(EGM) Foreign Direct Investment in Southeast Asia - Unido

socialising public goods and private returns; and the role of the
interventionist state and incentives to the private sector.
The discussion exposed the pressing need for the region to build on its
successes in attracting FDI by increasing the managerial skills of policy-
makers. The requirement for greater transparency in legal frameworks, so
as to permit consistent interpretation across sovereign territory, was
emphasised as being a key determinant of success in investor aftercare
services provided by IPAs. Trade-policy linkages were underscored with
respect to strategies to attract efficiency-seeking FDI (i.e. export-oriented
FDI). A persistent dilemma highlighted was balancing the interests of
‘insiders’ wanting ‘protection’ from further competition, and the need for
increasing resource allocation efficiency by allowing greater competition.
On the one hand, some countries in the region are reaping the benefits of
rapidly moving towards fourth generation investment policies, by reducing
the legislative differences between domestic and foreign companies and
creating IPAs for domestic industry. On the other hand, some countries are
grappling with the impact of the electoral cycle on the business cycle which
tended, in some cases, to thwart the transition of policy advice into law.
Finally, the regional division of labour -- a function of differentiated stages of
development -- implies an intensification of regional co-operation at the level
of inter-ministerial co-ordination, in setting the stage for negotiating major
FDI projects into the region. This is despite the temptation (and dangers) of
a zero-sum competitive game. Such regional integration initiatives as
ASEAN+3, AFTA and AIA provide opportunities for such co-ordination.
Second presentation summary
Axèle Giroud illustrated that the shift towards spatial distribution of
production, across countries and regions, poses new challenges for policy-
makers and IPAs. What are the characteristics of these spatially distributed
production networks (SDPNs), and what are the implications for countries
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