(EGM) Foreign Direct Investment in Southeast Asia - Unido

It appears that the advantages and disadvantages of FDI policy instruments
are not absolute. Rather, successful policy instruments are a matter of
matching a country’s FDI policies to the specific circumstances of its
economy, stage of development, location, resources, regional agreements
and international competition, in accordance with the priorities set by the
government. For effective FDI promotion, a country should be both co-
operative and competitive with its neighbouring partners. In fact, regional-
integration agreements constitute a powerful means to attract FDI, especially
when the national governments co-operate in order to have coherent and co-
ordinated policies. However, IPAs should also be aware of the policy
instruments adopted by competitor countries in order to successfully attract
MNEs to invest in their country.
Finally, the role of IPAs has become increasingly more complicated. In fact,
IPAs have to adopt a much more active and dynamic attitude towards FDI.
Of crucial importance is that IPAs co-operate with other levels of government
in order to design and implement coherent FDI polices, which should also be
reflected in the legal framework. By complementing some FDI liberalisation
with coherent regulation and customised policy instruments, IPAs in the
developing countries should be able to capture and promote the kinds of FDI
activity that can assist them to speed up their industrial development.
Commentary and discussion
Hafiz Mirza noted that, although FDI policy craft was nowadays required
within a ‘WTO determined environment’, rapid changes in the world economy
were delivering new sources of foreign investment. Therefore, apparent
constraints expressed by representatives of regional IPAs could be overcome
by IPAs “making their own histories” through more rigorous policy analyses,
and by moving away from narrowingly focused inducements, towards a more
general incentivisation of economic activity as a whole. Southeast Asia had
demonstrated a consistent track-record of generating distinctive solutions to
the problems of: the diverging interests between the State and MNEs;
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