Asia-Pacific Foreign Investment Brief
The FDI, Trade, and Economic Development Community

Plans by China’s Gotion to build a $2.4 billion EV battery plant in Michigan have ignited significant local and political opposition. Despite the promise of 2,350 new jobs, many local politicians and residents have protested the project. by FDI Intelligence Concerns center on the company’s ties to China’s Communist Party (CCP) and the use of taxpayer-funded incentives for foreign firms. This opposition highlights the growing scrutiny over Chinese foreign direct investment in the US, with national security and geopolitical concerns potentially reshaping future investment policies. Kei Komuro, an associate in the global trade and national security practice at law firm Lowenstein Sandler, explains that Chinese investment in the US has stoked “significant apprehension” about business ties to the CCP. This centers on possible risks related to technology transfers “that could undermine US national security.” Komuro notes, “The pushback against FDI, particularly from China, has intensified compared to previous years.” A recent survey supports this assertion, showing that 41% of voters hold negative views of FDI in their state, with national security concerns being a key issue. Jonathan Samford, executive vice-president of the Global Business Alliance, adds, “Our nation’s complicated relationship with China is of bipartisan interest in Washington and shows no sign of diminishing after this year’s election.” This sentiment is reflected in legislative efforts like the No Official Giveaways Of Taxpayers’ Income to Oppressive Nations Act, which aims to prohibit CCP-affiliated companies from receiving green energy tax credits. Such measures underscore the tension between the economic benefits of job creation and the perceived threats to national security. Despite the high-profile backlash, there remains “tremendous excitement” around FDI in the US, according to Hrishikesh Hari, a partner at Dechert LLP. He states, “There’s tremendous excitement around FDI in the US, and its future looks promising.” However, he acknowledges that this enthusiasm is not uniform across all investors, particularly those from China. The future of FDI in the US, especially from China, is likely to be marked by increased regulatory scrutiny and evolving geopolitical dynamics, potentially impacting APAC investors’ appetite for investing in the US. VIEW ARTICLE

Newly released data from the Global Emerging Markets Risk Database (GEMs) Consortium, which includes 26 multilateral development banks and development finance institutions, challenges the long-held belief that investing in emerging markets is excessively risky. The data, covering 15,000 loans over 30 years,reveals that the risk of default in emerging markets, including the Asia-Pacific region, is comparable to that of non-investment grade companies in advanced economies. The GEMs data, spanning from 1994 to 2023, includes loans to private companies across various sectors such as transportation, energy, manufacturing, and financial services. In the Asia-Pacific region, this comprehensive dataset provides valuable insights into default and recovery rates, showing that the average default rate of 3.6% is similar to that of high-yield corporate borrowers in developed markets. This finding suggests that the perceived risk of lending in emerging markets may be overstated. One key takeaway from the GEM statistics is the diversification benefit of including emerging market assets in investment portfolios. The data shows that default rates in emerging markets do not always correlate with those in advanced economies, particularly during economic downturns. For instance, during the 2008 global financial crisis, defaults in the Asia-Pacific region were less severe compared to those in advanced economies, highlighting the potential for risk mitigation through diversified investments. The GEMs data also reveals higher-than-expected recovery rates for defaulted loans, with an average recovery rate of 72%. This is particularly relevant for investors in the Asia-Pacific region, where local expertise and strong relationships with borrowers, facilitated by MDBs and DFIs, contribute to better recovery outcomes. These findings encourage a reassessment of the risks associated with investing in emerging markets, suggesting that such investments can be more secure and profitable than previously thought. VIEW ARTICLE

