U.S. business group expects ASEAN to lure back investments

U.S. business group expects ASEAN to lure back investments

KUALA LUMPUR (Dow Jones): The U.S.-ASEAN Business Council said Saturday it expects foreign investment flows to Southeast Asia to pick up, despite the region's cloudy economic prospects.

While the struggling economies of Japan and the U.S. "makes economic recovery prospects in the near term for ASEAN unclear," progress on financial sector reforms and corporate restructuring, and the regional grouping's "inherent advantages" - particularly the formation of the ASEAN Free Trade Area and other regional economic cooperation initiatives - will help lure capital back to Southeast Asia, said Ernest Bower, the president of the business council.

Still, he noted the "different levels of progress" in corporate restructuring in the region, adding that "there's a lot more to be done."

"ASEAN has a great opportunity to pull back its share of foreign direct investments that have been lost, in some part, to China over the decade of the 1990s," Bower said. "We want to be part of that recovery."

Bower said that although foreign investment flows to ASEAN have fallen for the past several years, the U.S. has increased its investment to the region by 30 percent since 1997, to a total value of $52 billion.

The U.S.-ASEAN Business Council is a non-profit organization in the U.S. that aims to promote increased trade and investment between the U.S. and member countries of ASEAN. ASEAN member countries include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

The business group held a dialogue Saturday with ASEAN Finance Ministers, focusing on financial sector issues and explored areas of mutual cooperation to support economic growth and investment.

Bower also said he expects the new U.S. administration under U.S. President George W. Bush to show "a more high level of engagement in ASEAN than we've seen in past administrations."

"The team in place has so far indicated to the U.S. business that they are going to keep the trade agenda moving forward, with the U.S.-Singapore Free Trade Area and completing the Vietnam bilateral trade agreement," he said.

Separately, Bower said the standoff between the U.S. and China, following the midair collision of a Chinese fighter and a U.S. spy plane over the South China Sea, has been "unfortunate" from the business point of view, but expressed optimism that it would be "resolved quickly".

"It doesn't make sense for anybody - not China, not the U.S., and certainly not the countries in ASEAN, for the U.S.-China rhetoric to be wound up like it is," he said.

In the meeting, the U.S. business group urged Southeast Asian countries to continue corporate restructuring programs begun in response to the 1997-98 Asian financial crisis, and warned that unrest in Indonesia is causing uncertainty within the region's economic forum.

Asked about unrest in Indonesia, geographically the largest country in the 10-nation ASEAN group, Bower said the archipelago nation was, "always going to be an anchor of ASEAN."

"Indonesia going through a time of such dynamic change makes for an uncertain future for ASEAN," he said. But "there is a fundamental belief that Indonesia will pull it back together."