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Investment Policy Reform
in ASEAN
2nd ASEAN-OECD Investment Policy Conference
10-11 December 2014, Jakarta
Dr. Stephen Tho...
• Trends in FDI in ASEAN: a bright spot in a gloomy
global landscape
• The growing importance of the regional market for
i...
Global FDI is still significantly below
pre-crisis levels
0
500
1000
1500
2000
2500
1998
1999
2000
2001
2002
2003
2004
200...
FDI in ASEAN is at record levels
0
20
40
60
80
100
120
140
0%
5%
10%
15%
20%
25%
ASEAN FDI inflows (right axis) ASEAN shar...
FDI in ASEAN may even be greater than
what AMS report
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
ASEAN statistics ...
MNE employment figures show even
stronger growth
0
100
200
300
400
500
600
700
800
1997 1998 1999 2000 2001 2002 2003 2004...
US investors are turning towards the
regional market
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1989 1994 1999 2004 2008 20...
• Good growth prospects:
– 5.4% projected over next 5 years on average
• ASEAN Economic Community blueprint
– Both intra- ...
• FDI at record levels for most AMS, but
performance varies strongly across ASEAN,
with Singapore dominating FDI inflows
•...
OECD FDI Regulatory Restrictiveness Index
• Measures only statutory restrictions on FDI
(i.e. where national treatment is ...
FDI liberalisation in Indonesia, 1985-2009*
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
0
10
20
30
40
50
60
1985 1987 1989...
Investment policy reform in Korea and
its impact on FDI inflows
0.0
0.1
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0.3
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1.0
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1...
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0 0.1 0.2 0.3 0.4 0.5
2012InwardFDIStocks(%ofGDP)
2013 FDI RR Index (Closed = 1; Open = ...
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0.00
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0.10
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The Philippines Myanmar Indonesia Thailand...
ASEAN economies are generally more
restrictive across sectors than OECD
0
0.1
0.2
0.3
0.4
0.5
0.6
OECD ASEAN9
OECD FDI Reg...
Embodied services are an important
share of exports
0
5
10
15
20
25
30
35
40
%
Construction Wholesale and retail trade, ho...
FDI restrictions affect the share of
services value added in exports
OECD FDI Regulatory Restrictiveness Index (0=open; 1=...
AMS are becoming more open to FDI over time,
often significantly so…
…but policies still vary significantly within ASEAN
G...
Policy Framework for Investment (and User’s Toolkit)
www.oecd.org/investment/pfi.htm
www.oecd.org/investment/toolkit/
www....
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Stephen Thomsen, OECD, 2014 ASEAN-OECD Investment Policy Conference

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This presentation by Stephen Thomsen was made at the session "Investment policy reform and regional integration" during the 2nd ASEAN-OECD Investment Policy Conference held on 10-11 December 2014.

To find out more visit: http://www.oecd.org/daf/inv/investment-policy/2014-asean-oecd-investment-policy-conference.htm

Published in: Government & Nonprofit
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Stephen Thomsen, OECD, 2014 ASEAN-OECD Investment Policy Conference