South-East Asia is becoming a global hotspot for data centres as AI usage rises, with Malaysia and Singapore leading the market. Major tech firms are investing heavily in the region to meet the growing demand for infrastructure and computing power driven by AI advancements. These investments are expected to boost local economies by creating skilled jobs in data centre construction, engineering, and maintenance, while also fostering talent in AI, cybersecurity, and data management. The influx of data centres will enhance the region’s digital infrastructure, allowing businesses to store data locally, reducing downtime, and increasing data sovereignty. Analysts predict that data centre demand will grow by around 20% annually over the next five to seven years due to the increased processing capacity required for AI-supported innovations like ChatGPT. Singapore, despite a temporary halt on data centre construction to assess environmental impacts, remains a preferred destination due to its superior infrastructure and stable regulatory regime. However, Malaysia has capitalized on this pause, attracting significant investments from tech giants like Microsoft and Amazon Web Services, which are set to boost the country’s data centre capacity significantly. By 2028, Malaysia is expected to account for over half of the data centre processing power in the top five South-East Asian markets, potentially rivaling Singapore as a regional hub. The competition between Singapore and Malaysia highlights the strategic importance of data centres in supporting advanced technologies and economic growth in the region. Among the notable investments, Microsoft announced in May that it will invest US$2.2 billion over the next four years to build cloud and AI infrastructure in Malaysia. Similarly, Amazon Web Services (AWS) revealed plans in August to invest an estimated US$6.2 billion to establish a data centre and cloud region in Malaysia. AWS is also developing a similar region in Thailand, with a planned investment of US$5 billion, making it the fourth AWS region in ASEAN after Singapore, Indonesia, and Malaysia. In September, Google committed US$1 billion to build a data centre and cloud region in Thailand, which has seen around US$9 billion in investments from operators, according to Morgan Stanley analysts. These substantial investments underscore the region’s growing importance as a data centre hub, driven by its lower costs, power availability, and geopolitical neutrality VIEW ARTICLE

🌏 APAC Leaders in the B-READY Report: Setting the Benchmark for Business Excellence The World Bank Group’s new flagship report, Business Ready (B-READY), is transforming how we evaluate the global business and investment climate. Replacing the Doing Business project, B-READY offers a comprehensive data set that not only advances the interests of individual firms but also elevates the interests of workers, consumers, new enterprises, and the environment. In the Asia-Pacific (APAC) region, several countries have emerged as top performers in the 2024 B-READY report, showcasing their robust business environments and investment climates. 1. Singapore : Known for its exceptional regulatory framework and efficient public services, Singapore continues to be a global leader in business readiness. The city-state’s strategic location, pro-business policies, and advanced infrastructure make it a prime destination for investors. 2. South Korea : High scores in digital adoption and operational efficiency highlight South Korea’s commitment to innovation and technology. The country’s strong emphasis on research and development, coupled with a skilled workforce, positions it as a key player in the global market. 3. New Zealand : While not traditionally grouped with APAC, New Zealand’s proximity and economic ties to the region warrant its inclusion. The country excels in regulatory frameworks and public services, providing a stable and transparent environment for businesses to thrive. 4. Australia : With a focus on environmental sustainability and operational efficiency, Australia is making significant strides in creating a business-friendly climate. The country’s diverse economy and strong legal framework support both local and international enterprises. 5. Japan : Japan’s advanced technological infrastructure and efficient public services contribute to its high ranking in the B-READY report. The country’s commitment to innovation and quality standards makes it an attractive destination for global investors. The 2024 B-READY report introduces an innovative analytical framework, benchmarking economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. It focuses on 10 essential topics for private sector development, corresponding to various stages of a firm’s life cycle. Additionally, it provides insights into three cross-cutting themes crucial for modern economies: digital adoption, environmental sustainability, and gender equality. B-READY’s robust data collection process includes expert questionnaires and firm-level surveys, covering 50 economies in its inaugural edition. This report is the first in a series that will expand its geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research. VIEW REPORT

