Outward Foreign Direct Investment in ASEAN The ISEAS – Yusof Ishak Institute (formerly Institute of Southeast Asian Studies) was established as an autonomous organization in 1968 It is a regional centre dedicated to the study of socio-political, security and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment The Institute’s research programmes are the Regional Economic Studies (RES, including ASEAN and APEC), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS) ISEAS Publishing, an established academic press, has issued more than 2,000 books and journals It is the largest scholarly publisher of research about Southeast Asia from within the region ISEAS Publishing works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world First published in Singapore in 2017 by ISEAS Publishing 30 Heng Mui Keng Terrace Singapore 119614 E-mail: publish@iseas.edu.sg Website: All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the ISEAS – Yusof Ishak Institute © 2017 ISEAS – Yusof Ishak Institute, Singapore The responsibility for facts and opinions in this publication rests exclusively with the author and his interpretations not necessarily reflect the views or the policy of the publisher or its supporters ISEAS Library Cataloguing-in-Publication Data Outward Foreign Direct Investment in ASEAN / edited by Cassey Lee and Sineenat Sermcheep Investments, Foreign—Southeast Asia Investments, Southeast Asian I Lee, Cassey II Sineenat Sermcheep HG5740.8 O93 2017 ISBN 978-981-47-6240-3 (soft cover) ISBN 978-981-47-6241-0 (e-book, PDF) Typeset by Superskill Graphics Pte Ltd Printed in Singapore by Markono Print Media Pte Ltd CONTENTS List of Tables vii List of Figures x Foreword by Suthipand Chirathivat xiii About the Contributors xv Introduction 1 Cassey Lee and Sineenat Sermcheep The Rise of Outward Foreign Direct Investment from ASEAN Sineenat Sermcheep ASEAN’s Outward Foreign Direct Investment Aekapol Chongvilaivan and Jayant Menon The Impact of the ASEAN Economic Community on Outward FDI in ASEAN Countries Pitchaya Sirivunnabood Determinants of Singapore’s Outward FDI Cassey Lee, Chew Ging Lee and Michael Yeo Outward Foreign Direct Investment from Malaysia Tham Siew Yean, Teo Yen Nee and Andrew Kam Jia Yi 103 Indonesia’s Outward Foreign Direct Investment Maxensius Tri Sambodo 128 30 47 79 Contents vi Factors Influencing Thailand’s Outward FDI Kornkarun Cheewatrakoolpong and Panutat Satchachai 152 Outward Foreign Direct Investment: The Case of Vietnam Hoang Thi Thu 180 Myanmar as a Destination for OFDI: A New ASEAN Foreign Investment Frontier Jean-Pierre A Verbiest and Tin Htoo Naing Index 202 227 LIST OF TABLES 1.1 1.2 ASEAN FDI Outflows, 1980–2013 Selected Top 20 Sources of OFDI in Asia, 2014 2.1 Rankings of Top TNCs from ASEAN by Foreign Assets, 2012 Top Sovereign Wealth Funds (SWFs) of Developing Asia, Ranked by the Value of Assets, 2007 Distribution of Outward FDI Stock by Economic Sector and Industry, 2000, 2008 Country Rankings by Outward FDI Performance Index, 2000–07 2.2 2.3 2.4 3.1 3.2 3.3 3.4 3.5 3.6 3.7 4.1 4.2 4.3 Mechanisms of the Impacts of Regional Economic Integration on FDI Relative Bilateral FDI Intensity of Selected ASEAN Countries as Home Economies, 2012 ASEAN’s Key Investment Efforts Assessment of ASEAN+1 FTAs FDI Flows of Each AMS to ASEAN Flows of Intra-ASEAN