Southeast Asia Pivots to 'Quality Over Quantity' in Investment Strategy

 

Southeast Asian nations are recalibrating their approach to foreign investment, shifting focus from sheer volume to quality and sustainable impact, according to discussions at the recent OECD Southeast Asia Regional Forum.

 

Amidst mounting global economic uncertainties and geopolitical tensions, the region is working to attract investment that maximises economic and social benefits while safeguarding national interests.

 

"The concept of a sound investment climate has evolved significantly," said Ana Novik, Head of the Investment Division at the OECD. "We're now focusing on strengthening the impact of investment rather than simply increasing capital flows."

 

This strategic pivot comes as the ten-member Association of Southeast Asian Nations (ASEAN) bloc deepens regional integration through the ASEAN Economic Community (AEC) initiative, which aims to address non-tariff barriers, improve connectivity and enhance supply chain resilience.

 

Rifki Weno

 

Rifki Weno, Executive Director of the ASEAN Business Advisory Council, highlighted a proposal for an "ASEAN Business Entity" framework that would incentivise cross-border investment by facilitating movement of talent and capital throughout the region.

 

"Greater economic integration is crucial for enhancing ASEAN's attractiveness in an increasingly complex global landscape," Weno noted.

 

Navigating Geopolitical Complexities

The region faces intensified competition amid shifting geopolitical dynamics, according to Tetsuya Watanabe, President of the Economic Research Institute for ASEAN and East Asia.

 

Tetsuya Watanabe

 

"ASEAN must strengthen its resilience through diversification and cooperation," Watanabe said.

 

He emphasised that the region has significant opportunities to attract investment in manufacturing, electronics and clean energy sectors, provided it creates a supportive environment by improving regulatory clarity

 

Thailand exemplifies this new approach. Werapong Prapha, Thailand Trade Representative, detailed the country's focus on investments that add genuine economic value and advance sustainable development goals, particularly in clean energy, electric vehicles and digital economy initiatives.

 

Werapong Prapha

 

"We're reviewing the Foreign Ownership Act to allow greater foreign participation in sectors like tech startups and biotechnology," Werapong said, underscoring Thailand's commitment to regulatory reforms.

 

 

Business Perspective

Whitney Baird, President and CEO of the US Council for International Business, affirmed American companies' continued interest in the region but stressed the importance of regulatory coherence, particularly in emerging technologies.
 

 

Werapong Prapha

 

"Predictable, transparent processes for investment screening are essential," Baird noted, adding that such mechanisms should address legitimate national security concerns without hindering competition or valuable investment.

 

 

Structural Reforms Key to Success

Jens Arnold, Head of Division at the OECD Economics Department, provided broader context for the region's challenges.

 

As economies built on exports and integration into global value chains, Southeast Asian nations face uncertainty from rising trade barriers worldwide.

 

Jens Arnold

 

While acknowledging the role of short-term macroeconomic policies, Arnold emphasised the critical importance of structural reforms in areas including productivity enhancement, regulatory streamlining, and services sector liberalisation.

 

The OECD's Economic Surveys for several Southeast Asian countries offer evidence-based policy recommendations by benchmarking against international peers, he noted.

 

"Improving access to finance for SMEs, ensuring a level playing field between state-owned and private enterprises, and maximising benefits from foreign direct investment through local linkages are all crucial priorities," Arnold said.

 

As Southeast Asia navigates this complex landscape, the ongoing dialogue between public and private sectors, facilitated by organisations like the OECD, remains essential for effective policy implementation and sustained economic progress.