Foreign direct investment in Southeast Asia: - Regional Office China

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Foreign direct investment in Southeast Asia: - Regional Office China

These include: i) changes in long-term business strategy and organisationconfiguration; ii) issues of ownership and financing; iii) the specific locationsof all activities (including that of headquarters); and iv) firm specificadvantages. And it is here that policy-makers should focus their attention.This can be done at the national level by seeking to:• Strengthen and build capacity in pertinent institutions;• Pursue consistent and transparent long-run policies;• Lower transaction costs.It is worth noting that these are almost entirely congruent with best practiceelements necessary for wider economic development, and can be expected togenerate benefits for domestic firms as well as foreign MNEs.In seeking to identify which potential host countries offer the most attractiveenabling environment for investment, MNEs will often use the increasingnumber of benchmark surveys, rankings and indices that are available, andwhich seek to evaluate and compare states. These include UNIDO’sCompetitive Industrial Performance Index, which evaluates the relativedegree of productive capacity and industrial complexity (precursors forinvestors to create manufacturing output and value) and the World Bank’s‘Doing Business’ survey. The latter survey includes an assessment of: i) howmany days it requires to set up a business; ii) the main obstacles toestablishing a new firm; iii) the main obstacles to growth for existingcompanies; and iv) the quality of business regulation and its implementation,etc. Another example is the Opacity Index, which measures small-scale butcommon investment risks that are typically associated with insufficienttransparency in host countries’ legal, economic, regulatory and governancestructures.While a number of country-representatives at the EGM quibbled with themeans by which these benchmark surveys are constructed, and the biasesthat are sometimes contained within global indices of this kind, the factremains that MNEs do use them when appraising where to enact specific FDIprojects. As a consequence, making a concerted attempt to move up the13

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