  1. 1. Investment Policy Reform in ASEAN 2nd ASEAN-OECD Investment Policy Conference 10-11 December 2014, Jakarta Dr. Stephen Thomsen Head, Investment Policy Reviews, OECD
  2. 2. • Trends in FDI in ASEAN: a bright spot in a gloomy global landscape • The growing importance of the regional market for international investors • The impact of FDI restrictions on relative performance in attracting investment within ASEAN • The role of services in total ASEAN exports and how this relates to FDI restrictions Outline
  3. 3. Global FDI is still significantly below pre-crisis levels 0 500 1000 1500 2000 2500 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 OECD EU World Source: OECD International Direct Investment database. 2013 is preliminary. p Global FDI outflows (USD billion)
  4. 4. FDI in ASEAN is at record levels 0 20 40 60 80 100 120 140 0% 5% 10% 15% 20% 25% ASEAN FDI inflows (right axis) ASEAN share of developing country FDI stock(left axis) Percentage USD billion ASEAN FDI inflows Source: UNCTAD
  5. 5. FDI in ASEAN may even be greater than what AMS report - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 ASEAN statistics OECD home country statistics USD million FDI in ASEAN from OECD countries (home vs host statistics)
  6. 6. MNE employment figures show even stronger growth 0 100 200 300 400 500 600 700 800 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (thousand) *Indonesia, Malaysia, Philippines, Singapore, Thailand Employment of US MNEs in ASEAN*
  7. 7. US investors are turning towards the regional market 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 1989 1994 1999 2004 2008 2011 Local Regional To US Share of total sales Pattern of sales of US affiliates in ASEAN Source: US Department of Commerce
  8. 8. • Good growth prospects: – 5.4% projected over next 5 years on average • ASEAN Economic Community blueprint – Both intra- and extra-ASEAN FDI • Liberalisation of FDI regimes – WTO, FTAs, ACIA – Unilateral removal of restrictions What can explain the recent performance of ASEAN in terms of FDI?
  9. 9. • FDI at record levels for most AMS, but performance varies strongly across ASEAN, with Singapore dominating FDI inflows • Intra-ASEAN investment is still only a small share of the total • Increasing the development impact of FDI • The treatment of foreign investors also varies considerably across AMS, as with Doing Business Strong FDI performance… but challenges remain
  10. 10. OECD FDI Regulatory Restrictiveness Index • Measures only statutory restrictions on FDI (i.e. where national treatment is not applied) • Does not include the degree of implementation, institutional quality or state ownership, EPZs • Covers equity restrictions, screening, restrictions on key personnel and operational restrictions • Scores currently available for almost 60 countries, covering 22 sectors. Benchmarking FDI restrictiveness across countries and over time
  11. 11. FDI liberalisation in Indonesia, 1985-2009* 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0 10 20 30 40 50 60 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Cumulative FDI inflows since 1980 (USD billion; left axis) OECD FDI Restrictiveness Index score (0=open; 1=closed; right axis) *The historical series is based on a simplified index and hence the score for 2009 does not correspond to the overall Index score.
  12. 12. Investment policy reform in Korea and its impact on FDI inflows 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 0 2 4 6 8 10 12 14 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 FDI stock as share of GDP (left axis, per cent) FDI Index (right axis; 0=open,1=closed) Source: Nicolas, Thomsen and Bang (2013)
  13. 13. 0 20 40 60 80 100 120 140 160 180 0 0.1 0.2 0.3 0.4 0.5 2012InwardFDIStocks(%ofGDP) 2013 FDI RR Index (Closed = 1; Open = 0) Sources: OECD Statistics and IMF estimates. Excludes Iceland, Belgium, Iceland, Jordan and Luxembourg. Fewer FDI restrictions mean more FDI More restrictive MoreFDI
  14. 14. 0 50 100 150 200 250 300 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50 The Philippines Myanmar Indonesia Thailand Lao PDR Viet Nam Malaysia Cambodia Singapore 2013 OECD FDI Regulatory Restrictiveness Index 2012 FDI Stocks (current, % of GDP) OECD FDI Regulatory Restrictiveness Index ,2013(open=0;clsoed=1) 2012 FDI Stocks (% of GDP) (Preliminary scores) FDI Index scores vs FDI Stocks (% of GDP) ASEAN9 countries
  15. 15. ASEAN economies are generally more restrictive across sectors than OECD 0 0.1 0.2 0.3 0.4 0.5 0.6 OECD ASEAN9 OECD FDI Regulatory Restrictiveness Index (open=0; closed=1)
  16. 16. Embodied services are an important share of exports 0 5 10 15 20 25 30 35 40 % Construction Wholesale and retail trade, hotels and restaurants Transport and storage, post and telecommunications Financial intermediation Business services Other services Source: OECD-WTO Trade in Value Added database
  17. 17. FDI restrictions affect the share of services value added in exports OECD FDI Regulatory Restrictiveness Index (0=open; 1=closed) Services value added as a share of exports
  18. 18. AMS are becoming more open to FDI over time, often significantly so… …but policies still vary significantly within ASEAN Governments have the sovereign right to choose their own level of openness… …but FDI restrictions can have a significant impact not only on FDI inflows but also on overall national competitiveness Conclusion
  19. 19. Policy Framework for Investment (and User’s Toolkit) www.oecd.org/investment/pfi.htm www.oecd.org/investment/toolkit/ www.oecd.org/daf/inv/investment-policy/pfi-update.htm FDI Index www.oecd.org/investment/fdiindex.htm Investment Policy Reviews www.oecd.org/investment/countryreviews.htm ASEAN-OECD Investment Programme www.oecd.org/daf/inv/mne/seasia.htm ASEAN Investment website www.investasean.asean.org For further information

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