The Global Innovation Index (GII) 2024, published by the World Intellectual Property Organization (WIPO), ranks 133 economies based on their innovation capabilities and performance. This year’s report highlights significant shifts in global innovation leadership, with several Asia-Pacific (APAC) countries emerging as key players. Singapore continues to lead the APAC region, ranking 4th globally. Its strong performance is driven by a robust regulatory framework, efficient public services, and a strategic focus on high-tech manufacturing and digital adoption. These factors not only enhance Singapore’s innovation landscape but also make it a magnet for foreign direct investment (FDI). The correlation between innovation and FDI is evident as investors seek stable, forward-thinking environments to place their capital. South Korea , ranked 6th, excels in digital innovation and operational efficiency, underpinned by substantial investments in research and development. This commitment to innovation attracts significant FDI, as global investors are drawn to South Korea’s cutting-edge technology and robust infrastructure. China and Japan also feature prominently, with China at 11th and Japan at 13th, showcasing their strengths in knowledge and technology outputs and creative industries. China’s rapid advancements in technology and its large market size continue to attract substantial FDI. Similarly, Japan’s focus on high-quality standards and technological innovation makes it an attractive destination for international investors. The GII measures each economy based on seven innovation pillars, including Knowledge & Tech Outputs, Human Capital & Research, Business Sophistication, Market Sophistication, Creative Outputs, Infrastructure, and Institutions. These pillars encompass 78 indicators, providing a comprehensive overview of each country’s innovation landscape. A key theme of this year’s GII is the rise of innovation overperformers—countries that exceed expectations relative to their development levels. Notably, Vietnam has made significant strides, reflecting its growing role as an innovation hub in the region. Vietnam’s improvements in innovation are closely linked to its increasing FDI inflows, as investors recognize the country’s potential for growth and development. The 2024 GII report underscores the dynamic nature of global innovation, with APAC countries increasingly positioning themselves as leaders in this space. As these nations continue to invest in technology, education, and infrastructure, their influence on the global innovation landscape is set to grow. The strong correlation between innovation and FDI highlights the importance of fostering an innovative environment to attract and retain global investments. VIEW ARTICLE

Despite global economic uncertainties, ASEAN has experienced a significant surge in FDI inflows over the past decade, averaging $220 billion annually between 2021 and 2023. The region's share of global FDI has risen to 17% by 2023, driven by deeper regional integration, an improved investment climate, and positive sentiment among investors and business associations. The report highlights emerging investment trends, including increased financial flows into renewable energy and manufacturing, as well as significant investment growth from major economies like China, the United States, and the European Union. It underscores the role of the ASEAN Economic Community Blueprint 2025 in enhancing the investment policy environment. Looking ahead, the report remains optimistic about ASEAN’s investment prospects beyond 2025. It emphasizes the need to further strengthen ASEAN’s investment facilitation framework, leverage intraregional investments, and attract greater investment in sustainable development sectors. Key recommendations include deeper regional cooperation, investment in skills development, and advancing public-private partnerships. The latest ASEAN Investment Report 2024, was unveiled on 9 October at the bloc’s Business and Investment Summit in Vientiane, Lao PDR, presents a comprehensive analysis of foreign direct investment trends in the region. Themed “ASEAN Economic Community 2025 and Foreign Direct Investment,” the report is a product of a technical assistance programme supported by the UN Trade and Development (UNCTAD). VIEW REPOR T

