Foreign direct investment in Southeast Asia: - Regional Office China

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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
generate tax revenues to fund various budgetary needs. On the other hand,some large foreign investors put pressure on IPAs to provide fiscal incentivesand assurances on protection. In the case of East Timor, for example,policy-makers had initially intended to have just one law pertaining toinvestment, both domestic and foreign. But it was eventually decided topursue separate investment laws for local and overseas investors,administered by two different investment agencies, as a result of pressurefrom the local business lobby. Ironically, there is little difference betweenthe two laws, other than some of the eligibility criteria for receiving taxcredits as incentives. Conversely, Laos and Vietnam are moving towards theenactment of a single investment law, for foreign and domestic investorsalike.Finally, in developing regional policies to attract SDPNs, the role ofgovernments in supporting clusters of partnership exchanges, vendor listsand supplier networks is vital. As is a positive perception of regionaldistribution services capacity and logistics capabilities, to enable regionallydistributed production. One persistent issue was the China dimension to FDIin Southeast Asia, which is discussed next.33
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 and 32: socialising public goods and privat
Page 33: Typically, but not exclusively, Sin
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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