ASEAN Investment inflows up 5% in 2022

Minister Bahlil Lahadalia, who oversees investments, revealed a notable 5 percent surge in Foreign Direct Investment (FDI) inflows within the Association of Southeast Asian Nations (ASEAN) region during 2022. This growth is in stark contrast to the overall global decline in FDI. The announcement was made during the 26th ASEAN Investment Area (AIA) Council Meeting held on August 19th in Semarang, Central Java. The event saw participation from all ASEAN member states and representatives from the United Nations Conference on Trade and Development (UNCTAD).

Lahadalia conveyed that while investment inflows into developed countries and the global market faced a downturn, investment flows into developing nations increased by 4 percent. He highlighted that Southeast Asia saw an even more remarkable increase of 5 percent, surpassing both global averages and developed nations’ levels. He commended the success of Southeast Asian ministers in drawing investment into the region.

The recent Special ASEAN Investment Report (AIR) 2023 from UNCTAD underscores the significant achievement of ASEAN’s investment growth in 2022, marking a historic high of 5 percent. The region experienced a substantial influx of FDI amounting to a staggering $224 billion.

Conversely, the global investment landscape faced a setback, encountering a decline of up to 12 percent in the same year. This drop was attributed primarily to concurrent global crises, including the conflict in Ukraine, escalating prices of essential commodities like food and energy, and mounting public debt. The impact of reduced investment growth was most acutely felt in developed nations.

Minister Lahadalia underscored the criticality of upholding equity as a guiding principle in investment practices. He noted that a disproportionate share of FDI benefits was being reaped by less than 1 percent of the ASEAN population. This concentration of FDI among a select few raised concerns about the unity of ASEAN in the long run. He shared that in 2022, a substantial 60 percent of FDI entering ASEAN was being enjoyed by only a minuscule fraction of the population.

Anticipating the future, Lahadalia emphasised the necessity for enhanced collaboration among ASEAN member states to promote and facilitate investment. This, he believed, would contribute to the realisation of ASEAN’s aspiration to become a unified community, akin to a single home and family.

The 26th AIA Council Meeting, held in conjunction with the ASEAN Economic Ministers’ (AEM) Meeting, brought together representatives from all ten ASEAN nations, addressing matters related to investments. UNCTAD’s 2023 Special ASEAN Investment Report (AIR) was created with support from the Government of Indonesia. The report’s central theme, “International Investment Trends: Key Issues and Policy Options,” delves into global FDI trends, associated policies, emerging concerns, and recommended policy approaches to address these new challenges.