Foreign direct investment in Southeast Asia: - Regional Office China

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Foreign direct investment in Southeast Asia: - Regional Office China

The increasing significance of outsourcing (of both production and services)associated with FDI, and as a substitute for FDI, implies that the emergenceof ‘campuses of manufacturing’ (evolving from industrial parks) needs to befactored into investment promotion policies. Cluster development in relationto knowledge-based institutions would be a significant determinant ofattracting FDI. In addition, FDI targeting policies need to account for specific‘types’ of FDI outsourcing by leading MNEs.Commentary and discussionPeter Buckley noted that national competition and corporatecomplementarities in FDI posed challenges for policy craft. Policies need toaddress whether MNEs strategies are evolving globally or regionally. Ingeneral, analysis points to MNEs strategies in EU, North America as regional,in contrast to those in Asia as global (exports from Asia to the rest of theworld). Campuses of manufacturing could be viewed as new growth poles,which could attract outsourcing manufacturing services providers.As a consequence, regional policy coherence is of vital importance inreducing the policy temptations of competing for FDI through incentive wars.Contemporaneously, ASEAN ‘could do better’ in terms of perceptions of thequality of governance in the region. Additionally, the perceived low capacitylevels of IPAs were a matter for urgent attention among policy-makers. Thedifficulties posed by bilateral trade agreements (BTAs), bilateral investmenttreaties (BITs), double taxation treaties (DTTs) with regional tradeagreements (RTAs) was recognised as requiring increased policy resources,with the caveat that BTAs can often skew resource allocations.38

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