Asean remains an investment bright spot in a messy global economy

It was 2013, the night before the launch of UOB’s foreign direct investment (FDI) advisory unit in Indonesia. The rupiah had weakened due to global and domestic factors and while this was not representative of Indonesia’s vast hinterland and growing economy, there were understandably concerns.

Despite the achievements, intraregional trade and the region’s sheer diversity still present challenges. When the AEC was created in 2015 to drive economic integration, there were doubts about Asean’s consensus approach to decision-making. Was the dream of a single market, with shades of the European Union, a step too ambitious?

A decade on, the numbers have allayed concerns. Annual FDI since 2015 has increased significantly, breaking the US$200 billion mark in 2021 and growing every year.

Under the AEC, an investment-friendly environment has been created, including through the 2018 establishment of the Asean Single Window to simplify the electronic exchange of trading documents and the 2021 setting up of the Asean Investment Facilitation Framework. These, together with the long-established free trade area, have encouraged integration and growth in strategic sectors like manufacturing and professional services.