The ASEAN economy is growing. According to the ASEAN Investment Report 2018, foreign direct investment increased between $123 billion in 2016 to $137 billion in 2017.[1]
Growth in foreign direct investments means that the bandwagon may be around the corner, and companies must take it as a signal to invest is now. Indeed, the interest of large international companies to invest in the ASEAN is palpable; multinational companies from the Netherlands, Switzerland, Germany, Australia and China partly account for the increased investment inflow in the region. Four-fifths of European and US executives with existing businesses in ASEAN also expect their organizations’ investment and trade to grow in the region in the next five years.[2]
The sectors investing in ASEAN are also become more diverse. While investments in manufacturing are to be expected, it was only a 50% increase in foreign investment to $31.6 billion whereas wholesale and retail trade had a 75% increase to $38.9 billion.[3]
The increased interest in ASEAN may indicate two things:
1. Different sectors are seeing a market share they can capture in ASEAN, and
2. Global companies have an increased confidence in the ability of ASEAN nations to support various aspects of business operations such as warehousing, logistics, human resourcing, and others.
As an emerging economic region, ASEAN offers multinational companies the access to growing markets as well as reduced trade barriers.[4]