Southeast Asian countries see strong FDI flows

Southeast Asia has emerged as a top choice for firms looking to diversify production away from China, including Chinese companies, amid escalating tensions between Washington and Beijing.

Southeast Asia is well-placed to benefit significantly from the China+1 phenomenon as both foreign and Chinese companies diversify their supply chains and operations, CNBC reported Kuo-Yi Lim, co-founder and managing partner of Southeast Asian venture capital firm Monk’s Hill Ventures as saying.

The 'China Plus One' strategy seeks to reduce the risks associated with a total reliance on that market or supply chain through diversifying manufacturing operations and expanding into other countries even as companies maintain a presence in China.

This has spurred greater investments into the ASEAN bloc. Foreign direct investments into the ASEAN economies of Indonesia, Malaysia, Philippines, Thailand, Singapore and Vietnam rose to US$236 billion in 2023, compared with an annual average of $190 billion between 2020 and 2022, OCBC economists said in a May report.

The inflows mostly came from the US, Japan, the EU, mainland China and Hong Kong.

For Vietnam, the country has become a key manufacturing location for Apple, as the US tech giant seeks to diversify the assembly of its products away from China.

It is already a major research and development hub for Samsung, as well as a manufacturing and export base for Samsung’s smartphones.

"Việt Nam's competitive labour costs and market access, with a whole raft of free-trade agreements, makes it a lot easier to export to other markets, for example, the EU,” Kai Wei Ang, an ASEAN economist at BofA Securities, told CNBC earlier this month. 

Viet Nam News

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