ASEAN attracted a record US$243.9 billion in Foreign Direct Investment (FDI) in 2025, up 9.7 per cent from US$222.3 billion in 2024, according to UNCTAD’s World Investment Report 2026. The region outperformed developing economies (+2.1 per cent) and the world (+6.0 per cent), reinforcing its position as one of the most attractive investment destinations globally. The FDI inflows to ASEAN accounted for 15.0 per cent of global FDI inflows, up from 14.5 per cent in 2024. ASEAN also increased its share of FDI flows to developing economies from 25.2 per cent in 2024 to 27.1 per cent in 2025, underscoring the region’s growing importance in the global investment landscape.

The region’s performance was supported by strong inflows across most ASEAN Member States. Singapore continued to be the largest recipient, attracting US$150.9 billion in FDI in 2025, compared with US$136.2 billion in 2024. Indonesia received US$21.4 billion, while Viet Nam maintained strong inflows at US$20.4 billion. Thailand recorded one of the fastest growth rate in the region, with FDI rising from US$14.7 billion to US$19.1 billion, while Malaysia registered an even stronger increase from US$10.2 billion to US$15.4 billion. The Philippines attracted US$9.0 billion, while inflows also increased in Cambodia (US$5.1 billion), Lao PDR (US$1.4 billion), Timor-Leste (US$253 million) and Brunei Darussalam (US$168 million). Only a few economies experienced decline, including Myanmar, where inflows moderated to US$1.1 billion.

Table 1: FDI Inflows to ASEAN 2025

Source: UNCTAD World Investment Report 2026

ASEAN Continues to Attract Strategic and Technology-Driven Investment

Although announced greenfield investment moderated by 10.1 per cent to US$105.6 billion in 2025, ASEAN continued to attract significant projects in the communications, semiconductors, electronics, renewable energy and digital infrastructure sectors. Investment remained concentrated in sectors aligned with long-term industrial transformation and the digital economy. Singapore reinforced its role as a regional headquarters and financial hub, Malaysia and Thailand secured major investments in electronics and communications, while Indonesia and Viet Nam remained key destinations for critical minerals, electric-vehicle value chains and advanced manufacturing.

Cross-border mergers and acquisitions (M&As) proved more resilient. ASEAN’s net cross-border M&A sales rose 6.6 per cent to US$13.3 billion in 2025, contrasting with a 7.3 per cent decline globally and a 41 per cent decline across developing economies. Such result suggests continuing confidence in ASEAN’s consumer markets, production networks and services sectors despite a more uncertain global environment.

Table 2: Selected Announced Greenfield FDI in ASEAN 2025

Source: UNCTAD World Investment Report 2026

ASEAN Companies Expand Their Global Footprint

ASEAN is increasingly important not only as the recipient of global investment but also as the source of investment with growing international reach of its multinational enterprises. In UNCTAD’s latest ranking of the world’s 100 largest non-financial multinational enterprises by foreign assets, Malaysia’s Petronas and Singapore-based Trafigura were included among the global top 100. Meanwhile, amongst developing economies, 18 companies originating from ASEAN, led by firms from Singapore, Malaysia and Thailand. Companies such as Petronas, Trafigura, Wilmar International, PTT, Singtel and Siam Cement Group exemplify the growing international reach of ASEAN businesses across sectors such as energy, telecommunications, manufacturing, agribusiness and services. This growing outward investment presence highlights ASEAN’s evolution from a recipient of investment into an increasingly important source of international capital.

ASEAN Integration Continues to Strengthen the Region’s Investment Appeal

ASEAN’s strong investment performance reflects decades of economic integration under the ASEAN Economic Community (AEC). Since the launch of the AEC, ASEAN Investment Report 2024 highlighted that key regional agreements—including the ASEAN Trade in Goods Agreement (ATIGA), ASEAN Comprehensive Investment Agreement (ACIA), ASEAN Framework Agreement on Services (AFAS) and ASEAN Trade in Services Agreement (ATISA)—have lowered business costs, strengthened regional production networks, improved trade and investment facilitation, and deepened services liberalisation. According to ADB’s Asian Economic Integration Report 2026, Southeast Asia remains the most integrated subregion in Asia and the Pacific, with trade as the main driver of integration, followed by FDI and the movement of businesspeople. The AEC Blueprint 2025 End-Term Review further shows that investment integration has been among the strongest-performing areas of ASEAN integration efforts.

ASEAN initiatives released in the past year have further strengthened the region’s investment architecture, in particular the signing of the Fifth Protocol to Amend ACIA (2026) to further modernise ASEAN’s investment framework, the adoption of the ASEAN Sustainable Investment Guidelines (ASIG) (2026) to promote sustainability-oriented investment, the endorsement of the ASEAN Regional Investment Promotion Action Plan (RIPAP) 2025–2030 (2025) to strengthen coordinated regional investment promotion, the adoption of the ASEAN Framework for Integrated Semiconductor Supply Chains (AFISS) (2025) to enhance supply chain resilience and investment attraction in the semiconductor industry, and the signing of the Second Protocol to Upgrade the ATIGA (2025) to support a more modern, inclusive and sustainable trading system.

