(EGM) Foreign Direct Investment in Southeast Asia - Unido

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seeking to attract FDI? Examining the profile of SDPNs in Southeast Asia provides some useful insights into the FDI dynamics of global value chains (GVCs). Companies from Japan have led the SDPNs trend within East and Southeast Asia, with networks that have utilised the complementarities that exist between the economies of the whole East Asian region, including that of labour. This degree of complementarity and interdependence within Southeast Asia has been steadily increasing, supported in part by such regional policies as AFTA, AIA and AICO. These in turn have encouraged the development of regional production networks, although it should be recognised that it has been companies themselves that have largely taken the lead, with policy-makers tending to follow. There are numerous examples from the electronics and electrical equipment industry, computers, and also the automotive industry (e.g. Nissan, Mitsubishi and Toyota). Toyota Training Center Yangon FUNCTIONAL INTEGRATION AND SPDNs: AN EXAMPLE FROM TOYOTA MOTOR CORPORATION IN ASEAN Toyota Motor Thailand Co., Ltd. Siam Toyota Manufacturing Co., Ltd. Toyota Auto Body Thailand Co., Ltd. Toyota Leasing (Thailand) Co., Ltd. Thai Hino Industry Co., Ltd. Toyota M otor Management Services Singapore Pte.Ltd. Toyota M otor Viet Nam Co., Ltd. Toyota Training Center Phnom Penh T.K. Autoparts Sdn. Bhd. Assembly Services Sdn. Bhd. Adapted from UNCTAD World Investment Report 2001 Map Source: www.efcmj.org/eastasia P.T. Toyota-Astra Motor 30 Toyota Motor Philippines Corp. Toyota Autoparts Philippines Inc. Exports of Parts and Materials Regional Headquarters Assemblers Financing/training centre Parts suppliers
Typically, but not exclusively, Singapore is often chosen by MNEs as the location for their regional headquarters in Southeast Asia. The picture above provides the indicative example of Toyota. The SDPNs in the product categories mentioned above demonstrate the leading role of industrial Japan as a co-ordinator of GVCs, and the associated backward and forward linkages. This co-ordination by Japanese MNEs manifests itself as increasing vertical intra-industry trade (VIIT) in intermediate exports and imports. A crucially important aspect of SDPNs is the diffusion of technological advances across the GVCs – hence the importance of policy instruments that target specific sectors and sub-sectors. This calls for sophisticated analysis of value chains and VIIT by policy- makers. This opens up vistas for regional capacity-building and regional industrial policy. As a consequence, the total value of intra-ASEAN imports has increased from US$38.7bn in 1993 to US$72.2bn in 2002; driven in part by the creation of regional production networks and the cross-border sourcing of parts and components by MNEs with SDPNs that straddle Southeast Asia. Similarly, in terms of cumulative FDI inflows in Southeast Asia, between 1995 and 2003, 13% was sourced from fellow ASEAN member countries (i.e. intra-regional FDI flows), compared with 7% from the other Asian NIEs, 13% from Japan, 16% from the US and 34% from Europe. Why should the development of regional production networks be encouraged? They can bring with them a number of positive attributes, including: i) an increase in firms’ efficiency and performance levels, largely through the reduction of costs; ii) a strengthening of the region’s position within specific industries; iii) and an enhancement of the visibility and 31
Page 3: Foreign Direct Investment in Southe
Page 6 and 7: Abbreviations and Acronyms ADB Asia
Page 8 and 9: thinkers and writers on FDI and mat
Page 10 and 11: The realignment of structural facto
Page 12 and 13: Recent years have seen increasing c
Page 14 and 15: overlap according to production pro
Page 16 and 17: enchmark rankings should be one aim
Page 18 and 19: Theme 2 FDI and National Experience
Page 20 and 21: ‘pipeline’ of harmonising legis
Page 22 and 23: major determinant of success. This
Page 24 and 25: and viii) general foreign investor
Page 26 and 27: Investment policy craft -- creating
Page 28 and 29: policies, as they would treat forei
Page 30 and 31: It appears that the advantages and
Page 34 and 35: attractiveness of the region to inv
Page 36 and 37: Theme 4 FDI and the China Dimension
Page 38 and 39: greater regional collaboration, the
Page 40 and 41: The increasing significance of outs
Page 42 and 43: aise their own finance like any oth
Page 44 and 45: Notwithstanding the dynamics of ris
Page 46 and 47: The logistics of the UNIDO ITPO Del
Page 48 and 49: no longer be an appropriate indicat
Page 50 and 51: FDI lens. Consequently, some IPAs h
Page 52 and 53: Select References Bartels F.L. and
Page 54 and 55: Annex 2: Participants at the EGM Co
Page 56 and 57: Appendix I: Thematic Programme of t
Page 58 and 59: 12.30-14.0 Lunch Plenary Discussion
Page 60 and 61: Appendix II: Opening Statement by t
Page 62 and 63: Appendix III: Opening Statement by
Page 64 and 65: and practitioners in other developi
Page 66 and 67: The themes of the EGM have been car
Page 68 and 69: Appendix V: EGM Working Paper EF Un
Page 70 and 71: ABSTRACT This working paper discuss
Page 72 and 73: In recent years, we have seen incre
Page 74 and 75: usiness domestically (improving int
Page 76 and 77: intra-industry trade, which account
Page 78 and 79: The agglomeration of markets and di
Page 80 and 81: These patterns are characterised by
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etween locations and maximises the
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ecome insiders and thus avoid being
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(iv) Those that relate to the “pu
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their indicators 50 of industrial p
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evolve more rapidly to account for
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changing morphology of MNEs with a
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92 Appendix I - Doing Business in A
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94 Appendix II - ASEAN Investment C
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96 Appendix III - Ranking of Econom
Page 100 and 101:
Buckley P. J., Carter M. J., 2004,
Page 102 and 103:
McKinsey & Company, 2003, New Horiz
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(EGM) Foreign Direct Investment in Southeast Asia - Unido

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