ASEAN expects FDI to rise

ASEAN expects FDI to rise

CHIANG MAI, Thailand (Dow Jones): Ministers and senior investment promotion officials of the Association of Southeast Asian Nations (ASEAN) expressed hopes Wednesday foreign direct investment flows in region will pick up over the next two years.

Members of the ASEAN Investment Council, or AIA, discussed ways to revive FDI flows into the region's recovering economies as recent numbers point to a slowdown.

Foreign direct investment in Southeast Asia amounted to US$16.9 billion in 1999, down from US$19.6 billion in 1998 and a further decline is likely in 2000, ASEAN Secretary General Rodolfo Severino told reporters after the meeting.

"But 2000 is almost gone, so we are looking at 2001 and we are quite optimistic about it," Severino told reporters.

However, foreign direct investment isn't evenly distributed across the region due to the wide differences in macroeconomic development among ASEAN members.

While Singapore and to a lesser extent Thailand, the Philippines and Malaysia still see growing or at least steady foreign direct investment, Indonesia is suffering a negative investment flow, Severino said. Poorer members, such as Myanmar, receive only a marginal amount of foreign direct investment.

Severino noted the different degree of development within the block's members provide potential investors a variety of choices, and "isn't necessarily an impediment."

However, political instability and violence in some countries, such as Indonesia, "could be a factor" in investors' decision, despite the fact "these are only pockets of trouble," he added.

ASEAN countries will continue to target the three major sources of foreign direct investment in the region, namely the U.S., Europe and Japan, in their bid to attract new investment, said Abhisit Vejjajiva, Thailand's Cabinet minister in charge of investment promotion.