In 2025, FDI inflows into ASEAN are expected to reach approximately US$246 billion. According to preliminary data from ASEAN Statistics (ASEANstats), Singapore will receive 61.5% of total FDI into ASEAN, followed by Vietnam (9%), Indonesia (8.7%), Thailand (7.8%), and Malaysia (6.3%).
According to BusinessToday, ASEAN has achieved considerable success in attracting global capital. However, a lasting consequence of the FDI-centric development model is the capacity gap between foreign and domestic businesses.
On one side are multinational corporations with high productivity and access to international technology, capital, and markets. On the other side is a large number of domestic businesses, especially small and medium-sized enterprises (SMEs), with lower productivity and technological capabilities, and limited connectivity to international production networks. This gap makes the process of ASEAN “upgrading the value chain” more difficult.
According to observers, continued success in attracting foreign companies cannot replace the development of a sufficiently strong domestic business sector. Dependence on multinational production networks also exposes economies to risks from decisions made abroad. Therefore, the issue is not about reducing FDI, but about building a stronger domestic investment base, alongside FDI.
Domestic direct investment (DDI) plays a crucial role because businesses need to build capacity in the domestic market before becoming competitive suppliers and exporters and eventually investing abroad.
By expanding their operations within ASEAN, these businesses can contribute to the formation of regional production and service networks owned by ASEAN enterprises themselves. Therefore, FDI, DDI, and intra-ASEAN investment should be seen as complementary factors.
Foreign investment facilitates access to capital, technology, and markets; domestic direct investment (DDI) helps strengthen the capacity of domestic businesses to absorb those opportunities; and intra-ASEAN investment enables ASEAN businesses to expand across the region.
Furthermore, investment policies need to focus more on supplier development, workforce training, research and development (R&D), and strengthening cooperation between businesses and universities and relevant partners. Employment policies also need to undergo a corresponding transformation.
An investment is judged not only by the number of jobs created, but also by the quality of those jobs and the skills acquired by the workers. Expanding the advanced manufacturing sector also needs to be accompanied by the development of supporting services for production.
According to BusinessToday, after decades of success in attracting global capital, ASEAN is facing the challenge of transforming foreign capital flows into internal capacity, thereby gradually reducing its dependence on external sources of funding.
Source: https://www.sggp.org.vn/asean-sau-cuoc-dua-hut-von-post874691.html
