Foreign direct investment in Southeast Asia: - Regional Office China

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seeking to attract FDI? Examining the profile of SDPNs in Southeast Asiaprovides some useful insights into the FDI dynamics of global value chains(GVCs).Companies from Japan have led the SDPNs trend within East and SoutheastAsia, with networks that have utilised the complementarities that existbetween the economies of the whole East Asian region, including that oflabour. This degree of complementarity and interdependence withinSoutheast Asia has been steadily increasing, supported in part by suchregional policies as AFTA, AIA and AICO. These in turn have encouraged thedevelopment of regional production networks, although it should berecognised that it has been companies themselves that have largely takenthe lead, with policy-makers tending to follow. There are numerousexamples from the electronics and electrical equipment industry, computers,and also the automotive industry (e.g. Nissan, Mitsubishi and Toyota).FUNCTIONAL INTEGRATION AND SPDNs: AN EXAMPLE FROM TOYOTA MOTORCORPORATION IN ASEANToyota TrainingCenter YangonToyota M otor Viet NamCo., Ltd.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 Training CenterPhnom PenhToyota Motor PhilippinesCorp. Toyota AutopartsPhilippines Inc.Toyota M otorManagement ServicesSingapore Pte.Ltd.T.K. Autoparts Sdn.Bhd. AssemblyServices Sdn. Bhd.Exports of Parts and MaterialsAdapted from UNCTAD World Investment Report 2001Map Source: www.efcmj.org/eastasiaP.T. Toyota-Astra MotorRegional HeadquartersAssemblersFinancing/training centreParts suppliers30
Typically, but not exclusively, Singapore is often chosen by MNEs as thelocation for their regional headquarters in Southeast Asia. The picture aboveprovides the indicative example of Toyota.The SDPNs in the product categories mentioned above demonstrate theleading role of industrial Japan as a co-ordinator of GVCs, and the associatedbackward and forward linkages. This co-ordination by Japanese MNEsmanifests itself as increasing vertical intra-industry trade (VIIT) inintermediate exports and imports. A crucially important aspect of SDPNs isthe diffusion of technological advances across the GVCs – hence theimportance of policy instruments that target specific sectors and sub-sectors.This calls for sophisticated analysis of value chains and VIIT by policymakers.This opens up vistas for regional capacity-building and regional industrialpolicy. As a consequence, the total value of intra-ASEAN imports hasincreased from US$38.7bn in 1993 to US$72.2bn in 2002; driven in part bythe creation of regional production networks and the cross-border sourcing ofparts and components by MNEs with SDPNs that straddle Southeast Asia.Similarly, in terms of cumulative FDI inflows in Southeast Asia, between1995 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 beencouraged? They can bring with them a number of positive attributes,including: i) an increase in firms’ efficiency and performance levels, largelythrough the reduction of costs; ii) a strengthening of the region’s positionwithin specific industries; iii) and an enhancement of the visibility and31
Page 3: Foreign Direct Investment in Southe
Page 7 and 8: PrefaceThis UNIDO report presents t
Page 9 and 10: PreambleWithin the constantly evolv
Page 11 and 12: IntroductionThe Changing Face of Fo
Page 13 and 14: Theme 1FDI and Multinational Enterp
Page 15 and 16: These include: i) changes in long-t
Page 17 and 18: quality of life in a country can be
Page 19 and 20: consequence, as well as in terms of
Page 21 and 22: high-technology cluster development
Page 23 and 24: Theme 3FDI, Boundaries, Hierarchies
Page 25 and 26: A second dimension is that incentiv
Page 27 and 28: industrial sector and sub-sector le
Page 29 and 30: industrial base without relying to
Page 31: socialising public goods and privat
Page 35 and 36: generate tax revenues to fund vario
Page 37 and 38: cumulatively serving to constrain F
Page 39 and 40: Southeast Asia as an integrated mar
Page 41 and 42: Theme 5FDI and Capital in Southeast
Page 43 and 44: Finally, there is also a need for i
Page 45 and 46: components of the integrated global
Page 47 and 48: ConclusionEmerging Policy Direction
Page 49 and 50: In conclusion, Frank Bartels sugges
Page 51 and 52: Taking the above research needs int
Page 53 and 54: Annex 1:Presenters at the EGMName P
Page 55 and 56: TIMOR LESTEMs. Warubon SUKASAMEMr.
Page 57 and 58: 14:00 - 15:30 Theme II: Intra-regio
Page 59 and 60: y Japan ITPOsCommentator: Frank L.
Page 61 and 62: This type of deep information excha
Page 63 and 64: The extent of FDI effects and their
Page 65 and 66: Appendix IV: Opening Statement by U
Page 67 and 68: only of UNIDO but also other UN spe
Page 69 and 70: LIST OF ABBREVIATIONSAFTA - ASEAN F
Page 71 and 72: in mind that host policy for attrac
Page 73 and 74: forces of competition and co-operat
Page 75 and 76: 2. BACKGROUND ISSUESAn accurate per
Page 77 and 78: economies. In contrast, Sub-Saharan
Page 79 and 80: costs, boost quality and accelerate
Page 81 and 82: Fourthly, in terms of a framework f
Page 83 and 84:
in joint venturing), while retainin
Page 85 and 86:
experiencing the kind of global rel
Page 87 and 88:
other hand, being predominantly nat
Page 89 and 90:
Also, the trade surplus (or deficit
Page 91 and 92:
limited [Freeman and Bartels (2000)
Page 93 and 94:
technology and innovation policy; h
Page 95 and 96:
Credit Information Index NA 0 3 0 6
Page 97 and 98:
Appendix II - Investment climate in
Page 99 and 100:
REFERENCESAlmor T., Hirsch S., 1995
Page 101 and 102:
Freeman N. J., Bartels F. L., Eds.,
Page 103:
Trigeorgis L., 1996, Real Option: M
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