Foreign Direct Investment (FDI) inflows into ASEAN reached an all-time high at $224 billion in 2022. This was an important achievement for ASEAN, despite a 12 percent decline in global FDI flows to $1.3 trillion due to the multitude of international crises and challenges, including geopolitical conflicts, inflated prices of food and energy, the risk of recession and mounting debt pressures in many countries around the world, resulting from the consequences of COVID-19 pandemic. It is noteworthy that ASEAN continues to remain resilient and positioned itself as a top FDI recipient. The robust growth in manufacturing investment, and the increased interest in sectors related to energy transition, digital economy, wholesale and retail trade, are among the key drivers of these strong investment trends.

Intra-ASEAN FDI also continued to expand further to $28 billion in 2022, marking its position as the second largest source of investment after the United States. The share of ASEAN FDI to the global FDI has also increased to 17 percent from the 15 percent level in 2021. Closer collaboration and proactive investment promotion and facilitation initiatives by the ASEAN Member States are imperative to further bolster the intra-ASEAN FDI.

This Special ASEAN Investment Report (AIR) identifies and discusses several key emerging issues that will affect the region’s efforts to attract FDI. These emerging issues include: (i) the reshaping of international supply chains; (ii) international tax reform and global minimum tax; and (iii) investment in the energy transition and electric vehicle supply chain. The report also looks at the need to further push intra-ASEAN investment and to reform International Investment Agreements (IIAs).