ASEAN FDI rebound breaches pre-Asian Crisis Level

1. The Ninth AIA Council met on 21 August 2006 in Kuala Lumpur, Malaysia to review developments in the AIA for the past year. The Council was pleased to note the increase in ASEAN FDI Flows for 2005, which reached US$38 billion, representing a 48% year-on-year increase from the previous year. Reinforcing the region’s attractiveness as an investment destination, the increase notably supersedes ASEAN FDI Flows in 1997, putting ASEAN back on track on its growth path prior to the Asian Financial Crisis (Figure 1).

Figure 1. FDI flows to ASEAN 1995-2005

Source: ASEAN Secretariat, ASEAN FDI Database, 2006, BOP Basis

2. Preliminary FDI data for the first quarter of 2006 indicated a substantial increase (90%) to US$14 billion from US$7.4 billion in the same period last year. The Council is optimistic that the growth in FDI flows into ASEAN would continue to be promising. The major sources of investment into ASEAN in 2005 were the United States, the United Kingdom, Japan, France and Finland. Together, these sources accounted for 48% of total FDI inflows into ASEAN.

3. The Council noted that financial intermediation and related services, including insurance, manufacturing, trade/commerce and services were the top recipients of FDI (accounting for 79% of total FDI) in 2005. Remarkable growth in FDI were also observed in the mining and quarrying sectors, which increased from US$388 million to US$3.2 billion and services, which increased from US$1.8 billion to US$5.9 billion.

Investor Confidence in ASEAN Manufacturing Sector Strengthens

4. Consistent with the notable increase in BOP FDI is the continuous growth in Approved Manufacturing FDI (Figure 2), which increased by 33% to US$27.8 billion from US$20.8 billion in 2004. The top five sectors with substantial FDI interest were refined petroleum products, radio, television and communication equipment, motor vehicles, food products, and electrical machinery.

AIA Liberalises Further

5. The Council has endorsed the Temporary Exclusion List (TEL) and Sensitive List (SL) for the Services Incidental to the Manufacturing, Agriculture, Fishery, Forestry and Mining & Quarrying sectors. These, along with the updated TEL and SL for the Manufacturing, Agriculture, Fishery, Forestry and Mining & Quarrying sectors, shall become an integral part of the AIA Agreement. The AIA Council is confident that these liberalisation measures will further enhance the ASEAN investment environment. (The above lists will be made available in the ASEAN Website -

6. The Council also endorsed the publication of the following:

  • Temporary Exclusion List (TEL) and Sensitive List (SL) for the Five Sectors (Manufacturing, Agriculture, Fishery, Forestry, Mining & Quarrying) and Services Incidental to the Five Sectors – to provide investors with the latest list of commitments under the AIA Agreement;
  • Statistics of Foreign Direct Investment in ASEAN, Eighth Edition, 2006 – to provide better understanding of FDI trends and development in ASEAN;
  • ASEAN Investment Report 2006 – to provide investors and policy makers with information on the ASEAN investment environment in 2005.

These publications will be made available during the 12th ASEAN Summit to be held in Cebu City, Philippines from 11-14 December 2006.

7. The Council welcomed Malaysia’s initiative to spearhead the formulation of the ASEAN Investment Area (AIA) Brochure, which packages ASEAN as a single investment destination.

8. The Council also reaffirmed its commitment to the Most-Favoured Nation Treatment principle of the ASEAN Investment Area, which ensures that ASEAN investors are treated no less favourable than other investors from other countries.

9. The Council agreed to further improve the compilation of investment statistics in ASEAN in order to present a clear picture of FDI in ASEAN.

10. In order to sustain growth momentum of FDI inflow into ASEAN, the Council agreed to undertake more joint investment promotion activities into and within the region (intra-ASEAN), particularly in the priority integration sectors. In line with this, the Council has tasked ASEAN investment officials to organise more inbound investment promotion missions and capacity building workshops and events, in cooperation with the private sector and Dialogue Partners.



The Ninth AIA Council Meeting was chaired by H.E. Dato’ Seri Rafidah Aziz, Minister of International Trade and Industry, Malaysia and attended by:

Mr. Lim Jock Hoi

Permanent Secretary

Ministry of Foreign Affairs and Trade

Brunei Darussalam

H.E. Mr. Kong Vibol

First Secretary of State

Ministry of Economic and Finance

Vice Chairman of the Council for the Development of Cambodia


H.E. Mr. Muhammad Lutfi


Investment Coordinating Board


H.E. Dr. Nam Viyaketh


Ministry of Industry and Commerce


H.E. U Soe Tha


Ministry of National Planning and Economic Development


H.E. Mr. Elmer C. Hernandez


Department of Trade and Industry


H.E. Mr. Lim Hng Kiang


Ministry of Trade and Industry


H.E. Dr. Somkid Jatusripitak

Deputy Prime Minister and Minister of Commerce

Ministry of Commerce


H.E. Mr. Nguyen Ngoc Phuc

Vice Minister

Ministry of Planning and Investment

Viet Nam

H.E. Mr. Ong Keng Yong

Secretary-General of ASEAN