FDI in ASEAN

Group-4

Presented by:
Amruth Pavan Davuluri
Chandan Kumar Jha
Deepti Tripathi
Kumar Aniket
Neha Kasana

FDI
Foreign Direct Investment (FDI) is an investment in a business
by an investor from another country for which the foreign
investor has control over the company purchased.
The Organization of Economic Cooperation and Development
(OECD) defines control as owning 10% or more of the
business.
One of the primary advantage of FDI is that it allows money
to go freely to whatever business has the best prospects for
growth anywhere in the world.

ASEAN
The Association of Southeast Asian Nations(ASEAN)
was formed on August 8, 1967 by five member
countries: Singapore, Indonesia, Malaysia, Thailand
and Philippines.
Today, the membership has grown to ten with the
joining of Brunei, Cambodia, Laos, Burma and Vietnam.
The force behind ASEAN was politics at its inception i.e.
prevention of external interference in the internal
affairs of member countries.
With a population of over 500 million and combined
GDP of more than $1 trillion, what happens in ASEAN
countries is not only important to Asia and Europe but
to the entire globe community.

FDI in ASEAN

The ASEAN countries were among the first to pursue a strategy of

export-led development based partly on foreign direct investment
(FDI). They welcomed firms from Japan and the newly industrializing
economies like Chinese Taipei, as these firms faced currency
appreciation and rising wages at home. They also attracted
investment from rest of the OECD, particularly US and Europe
Each member country of ASEAN appears to specialize in attracting FDI in
specific sectors, depending on each countrys comparative advantage and
natural endowments relative to regional neighbors.
Vietnam mainly attracts investments in export-oriented manufacturing
industries, and also in the real estate and service sectors.
Cambodia focuses on garment manufacturing, financial services and
agriculture.
Investments in the Laos tend to target the service sector, and in
Myanmar the natural resources sector dominates FDI inflows.
Indonesia and Thailand continued to attract high levels of investments
particularly in the automotive and metals industries.

Over the years,FDI in ASEAN has surpassed the FDI in China.

Trade Agreements in
ASEAN
ASEAN is the third largest trade bloc in the world after European
Union and NAFTA.

ASEAN has largely cancelled all import and export duty taxes on
items traded between its member countries.
ASEANs free trade agreement with China allows MNCs and regional
companies to place the manufacturing capacity at cheaper
locations.
ASEAN also has a series of Comprehensive Economic Partnerships
with Japan and FTA with South Korea.
ASEAN also has a combined FTA with New Zealand and Australia.
This is known as AANZFTA. It has eliminated tariffs on 67 percent of
all traded products between the regions and will expand to 96
percent by 2020.

FDI statistics

Observations on FDI statistics

Received $128.4 billion in foreign investment in 2013 which
was a 7 percent increase from $120 billion in 2012.
In Malaysia, FDI strengthened by 19 percent, 17 percent in
Indonesia and 5 percent in Singapore
It fell 12 percent in Thailand as the country grappled with
political instability. There was a phenomenal 118 percent
increase in FDI in Philippines in the first three quarters. But it
took a hit from Typhoon Haiyan towards the end of the year,
though Philippines still managed to book a robust 24 percent
rise in FDI for the full 2013
.

Singapore has been the greatest recipient of FDI in ASEAN. It is followed at

a wide margin by the remaining ASEAN-5 members and Vietnam

Indias Trade with ASEAN Countries

ASEAN has emerged as

one of Indias largest
trading partners. A
majority of India-ASEAN
trade is with Singapore,
Indonesia, Malaysia,
Thailand and Vietnam.

Indian Investors
want to enter
ASEAN for:
IT
Automobiles
Engineering
Pharmaceuticals

ASEAN Investors
want to enter India
for:
Construction
services
Transportation
services
Engineering
services
Shipping

Indias Exports to ASEAN

S. No.

1
2

5
6

10

Name of
Country

April-2010-March-2011
April-2011-March-2012
Value in INR Value in US$ Value in INR Value in US$
Lacs
Million
Lacs
Million
India Export 10,525.05
23.07
406,235.77 895.49
to BRUNEI
India Export 30,483.23
66.94
47,753.35
99.45
to
CAMBODIA
India Export 2,592,440.7 5,700.78
3,210,069.6 6,677.99
to
9
1
INDONESIA
India Export 5,943.51
13.11
7,320.34
14.97
to LAO PD
RP
India Export 1,767,721.0 3,871.17
1,910,321.0 3,980.36
to MALAYSIA 5
0
India Export 145,903.12 320.62
264,450.60 545.38
to
MYANMAR
India Export 400,462.19 881.10
476,321.82 992.91
to
PHILIPPINES
India Export 4,473,173.3 9,825.44
8,036,299.9 16,857.71
to
1
8
SINGAPORE
India Export 1,034,625.6 2,274.21
1,425,353.4 2,961.01
to
6
9
THAILAND
India Export 1,204,507.3 2,651.44
1,808,498.3 3,719.09
to VIETNAM 6
0
SOC REP
Total
11,665,785 25,627.88 17,592,624 36,744.36
.27
.27

April-2012-March-2013 %Growth in %Growth in

INR
US$
Value in INR Value in US$
Lacs
Million
21,830.06
40.02
-94.63
-95.53
60,998.60

