Foreign Investments in ASEAN: Ample Room For Growth

A series of pro-investor measures will help attract international investment into the region.

Singapore-headquartered renewable energy firm Blueleaf Energy and Philippines-based Sun Asia Energy recently partnered with the Philippines government to build the world’s largest floating solar project in the country. This partnership will help the country accelerate its shift to renewable energy. But more importantly, it will be a source of foreign direct investment (FDI) inflow into the Philippines.

Blueleaf Energy, in particular, plans to invest over $2 billion in renewable energy projects in the Philippines over the next five years. This is amidst regulatory changes that allow up to 100% foreign capital in the public services sectors, such as electricity, transportation, and water supply.

The Philippines is not the only country attracting foreign investment in the region. Indonesia, for example, saw a 44.2% increase in FDI in 2022 to $45.6 billion. It was on the back of investments in base metals and mining. Thailand, too, is encouraging foreign investments through tax incentives.

The surge in investments in ASEAN reflects the region’s attractiveness among global investors. FDI in sectors such as renewable energy, electric vehicles, electronics, and digital technology will contribute to the economic recovery of Southeast Asia.


A mix of regulatory initiatives, tax incentives, and public-private partnerships has enabled and strengthened FDI inflows into ASEAN. Indonesia, Thailand, Vietnam, and the Philippines have witnessed a rise in global capital.

Take the Philippines, for instance. FDI inflows into the Philippines rose 13% in February 2023 to reach $1 billion. Japan and the United States accounted for the bulk of the inflow and invested in industries such as electricity, manufacturing, real estate, and financial services.

The amended Public Service Act that expands FDI into public sectors is expected to act as a catalyst for investment growth in the country and improve the delivery of services to Filipinos.

Another country that is adopting policy changes to bolster FDI is Thailand. The country has an initiative called the Thailand Plus Package that incentivises foreign entities to set up local production facilities and offers corporate tax exemptions till December 31, 2025. It is expected to generate ~$178 million in investments over the next three years.

Country FDI in 2022 (USD billion) Growth (%)
Indonesia 45.6 44.2
Vietnam* 27.72 -11%
Thailand 12.3 36
Philippines 9.2 -23.2%

*As of December 20, 2022

Source: Government agencies

That is not all. The Board of Investment will also hold a roadshow in South Korea to fortify FDI in Thailand. In 2022, the country attracted investments from global companies such as Amazon Web Services (cloud services), BYD Auto (Chinese automaker), and Foxconn (Taiwanese electronics manufacturer).

Indonesia has taken rapid strides towards increasing FDI inflows as well. Its Positive Investment List supports 100% FDI in 246 business fields such as telecom, healthcare, advertising, and finance. The country’s FDI rose 20% to $11.96 million in the January to March quarter compared to the same period the previous year.

For instance, South Korean steelmaker POSCO and Chinese mining firm Ningbo Liqin will set up a nickel production plant for EVs in Indonesia. Similarly, a few Danish companies are in discussions with Indonesian ammonia producer Pupuk Kalimantan Timur to set up a fertiliser plant in the country.

A shift in mindset from China-centric manufacturing facilities towards Southeast Asia has worked in the region’s favour. Vietnam, for instance, has just approved three manufacturing projects worth $80 million. The country is targeting between $36 billion and $38 billion in FDI this year. Projects in the areas of sustainable development, electronics, renewable energy, and green technologies are likely to be given priority.

International manufacturers have already evinced interest. Taiwanese electronics manufacturer Quanta Computer, for instance, plans to invest $50 million in a new Vietnamese subsidiary. This subsidiary will produce consumer electronics at its new facility, making it Quanta’s second manufacturing hub in Southeast Asia.


While ASEAN has made significant progress in FDI, 2023 is expected to be a challenging period. Vietnam and the Philippines saw a decrease in foreign investments in 2022. However, the window of opportunity has not closed off.

Sectors such as electronics manufacturing, semiconductors, electric vehicles, and green energy will continue to attract investments. The period of cautious optimism may open up opportunities for Southeast Asia as an alternative through its cost-effective manufacturing models and affordable labour. The region’s resilience against economic uncertainty remains intact.

About the Author

Sumit Dutta
Founder and Chief Executive Officer | Profile

Sumit Dutta is the Founder and Chief Executive Officer of ASEAN Business Partners. Prior to this, Sumit spent 26 years working for HSBC, one of the biggest banks in the world, in countries including Indonesia, Vietnam, USA, Hongkong and India.