Foreign direct investment in Southeast Asia: - Regional Office China

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Foreign direct investment in Southeast Asia: - Regional Office China

It appears that the advantages and disadvantages of FDI policy instrumentsare not absolute. Rather, successful policy instruments are a matter ofmatching a country’s FDI policies to the specific circumstances of itseconomy, stage of development, location, resources, regional agreementsand international competition, in accordance with the priorities set by thegovernment. For effective FDI promotion, a country should be both cooperativeand competitive with its neighbouring partners. In fact, regionalintegrationagreements constitute a powerful means to attract FDI, especiallywhen the national governments co-operate in order to have coherent and coordinatedpolicies. However, IPAs should also be aware of the policyinstruments adopted by competitor countries in order to successfully attractMNEs 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 governmentin order to design and implement coherent FDI polices, which should also bereflected in the legal framework. By complementing some FDI liberalisationwith coherent regulation and customised policy instruments, IPAs in thedeveloping countries should be able to capture and promote the kinds of FDIactivity that can assist them to speed up their industrial development.Commentary and discussionHafiz Mirza noted that, although FDI policy craft was nowadays requiredwithin a ‘WTO determined environment’, rapid changes in the world economywere delivering new sources of foreign investment. Therefore, apparentconstraints expressed by representatives of regional IPAs could be overcomeby IPAs “making their own histories” through more rigorous policy analyses,and by moving away from narrowingly focused inducements, towards a moregeneral incentivisation of economic activity as a whole. Southeast Asia haddemonstrated a consistent track-record of generating distinctive solutions tothe problems of: the diverging interests between the State and MNEs;28

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