112.28

27.74

12.90

2,899,608.7 5,331.30
0

-9.67

-20.17

15,712.71

114.64

93.12

2,414,350.8 4,444.07
5
296,070.66 544.66

26.38

11.65

11.96

-0.13

646,549.08 1,187.19

35.74

19.57

7,399,496.6 13,619.24
3

-7.92

-19.21

2,031,024.1 3,733.17
6

42.49

26.08

2,156,284.2 3,967.37
5

19.23

6.68

17,941,925 33,008.21
.71

1.99

-10.17

28.91

Observations on Indias exports to

ASEAN
Major chunk of exports goes to Singapore and
Indonesia.
Over the past 10 years, the share of Indian
exports to ASEAN has doubled, reaching 11% at
end-2013.
Exports were USD 32bn at end-2013. This marks
Indian
exports indexed
to 100
in 2001
in USD
billion
a CAGR
of 24%
p.a.,
comparedExports
with 22%
p.a.
over
1200
40
the
past
10
years.
35
1000
800
600
400
200
0

Indian exports
indexed to 100 in
2001

30
25
20
15
10
5
0

Exports in USD
billion

Indias Imports from ASEAN

S. No.

1
2

10

Name of
Country

April-2010-March-2011
Value in INR Value in US$
Lacs
Million
India Import 106,485.70 234.17
from BRUNEI
India Import 3,637.69
8.01
from
CAMBODIA
India Import 4,513,629.3 9,918.63
from
0
INDONESIA
India Import 100.53
0.22
from LAO PD
RP
India Import 2,974,590.4 6,523.58
from
4
MALAYSIA
India Import 465,115.40 1,017.67
from
MYANMAR
India Import 195,046.60 429.39
from
PHILIPPINES
India Import 3,254,576.7 7,139.31
from
5
SINGAPORE
India Import 1,945,991.1 4,272.09
from
4
THAILAND
India Import 484,759.06 1,064.90
from
VIETNAM
SOC REP
Total
13,943,932 30,607.96
.60

April-2011-March-2012
Value in INR Value in US$
Lacs
Million
285,369.97 605.02

April-2012-March-2013
%Growth in %Growth in
US$
Value in INR Value in US$ INR
Lacs
Million
440,597.91 814.80
54.40
34.67

3,463.66

6,469.52

7.27

11.90

86.78

63.69

7,041,989.6 14,765.93
2

8,096,569.7 14,879.49
6

14.98

0.77

44,065.07

76,479.58

73.56

55.32

89.26

138.64

4,538,502.7 9,473.64
7

5,419,876.3 9,951.06
3

19.42

5.04

661,401.33

1,381.15

770,118.21

1,412.69

16.44

2.28

212,544.32

441.38

274,358.42

504.00

29.08

14.19

3,970,847.5 8,388.49
5

4,076,395.0 7,486.38
9

2.66

-10.75

2,532,484.4 5,283.84
1

2,911,298.1 5,352.61
0

14.96

1.30

832,325.93

1,259,442.2 2,314.78
4

51.32

34.36

23,331,605 42,866.36
.17

15.94

1.68

1,722.87

20,122,994 42,158.84
.63

Observations on Indias exports to

ASEAN
India imports maximum from Indonesia and
Vietnam, followed by Singapore.
The imports have risen significantly from 4.39
billion USD to 43.6 billion USD over the course of
ten years.
India's imports from ASEAN(in USD billion)
50
45
40
35
30
25
20
15
10
5
0

India's imports from

ASEAN(in USD billion)

India-Singapore
Indias largest trade and investment partner in the ASEAN is
Singapore.
It accounts for a third of Indias overall trade with ASEAN.
The bilateral trade has grown significantly from US$ 8.8 billion in
2005-06 to US$ 21.1 billion in 2013.
Singapore has emerged as the seventh largest trade partner of
India globally with US$ 19.3 billion of bilateral trade in 2013-14 .
Singapore acts as a key offshore logistics and financial hub of
many Indian companies. Nine Indian banks operate in SingaporeIndian overseas Bank, UCO Bank, Indian Bank, Bank of India, Axis
Bank, ICICI Bank, Bank of Baroda, Exim Bank and State Bank of
India.
India signed Comprehensive Economic Cooperation
Agreement (CECA) with Singapore, the first such agreement to
be signed by India with any country. This integrates agreements
on trade in goods and services, economic cooperation and
investment protection in fields like science & technology,

India-Indonesia
Indonesia is the second largest trading partner of India
among ASEAN countries. The bilateral trade has
increased to US$ 20.1 billion in 2012-13 from US$ 6.9
billion in 2007-08.
India is the largest buyer of crude palm oil from
Indonesia and imports minerals, coal, pulp and paper
rubber and hydrocarbons reserves.
India exports maize, refined petroleum products,
commercial vehicles, oil seeds , cotton, animal feed,
telecommunication equipment, plastics and steel
products and to Indonesia. Also, India exports
pharmaceuticals in bulk and formulations to Indonesia.

Conclusion

FDI in ASEAN has boomed surpassing the pre-crisis

levels.ASEAN-5( Indonesia, Philippines, Malaysia,
Singapore and Thailand) attracted more foreign
direct investment than China in 2013.
ASEAN accounts for 38 percent of Asias market
for initial public offerings, thus becoming a launch
pad for new companies.
The ten member states of ASEAN despite their
distinct cultures, share a common focus on jobs
and prosperity. The region is fast transforming into
the next frontier of consumer growth as the
household purchasing power is rising.
To maintain the current trajectory, it will require
enormous investment in infrastructure and
human-capital development. The implementation
of ASEAN Economic Community offers an
opportunity to create a seamless regional market
and production base. This will make ASEAN a case
where the whole actually does exceed the sum of
its part.