ASEAN Investment Report 2015 Invest in ASEAN Infrastructure Investment and Connectivity ASEAN INVESTMENT REPORT 2015
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Association of Southeast Asian Nations ASEAN Investment Report 2015 Invest in ASEAN Infrastructure Investment and Connectivity ASEAN INVESTMENT REPORT 2015 ASEAN INVESTMENT REPORT : ASEAN : @ASEAN : www.asean.org one vision www.unctad.org one identity one community ASEAN Investment Report 2015 Infrastructure Investment and Connectivity United Nations Conference on The ASEAN Secretariat Trade and Development The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967. The Member States of the Association are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam. The ASEAN Secretariat is based in Jakarta, Indonesia. For inquiries, contact: The ASEAN Secretariat Public Outreach and Civil Society Division 70A Jalan Sisingamangaraja Jakarta 12110 Indonesia Phone : (62 21) 724-3372, 726-2991 Fax : (62 21) 739-8234, 724-3504 E-mail : [email protected] General information on ASEAN appears online at the ASEAN Website: www.asean.org Catalogue-in-Publication Data ASEAN Investment Report 2015 Jakarta: ASEAN Secretariat, November 2015 332.67395 1. Investment - ASEAN 2. Economics - Foreign Direct Investment ISBN 978-602-0980-51-5 ASEAN: A Community of Opportunities The text of this publication may be freely quoted or reprinted, provided proper acknowledgement is given and a copy containing the reprinted material is sent to Public Outreach and Civil Society Division of the ASEAN Secretariat, Jakarta. Copyright Association of Southeast Asian Nations (ASEAN) 2015. All rights reserved. This publication was prepared by the ASEAN Secretariat and the United Nations Conference on Trade and Development (UNCTAD), and supported by the Government of Australia through the ASEAN-Australia Development Cooperation Program Phase II (AADCP II). The map in this publication is only indicative and is not drawn to scale. Disclaimer The ASEAN Investment Report is produced to facilitate a better understanding of FDI developments in ASEAN. The findings, interpretations, and analysis in the Report should be treated with care, as work on harmonising and improving FDI quality across the region is on-going. The ASEAN Secretariat and UNCTAD have taken due diligence in the preparation of this publication. However, they shall not be held liable for any omissions or inaccuracies in the content of this publication. The use of company’s name or cases does not imply endorsement by the ASEAN Secretariat, UNCTAD and the Government of Australia. Neither the ASEAN Secretariat, UNCTAD and the Government of Australia accepts any liability for any claims, loss or expenses that may arise or arising from use of information in this publication. Reliance on the information is at the user’s sole risk/responsibility. FOREWORD Foreign Direct Investment (FDI) into ASEAN has risen for the third consecutive year from $117.7 billion in 2013 to $136.2 billion in 2014. Despite a 16% decline of global FDI flows in 2014, ASEAN Member States have collectively received the largest FDI among developing countries. Due to robust regional economic fundamentals, cost advantages, regional integration, and on-going efforts to improve the investment environment in ASEAN, the region is now seen as a prime investment destination, attracting investments and influencing corporate strategies in the region. Investments from ASEAN Member States also continue to rise, reaching $24.4 billion in 2014 from $19.4 billion of the previous year. With intra-ASEAN investment accounting for 18% of the total FDI into the region, ASEAN is now the 2nd largest investor in its own region, manifesting greater interest from the business community to have a stronger regional presence in light of the establishment of the ASEAN Economic Community by the end of 2015. This year’s ASEAN Investment Report focuses on infrastructure investment and connectivity – both critical in supporting the region’s economic growth as they improve logistical efficiency, reduce transaction costs and support greater flow of trade and investment. Highlighting the important role of the private sector in helping governments to bridge the infrastructure gap in ASEAN and the linkages of various players across the infrastructure value chain, this Annual Report continues to provide useful updates on the latest developments in the ASEAN investment landscape. With strategic measures in the ASEAN Community Vision 2025 aimed to establish an open, transparent and predictable investment regime in the region beyond 2015, ASEAN will continue to make the region a foremost investment destination globally. LE LUONG MINH Secretary-General of ASEAN v ASEAN INVESTMENT REPORT 2015: Infrastructure Investment and Connectivity ACKNOWLEDGEMENTS The ASEAN Investment Report 2015 