The ASEAN Investment Forum 2024 in Vientiane, Laos, brought together governments, global business leaders, and investors to unveil the ASEAN Investment Promotion Action Plan 2025-2030. This collaborative initiative aims to position ASEAN as a unified, thriving investment destination, leveraging regional ecosystems to capture the growing investor interest. What a fantastic week! We were delighted to collaborate with United Nations ESCAP to organize and deliver the second edition of the ASEAN Investment Forum, held in Vientiane, Laos on the 7th of October. During the Forum the ASEAN Secretariat and the United Nations ESCAP unveiled the ASEAN Investment Promotion Action Plan 2025-2030, which was officially endorsed by ASEAN Economic Ministers. This Action Plan marks a significant shift in promoting investment, presenting ASEAN as a unified investment destination across key sector value chains. This approach leverages growing investor interest in regional ecosystems rather than focusing on individual national markets.   KW Group APAC Advisory was proud to support the organization of AIF, program development, and delivery of this successful event. As part of the program, we supported site visits to key investment locations and special economic zones around Vientiane, providing investors and international governments with a direct understanding of opportunities available in Laos. The tours visited Thatluang Lake Special Economic Zone, Vientiane Logistics Park, and Saysettha Development Zone With over 300 participants attending this year's forum, the program featured remarks from key officials, including the Deputy Prime Minister of Lao PDR, the Executive Secretary of the United Nations ESCAP and senior officials from ASEAN member states. The speakers and audience included regional governments, global business leaders, CEOs, investors, and industry experts who shared insights and expertise around the challenges and opportunities of sustainable FDI in ASEAN. The event also provided ASEAN officials with a platform to engage with potential investors. I also had the pleasure of collaborating with  Gavin Winbanks  of  White Hawk Green  to lead a workshop on 'Investor-Ready Projects' for ASEAN and Mesoamerican IPAs, a critical session aimed at developing new strategic approaches to FDI and unlocking vital capital for the regions through proactively developing investor value propositions around key strategic projects. United Nations ESCAP organized the ASEAN Investment Forum in partnership with the Ministry of Planning and Investment of Lao PDR, the ASEAN Secretariat, and the ASEAN Business Advisory Council. Special thanks to all of our sponsors and partners who made this edition such a huge success.   CONCLUSION As someone deeply invested in ASEAN's growth and development, both professionally and personally, this year's ASEAN Investment Forum was a meaningful experience. The progress made since the first edition in Jakarta last year, particularly in fostering regional collaboration, truly highlights the commitment to driving investment into ASEAN. Looking ahead to the next edition in Kuala Lumpur in 2025, I feel optimistic about the momentum we’ve built together. This project was especially rewarding for Michelle and myself and the KW Group team, and we’re grateful to the UN ESCAP Trade, Investment & Innovation team for their trust and partnership. Ultimately, it’s the people and their shared vision that make initiatives like this truly special. 👍 Andrew Keable, Managing Partner, KW Group APAC FDI Advisory Economic Development Consultant, Trade, Investment & Innovation Division, United Nations ESCAP

Key strategies for governments in attracting institutional and corporate investors to strategic FDI projects, featuring case studies and FDI 2.0 insights at ASEAN Investment Forum, Laos Dear Friends and Colleagues,  We are excited to announce that as part of the ASEAN Investment Forum on October 7th in Vientiane, Laos , we will host the Investor-Ready Projects Capacity Building Workshop  in collaboration with Gavin Winbanks , Founder of White Hawk Green , on October 8th .   Workshop Overview: This exclusive session, designed for invited Investment Promotion Agencies (IPAs)  from ASEAN and Mesoamerica, will focus on the key factors that make major strategic projects appealing to institutional and corporate investors. Through case studies  and interactive discussions , participants will learn how governments can prioritize and evaluate projects more effectively to attract institutional and corporate investors.   The workshop will introduce FDI 2.0 , a proactive approach to investment promotion that positions strategic major projects to attract institutional and corporate investment. As global competition for capital intensifies, IPAS must align with investor expectations around regulatory stability , sustainability , and leadership .   This is a by-invitation-only workshop. If you're interested in learning how your organization can develop investor-ready projects, and position major projects for institutional and corporate investors , please email andrewk@kwconfex.com  to schedule a call.   Details: https://www.unescap.org/events/2024/asean-investment-forum-2024-0 Best Regards, Andrew Keable , Managing Partner, KW Group FDI Consultant, Trade, Investment & Innovation Division, United Nations ESCAP

As global economies adopt the China+1 strategy to diversify supply chains, China is expanding its manufacturing base into Southeast Asia, driving new investment opportunities. China’s economic growth, while remarkable, is prompting global supply chain diversification via the "China+1" strategy. Countries like India, Vietnam, and Malaysia have seen increased investment from both foreign firms and Chinese companies, which are shifting operations to these regions. Despite these shifts, China remains a key player, especially as a supplier of intermediate goods. However, concerns about China undergoing "Japanification" linger, with similarities in economic slowdowns, real estate bubbles, and a trade conflict with the US. To avoid Japan’s mistakes, China has been using monetary policy rather than excessive fiscal measures to stimulate its economy. Chinese companies are driving cross-border investments into Southeast Asia, especially in sectors like solar energy, electric vehicles, and electronics. As China becomes a significant overseas investor, its global economic presence is transforming, while still grappling with domestic economic challenges. VIEW ARTICLE

