Chapter 4 Investment Climate Study of ASEAN Member ... - ERIA

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The evaluation of the business environment and competitiveness of the ASEANcountries in this section suggests that reducing the complexity and time required forinstitutional procedures, increasing labor market flexibility (reducing the burden oflabor regulations), and developing infrastructure are particularly important forimproving the investment environment.3. Assessment of FDI Policy Regimes, based on Legal DocumentsThis section assesses the FDI policy regimes in ASEAN countries using theinformation obtained from legal documents such as FDI Laws. In some casessupplementary information sources, such as FDI guides, are used. The first sectiondescribes the methodology used for the analysis and then the following sectiondiscusses the results of the analysis.3.1. MethodologySeveral studies have assessed the restrictiveness of FDI policies. Golub (2003)examined the restrictiveness of FDI for OECD countries in 1998/2000 by examiningrules on foreign equity, screening and approval procedure, and other restrictionsincluding those on boards of directors, movement of people, and input and operationalrestrictions. Golub found the United Kingdom the most open country and Iceland theleast open country among 28 OECD member countries.180
PECC (2002) evaluated FDI regimes of APEC economies by examining widerangingFDI rules on market access, examination procedures, most-favored-nation(MFN) treatment, profit repatriation, work permits, performance requirements, disputesettlement, investment incentives, and capital exports. PECC found Hong Kong to bethe most open and Brunei the least open among 19 APEC sample economies. ThePECC study shows that the FDI regimes of developing members are more restrictivecompared to developed members.We used a modified methodology adopted by Golub (2003). Our evaluationmethod is shown in Table 3.1. We evaluated the restrictiveness of FDI rules in sixareas: foreign ownership or market access, national treatment, screening and approvalprocedure, board of directors and management composition, movement of investors,and performance requirement. Low scores indicate open FDI rules 6 . Different areas aregiven different weights. In most FTAs, restrictions are imposed on ownership andcontrol of a local enterprise through a cap on foreign-owned equity. It is given a weightof 0.4 while restriction on national treatment is given a weight of 0.2 for thecomputation of the overall score. Meanwhile, other restrictions such as screeningprocedures, composition of management, entry of investors, and performancerequirements are given 0.1 each. In this manner, this study avoided the limitations ofGolub’s analysis wherein some sectors received a score above 1, which is the highest6 We evaluated FDI rules by sectors, then aggregated them to obtain an overall score by giving equalweight. We used an 88 ISIC two-digit industry classification to analyze FDI rules, then aggregatedthese detailed results using equal weights181
Page 1 and 2: Chapter 4Investment Climate Study o
Page 4 and 5: Figure 1.1 FDI Inflows to ASEAN and
Page 6 and 7: Although ASEAN members have been ex
Page 8 and 9: discern the business environment in
Page 11 and 12: The Doing Business Database evaluat
Page 13 and 14: Table 2.2. Components of Ease of Do
Page 15 and 16: may not directly influence the inve
Page 17 and 18: Similarly to the rankings in Doing
Page 19: Table 2.4. The Most Problematic Fac
Page 23 and 24: 3.2. The ResultsThe results of our
Page 25 and 26: Examining the average scores for th
Page 27 and 28: Table 3.3. Assessment of Market Acc
Page 29 and 30: 4. Assessment of FDI Environments b
Page 31 and 32: The four categories of impediments
Page 33 and 34: terms of institutional problems and
Page 35 and 36: 4.2. The ResultsTable 4.2 summarize
Page 37 and 38: Table 4.3. Investment Climate in AS
Page 39 and 40: Fourth, most problems identified ar
Page 41 and 42: The major problems identified in ma
Page 43 and 44: include a nationality requirement f
Page 45 and 46: To sum up, ASEAN economies as a who
Page 47 and 48: procedures of customs clearance, ar
Page 49 and 50: difficulty of administrative proced
Page 51 and 52: and road and traffic, and insuffici
Page 53 and 54: underdevelopment, ambiguity, and su
Page 55 and 56: Impediments to Foreign Direct Inves
Page 57 and 58: The Sources Used for the Analysis o
Page 59 and 60: Supporting documents(1)ICFTU (2005)
Page 61 and 62: investment certificates of foreign-
Page 63 and 64: (Continue)2009-2010 2008-2009Brunei
Page 65 and 66: Lao PDR Total Market accessNT Scree
Page 67 and 68: Vietnam Total Market accessNT Scree
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(Continue)Category2009 20082005Indo
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