was prepared under a technical cooperation arrangement between the ASEAN Secretariat and the UNCTAD Division on Investment and Enterprise (DIAE). The Report was prepared and written by Wee Kee Hwee and Hafiz Mirza. It was overseen by Lim Hong Hin, Deputy Secretary-General of ASEAN for ASEAN Economic Community, ASEAN Secretariat and James Zhan, Director, DIAE, UNCTAD. The Report benefited from support and contribution provided by the teams at the Services and Investment Division (SID) and the Infrastructure Division at the ASEAN Secretariat. The SID team was led by Tan Tai Hiong and supported by Madelyn Joy Almazora. The Report benefitted from specific inputs provided by Michael Minges and Torbjorn Fredriksson, Maricel Macesar, Yanfei Li, Christie Richards, Eddy Krismeidi Soemawilaga and Joerg Weber. Other materials for the Report were provided by Paul C.G. Gwee, Jan Hoffmann, Florian Kitt, Sarianna Lundan, Noelia Garcia Nebra, Tran Dong Phuong, Giang Thanh Tung and Megasari Widyaty. Comments at different stages in the preparation of the Report were provided by members of the ASEAN Coordinating Committee on Investment (CCI) and Choo Wai Meng. The Report has also benefitted from the work of the ASEAN Working Group on International Investment Statistics. Statistical assistance was provided by Elizabeth Alarilla, Brad Boicourt, Michael Hanni and Sri Wardhani. Hilvy Hanriany, Anne Bouchet, Catherine Corpuz and Sovyana Putranti provided administrative support. The manuscript was copy-edited with the assistance of Lise Lingo and typeset by Tess Ventura. Research assistance was provided by Karim Kirollos and Nattanit Mei Fang Wee. The financial support of the Government of Australia is gratefully acknowledged. Any correspondences or queries on the content of the AIR should be addressed to: Services and Investment Division Market Integration Directorate ASEAN Economic Community Department ASEAN Secretariat, 70A Jl. Sisingamangaraja, Jakarta 12110, Indonesia Email: [email protected] vi TABLE OF CONTENTS FOREWORD ......................................................................................... v ACKNOWLEDGEMENTS ...................................................................... vi ABBreviations ................................................................................. xi OVERVIEW ..........................................................................................xv Part ONE: FDI AND MNEs’ DEVELOPMENT IN ASEAN CHAPTER 1: FDI DEVELOPMENT AND corporate INVESTMENT strategies ..................................................................3 1.1. Introduction .................................................................................................3 1.2. FDI trends and developments in 2014 ........................................................3 1.2.1. FDI in ASEAN ................................................................................................ 3 1.2.2. Intra-ASEAN investment ................................................................................ 5 1.2.3. CLMV recipients ............................................................................................ 9 1.2.4. Factors and reasons for 2014 developments .............................................. 18 1.3. MNEs’ strategies and operations in 2014–2015 ........................................20 1.3.1. Foreign MNEs’ continued regional expansion ............................................. 21 1.3.2. Regional players and intraregional corporate investment ........................... 26 1.3.3. Cross-border M&As ..................................................................................... 30 1.4. Policy developments .................................................................................32 1.4.1. Reform and improvement of investment policies ........................................ 33 1.4.2. Investment incentives and tax reforms ........................................................ 34 1.4.3. Investment facilitation and ease of doing business measures .................... 35 1.4.4. Regional and bilateral investment agreements ............................................ 37 1.5. Outlook for 2015-2016 ..............................................................................38 1.6. ASEAN: a rapidly growing South–South cooperation partner ....................40 1.7. Conclusion ................................................................................................47 vii ASEAN INVESTMENT REPORT 2015: Infrastructure Investment and Connectivity Part TWO: INFRASTRUCTURE INVESTMENT AND CONNECTIVITY IN ASEAN CHAPTER 2: INFRASTRUCTURE INVESTMENT AND private SECTOR PLAYERS IN ASEAN ...........................................................................53 2.1. Introduction ...............................................................................................53