The City of London Corporation has urged the UK government to set a national strategy to encourage more sovereign-owned funds to establish offices in the country, claiming it could attract a further £7.7bn-worth of FDI across the UK by 2030, by FDI Intelligence In a report released on September 19, the Square Mile’s governing body cites fresh data showing that sovereign wealth funds (SWFs) and public pension funds that have opened offices in the UK over the past decade have gone on to double their investment in the country over the following five years.  To fully capitalise on this, the report recommends the establishment of a nationwide financial and professional services strategy, echoing calls by former investment minister Lord Johnson to encourage more foreign pension funds and SWFs to set up shop in the UK.  “The UK’s financial and professional services are the engine in the country’s economy. It is therefore essential that the UK positions itself as the premier destination for overseas investors,” said Chris Hayward, policy chairman of the City of London Corporation, in a statement.  The report points to examples including the Canadian pension fund British Columbia Investment Management Corporation, which increased its UK investments by £4.7bn after opening an office in 2016. Singapore SWF Temasek also increased its UK investments by £2.2bn after opening in the UK in 2014. VIEW ARTICLE

Amid global mixed feelings about AI, APAC countries emerge as champions of optimism, with many citizens excited about AI's potential to enhance their lives and workplaces. According to recent data, nations like Thailand exhibit the highest levels of enthusiasm, with individuals believing that AI will not only improve their jobs but also contribute to overall progress. This positive outlook is critical as it positions APAC as a leader in AI adoption and innovation. The regional excitement contrasts sharply with countries like Australia and Sweden, where anxiety and skepticism prevail. In Australia, concerns over AI's benefits and trust issues regarding bias and privacy create a climate of apprehension. Conversely, APAC's proactive stance on AI reflects a deep-seated belief in technology's ability to drive economic growth and improve quality of life. Key to this optimistic attitude is the perceived knowledge about AI among citizens. In countries where individuals feel more informed, excitement levels rise significantly. By investing in education and promoting awareness around AI technologies, APAC nations can foster an environment that not only embraces innovation but also ensures a competitive edge in the global market. VIEW ARTICLE

Fantastic news as The Philippines and the Asian Development Bank (ADB) have launched a $12.4 billion Country Partnership Strategy, aiming to enhance human development and economic growth. Focused on infrastructure, education, and climate resilience, this six-year plan seeks to attract foreign direct investment and drive sustainable progress. Discover how this strategic initiative positions the Philippines for a prosperous future. The Philippine government, in collaboration with the Asian Development Bank (ADB), has unveiled a significant $12.4 billion Country Partnership Strategy (CPS) aimed at advancing the country’s development goals over the next six years. President Ferdinand R. Marcos Jr. emphasized that this funding commitment underscores the ADB's confidence in the Philippines’ growth potential, which the government plans to leverage through targeted investments. The CPS focuses on key priorities, including strengthening human development, enhancing economic competitiveness, and improving infrastructure. Notable projects include the Bataan-Cavite Interlink Bridge and the North-South Commuter Railway, which are expected to boost regional integration and stimulate economic growth in the Greater Manila Bay area. Additionally, the strategy aims to enhance access to education and healthcare for marginalized communities, ensuring that vulnerable populations are protected from economic shocks. Marcos Jr. highlighted that the CPS is designed to translate ambitious goals into real improvements in the daily lives of Filipinos, emphasizing renewable energy, climate solutions, and private sector innovation. Approved by the ADB Board on September 4, 2024, this strategic blueprint reflects the commitment of both the Philippine government and ADB to foster sustainable, inclusive growth and to build a resilient future for the country. VIEW ARTICLE