Asean’s FDI to surpass China this year

Feb 16, 2017
The key growth driver for the Malaysian economy in long term will be mega infrastructure projects that would improve connectivity and facilitate mobilisation of goods, services, and people.
The key growth driver for the Malaysian economy in long term will be mega infrastructure projects that would improve connectivity and facilitate mobilisation of goods, services, and people.

United Overseas Bank (M) Bhd foresees foreign direct investment (FDI) inflows into Asean to surpass China for the first time this year, after falling behind for over a decade.

In a statement yesterday, its economist Julia Goh said the stock of FDI accumulation in Asean had been rising at a steady annual rate of 15% since 1980.

“We anticipate the FDI flows into Asean will continue to gather momentum. We expect the stock of investment in Asean to nearly triple to US$5.2 trillion in 2030, from our estimates of US$1.8 trillion in 2015,” she said.

Goh said the existing lack of infrastructure investment, as well as the opening up of frontier Asean economies such as Myanmar, presented huge opportunities for investors.

“The current predicament has already attracted foreign investors’ attention and Asean has been experiencing increased FDI inflows over the past few years,” she said.

Furthermore, she said the implementation of the Asean Economic Community at the start of 2016 was an important milestone in the closer collaboration among Asean economies.

“The synergies from the differing comparative advantages can provide immense opportunities for both the domestic sectors as well as foreign investors,” said Goh.

She also pointed out that Malaysia should continue to facilitate intra-regional exports through Asean and the association’s trade partners and reinforce regional integration within Asia.

She said the heightened political uncertainties, potential trade frictions and continued financial market volatility could pose downside risks to the economy.

“Given Malaysia’s high dependence on trade and strong financial linkages, potentially destabilising protectionist US’ policies or political fallout that threatens the economic stability of the European Union will challenge the countrys economic growth this year,” said Goh.

Malaysia should also further diversify its traditional export sectors towards higher value-added segments to support economic growth.

“However, the key growth driver for the Malaysian economy and its neighbouring Asean economies in the longer term will stem from the development of mega infrastructure projects that improve connectivity and facilitate mobilisation of goods, services, and people,” she said. – Bernama

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