Foreign direct investment in Southeast Asia: - Regional Office China

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Notwithstanding the dynamics of risk and risk appetite in emerging markets,the importance of disclosure, due diligence and corporate governance washighlighted. This points to the need for laws that ensure that markets workproperly, and that property rights and ownership rights are respected andenforced. While there is no shortage of domestic savings in Southeast Asia,there is a marked absence of financial instruments which can intermediatethose savings into real investment in productive assets. Policy craft for FDItherefore requires not only attention in attracting foreign investors, but alsoattracting domestic investors into asset classes that link FDI, FPI and thedomestic corporate sector.Second presentation summaryIkue Toshinaga, UNIDO Investment and Technology Promotion Office (UNIDOITPO Tokyo), provided an in-depth exposition of Japan’s role as a source ofglobal outward FDI, especially to Southeast Asia. Interestingly, some 90% ofJapanese firms have intentions to enact FDI activity in China over the nextthree years – a factor that Southeast Asian policy-makers have to seriouslyconsider. Especially with respect to the investors’ ‘wish list’ of: stabilityacross political, economic and market environments; transparentgovernment policies; efficiently operable infrastructure; and continuousproductivity growth. To the inward investor from Japan, and elsewhere, thecost of doing business is also key. In this context, the investment decisionmakingbehaviour of investors from Japan, North America and Europe differ,and policy-makers in developing countries need to be sensitive to this factor.Japan’s foreign investors are relatively slow in decision-making, partly due tothe cross equity holding structures of MNEs’ industrial organisation.The requirements of FDI policy craft, alluded to in earlier presentations anddiscussions, can be supported by various public goods interventions. Firstamong the most effective are information services attuned to facilitating theFDI decision and the needs of the foreign investor. Second is the activeengagement of IPAs in searching for, tracking and targeting specific42
components of the integrated global factory. In respect of both theseapproaches, the importance of IPAs being open and generous withinformation in order to reduce uncertainty and encourage extant investors todo investment promotion cannot be over emphasised.The uniqueness of UNIDO’s capacity-building network of Investment andTechnology Promotion Offices (ITPOs) located internationally was illustrated.Through institutional mechanisms for strengthening partnerships, ITPOsenable investors in OECD countries and emerging markets to link up withinvestment opportunities in developing countries. The flagship service -- theDelegate Programme -- in which investment promotion professionals fromdeveloping countries spend time in ITPOs is available to all UNIDO memberstates. The Delegate Programme enables IPA professionals to apply thetechniques of investor targeting in situ within the source countries of FDI.The importance of business networking, developing professional approachesto investor selection and capacity-building are the hallmarks of the UNIDOITPO Delegate Programme.Commentary and discussionFrank Bartels commented that the ITPO (public good) service provided byUNIDO to developing countries should be seen as a strategic facility whichcould extend the capacity of most IPAs. The enabling services from UNIDOshould be viewed as a means of leveraging the national resources availableto IPAs. And in participating in the Delegate Programme, the quality ofpreparation -- itself an indication of commitment and capacity-building -- wasof crucial importance.The importance of integrating investment promotion with domestic industryupgrading programmes was pointed out as of vital significance to promisinglocal companies, especially considering the industrial organisation ofdeveloping countries which depends overwhelmingly on SMEs.43
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 and 34: Typically, but not exclusively, Sin
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: Finally, there is also a need for i
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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