ASEAN markets are likely to attract increased Japanese FDI

Trade and investment liberalization in the ASEAN region is finding increased FDI from Japanese investors. Japanese investors are allocating more FDI flows to the ASEAN-6 countries (SG, TH, MY, ID, PH, VN), share of ASEAN-6 in Japan’s total FDI in Asia has exceeded 50%.

Many ASEAN economies have great potential to grow, thanks to relatively low per capita incomes and a young population profile. Strong growth prospects and a high degree of market openness are the main factors attracting Japanese investment. High costs of doing business there definitely outweigh benefits and will not be a binding constraint for Japanese investors.

Japan and several ASEAN countries have joined the Trans-Pacific Partnership (TPP), which if implemented will strengthen supply chains in TPP member countries and  cuts trade barriers in service sectors, including financial, telecommunication, e-commerce and other new areas, making investment all the more attractive.