PRESS RELEASE

MORE FDI FLOWS INTO ASEAN SEEN IN 2000

Despite the downside risks brought about by the impact of the recent financial crisis that hurt most economies in the region in 1997, foreign direct investment (FDI),flows into the Association of Southeast Asian Nations (ASEAN) are expected to increase in the coming year.

Already, there is a positive trend going on right now in light of the improving global and regional economic outlook which can be credited to the close cooperation among ASEAN members in their efforts to sustain economic growth in close partnership with the rest of the world.

These observations are contained in a recent study entitled, "ASEAN Investment Report 1999," prepared by the ASEAN Secretariat. The report seeks to outline the economic perspective in the region.

"There are good reasons to believe that there are better prospects for higher amounts of FDI flows into the region in 2000, in comparison to the 1998-1999 level," the study noted.

It attributed this to the economic recovery in ASEAN and improved economic conditions in major FDI sources such as Japan, the United States and the European Union.

Net intra-ASEAN direct investment plunged to a two percent share of the total FDI in the region in 1998 as against an 18 percent share achieved a year before, the study noted.

It will be recalled that at the height of the financial turbulence, outward FDI flows world-wide grew by 36.6 percent from US$ 475.1 billion in 1997 to US$ 648.19 billion last year.

The increase, according to the study, came largely from the USA and the European Union (EU). However, outward FDI flows from Japan and the Asian Newly Industrializing Economies (ANIEs) as well as the regional economies were affected by the 1997.

Consequently, the contributions of these countries to the global FDI flows in the last two years have been limited, the report noted.

"Out of the US$ 760 billion FDI inflows to developing countries between 1993-1998, developing countries in Asia, Latin America and the Caribbean accounted for an 87 percent share," the ASEAN report said.

Developing countries in Asia overlook Latin America as the largest recipient of FDI in the 1990s. The share of the developing countries in Asia continues to increase and even reached 54 percent of the global FDI between 1993 and 1998.

Accounting for an 80 percent share of the total FDIs are the ASEAN and China, the two dominant recipients of FDI flows to developing Asia.

These FDI flows were concentrated in six countries in the ASEAN, accounting for 98 percent of the US$ 132.5 billion in FDI flows to the region in the same period.

However, it was noted that the infusion FDI into ASEAN declined by 23 percent in 1998 from US$ 27.8 billion level recorded a year before.

But amid this backdrop, analysts support the view that ASEAN is a resilient and competitive investment location, since the region remains an important recipient of FDI even after the financial turmoil of 1997.