FDI in 2013 Outward FDI Flows from ASEAN, annual average 6 35 38 41 43 50 52 60 62 64 65 66 ASEAN Country Share of Singaporean OFDI Stock, 1997–2012 87 Singapore’s OFDI by Sector, 2012 88 Sectoral Composition of Singapore’s OFDI for Main Destination Countries, 2012 89 List of Tables viii 4.4 4.5 Determinants of OFDI Stock — Arellano-Bond Dynamic Panel-Data Estimation Determinants of OFDI Flow — Arellano-Bond Dynamic Panel-Data Estimation 94 96 5.1 5.2 Description of Variables Regression Results 118 120 6.1 6.2 6.3 Inward and Outward FDI Stock for Selected Countries OFDI from Indonesia in Singapore by Major Industry Remittance and Number of Indonesian Migrants in 2013 Incentives for ASEAN Countries — Presidential Regulation No 39 Year 2014 141 142 6.4 7.1 7.2 7.3 7.4 7.5 7.6 7.7 8.1 8.2 8.3 8.4 8.5 8.6 8.7 Thailand’s Outward FDI Flows during 2009–14, by Sectors Thailand’s Outward FDI Flows in Manufacturing Sub-Sectors during 2009–14 Summarized Data Sources Descriptive Statistics for the Case of ASEAN-5 Descriptive Statistics for the Case of CLMV Estimation Results for ASEAN-5 Panel Regression of Equation (1) in Case of CLMV 143 148 156 158 162 163 163 164 167 Structure of GDP in Vietnam 184 Annual Average Value and Ratio per GDP of Major Factors 185 Vietnam’s Outward FDI 192 Structure of Outward FDI of Vietnam by Sector, 1989–2013 193 Vietnam’s Outward FDI by Economic Activity, 1989–2013 194 Structure of Outward FDI of Vietnam by Region 196 Top 10 Destination of Outward FDI of Vietnam, 1989–2013 197 List of Tables ix 9.1 9.2 9.3 9.4 Cumulative Foreign Direct Investment in Myanmar by Sector (up to 31 March 2011) Cumulative Foreign Direct Investment in Myanmar by Country (up to 31 March 2011) Yearly Approved Foreign Investment by Sector Yearly Approved Foreign Investment by Country 208 210 212 213 LIST OF FIGURES 1.1 1.2 1.3 1.4 1.5 1.6 1.7 2.1 2.2 2.3 2.4 2.5 3.1 3.2 3.3 Outward FDI Flows from Selected ASEAN Countries, 2010–13 ASEAN Inward and Outward FDI Flows, 1980–2013 ASEAN Countries’ Inward and Outward FDI Flows, 1980–2013 Geographical Distribution of Outward FDI Stock, as of 2012 Sectoral Distribution of Intra-ASEAN Investment in 2013 Outward FDI Flows from ASEAN, China, Hong Kong, Taiwan and Korea, 1980–2013 China, Hong Kong, Korea and Taiwan Inward and Outward FDI Flows, 1980–2013 12 14 17 19 24 25 Outward FDI Flows from ASEAN, 1990–2013 Intra-ASEAN FDI, 2005–14 Outward FDI Stock by ASEAN Country, 1990–2013 Value of Cross-border M&As by Purchasers from ASEAN Countries, 1990–2013 Value of Greenfield FDI Projects by Sources from ASEAN Countries, 2003–13 32 33 36 ASEAN’s Inward FDI Trend, 1995–2013 Top 10 Investors in ASEAN, 2012–13 ASEAN’s Outward FDI, 2003–13 53 54 55 37 38 ... edited by Cassey Lee and Sineenat Sermcheep Investments, Foreign? ??Southeast Asia Investments, Southeast Asian I Lee, Cassey II Sineenat Sermcheep HG5740.8 O93 2017 ISBN 97 8-9 8 1-4 7-6 24 0-3 (soft... Contributors xv Introduction 1 Cassey Lee and Sineenat Sermcheep The Rise of Outward Foreign Direct Investment from ASEAN Sineenat Sermcheep ASEAN’s Outward Foreign Direct Investment Aekapol... Investment, Annual Foreign Direct Investment Inflows and Total Investment 206 FOREWORD Outward foreign direct investment (OFDI) from developing countries has been growing significantly since the turn