The past two years (2019 and 2020) were exceptional for ASEAN in terms of foreign direct investment (FDI): 2019 saw the region’s highest-ever inflows, at $182 billion – making ASEAN the largest recipient of FDI in the developing world – and 2020 saw the unprecedented impact of the COVID-19 pandemic, with a 25 per cent fall in FDI, to $137 billion (figure 1). The decline followed lockdown measures, supply chain disruptions, falling corporate earnings, successive waves of the pandemic, economic uncertainty and postponement of investment by multinational enterprises (MNEs).

Investment activity in the region shrank across all types. Announced greenfield investment declined by 17 per cent to $68 billion, international project finance fell by 21 per cent to $53 billion, and cross-border mergers and acquisitions (M&As) recorded a precipitous dive from $9.8 billion in 2019 to -$4.7 billion