained strong. Investment from the six prospective partners with ASEAN in the Regional Comprehensive Economic Partnership (RCEP) increased by 11 per cent to $40 billion in 2015; and these countries contributed some 30 per cent of inflows in 2014–2015, underscoring their position as a significant source of FDI for the region. Investors are also more attentive to the CLMV countries (Cambodia, the Lao People’s Democratic Republic, Myanmar and Viet Nam): total FDI flows to these countries taken together rose by 38 per cent to $17.4 billion in 2015. Their share as recipients of FDI flows in the region rose from 10 per cent in 2014 to 14 per cent in 2015.

This publication was supported by the Australian Government through the ASEAN-Australia Development Cooperation Program Phase II.

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