Foreign direct investment in Southeast Asia: - Regional Office China

attractiveness of the region to investors; and ultimately iv) making acontribution to the consolidation of a robust regional economy.Southeast Asia’s success in this regard is highly dependent on individualcountries making the commitment to develop endogenous industries andcreating a favourable investment environment. ASEAN member countriesneed to collaborate in moving towards greater integration, so as to reap thefull benefits of SDPNs. This includes moving towards a model of regionalindustrial policy, and providing support at the firm level to all companies,whether they perceive the region as a market, or a production base. There isalso a need to increase activity in the field of more innovative FDI, throughthe development of human resources and skills. Tellingly, there is relativelylittle fundamental research and development FDI activity undertaken byMNEs operating in Southeast Asia.Commentary and discussionThere is a trend towards what one might call “network capitalism”, notedHafiz Mirza, bringing with it new sources of foreign investment activity, anddifferent ways that individual companies enact investment. For example, thetypical way that a British company goes about enacting an FDI project tendsto be quite different from the approach adopted by most German firms.There is a need to think beyond simply national FDI policies, and look atregional strategies, clusters and partnering. Such new developments as theASEAN-China and ASEAN-Japan agreements are signs of this trenddeveloping, and are in some ways a response to the increasingly fine ‘slicingand dicing’ of production stages, through regional networks and partnerships.However, many developing countries find themselves confronted with adifficult dilemma. On the one hand, commitments made as part of WTOmembership, and other agreements, tend to call for open markets and alevel playing field for both domestic and foreign investors. This is broadlysupported by consumers, which object to protective practices that oftenresult in higher prices for goods and services, and the need for a country to32