At the national level, ASEAN Member States continue to maintain a generally pro-investment policy stance. According to the ASEAN Investment Report 2024, ASEAN Member States adopted 149 investment policy measures during the AEC 2025 period, of which more than 90 per cent were favourable to investors, significantly higher than the global average of 77 per cent. Nearly 40 per cent of these measures focused on investment liberalisation and easing foreign ownership restrictions, compared with a global average of 26 per cent. Investment incentives and facilitation measures also remained prominent policy tools, reinforcing ASEAN’s attractiveness as an investment destination. Recent measures included incentives for AI, quantum computing, medical devices and aerospace activities in the Johor–Singapore Special Economic Zone (Malaysia, 2025), enhanced support for electric vehicle investments (Thailand, 2025), and incentives for downstream mineral processing and green industrial development (Indonesia, 2025).

Looking Ahead: Strengthening ASEAN’s Investment Competitiveness

The World Investment Report 2026 points to a growing concentration of investment in strategic industries such as AI infrastructure, semiconductors and critical minerals. While investment in these sectors has expanded rapidly, it is increasingly concentrated among a small number of major economies, underscoring the importance of ASEAN strengthening its competitiveness in emerging industries. Against this backdrop, ASEAN will need to continue strengthening its competitiveness and positioning for the next phase of global investment growth. Three priorities stand out.

1. Deepening ASEAN’s role in strategic industries through regional integration and cooperation

Rather than competing across all strategic industries, individual ASEAN Member States can build on their respective strengths while deepening regional value chains and enhancing ASEAN’s collective investment proposition. Regional initiatives such as the ASEAN Regional Investment Promotion Action Plan (RIPAP), the forthcoming ASEAN Digital Economy Framework Agreement (DEFA), the ASEAN Semiconductor Strategy and the ASEAN Investment Facilitation Framework (AIFF) can help attract higher-quality investments and reinforce ASEAN’s collective position in emerging industries. Continued integration, regulatory cooperation and connectivity will further strengthen ASEAN’s ability to present itself as a single and competitive investment destination.

2. Preserving openness in a more security-conscious investment environment

The World Investment Report 2026 alerted that there is growing emphasis on national security, technological capabilities and supply-chain resilience is reshaping investment policymaking globally, which may increase scrutiny of foreign investment and contribute to a more complex environment for cross-border investment flows. Within such context, ASEAN should continue to build on its strengths of openness, transparency and predictability. As governments increasingly use industrial policies, subsidies and investment screening measures to support strategic sectors and economic security objectives, coupled with growing global adoption of global minimum tax[1], competing solely through incentives is unlikely to be a sustainable strategy. Instead, ASEAN should harness its comparative advantage of open, rules-based and reliable investment environment, supported by regional integration, market scale and efficient facilitation. The effective implementation of the ASEAN Comprehensive Investment Agreement (ACIA) and related regional initiatives will therefore remain important in sustaining investor confidence and strengthening regional investment integration.

3. Mobilising investment for sustainable development

At the same time, ASEAN should ensure that efforts to attract strategic investment are complemented by measures to ensure that the capital flows support sustainable development. The ASEAN Sustainable Investment Guidelines (ASIG) provide an important foundation for promoting investment in renewable energy, climate resilience, sustainable infrastructure and other SDG-related sectors. Looking ahead, discussions on a possible ASEAN Green Economy Framework Agreement (GEFA) are expected to further strengthen regional cooperation on sustainable investment and support ASEAN’s long-term green and inclusive growth objectives.

References

Asian Development Bank (ADB). 2026. Asian Economic Integration Report 2026: Leveraging Regional Cooperation and Integration to Navigate Global Uncertainties. Manila: Asian Development Bank.

ASEAN Secretariat. 2021. ASEAN Investment Facilitation Framework (AIFF). Jakarta: ASEAN Secretariat.

ASEAN Secretariat. 2024. ASEAN Investment Report 2024: ASEAN Economic Community 2025 and Foreign Direct Investment. Jakarta: ASEAN Secretariat and United Nations Conference on Trade and Development (UNCTAD).

ASEAN Secretariat. 2024. ASEAN Sustainable Investment Guidelines (ASIG). Jakarta: ASEAN Secretariat.

ASEAN Secretariat. 2025. AEC Blueprint 2025 End-Term Review (Final Report). Jakarta: ASEAN Secretariat.

ASEAN Secretariat. 2025. ASEAN Regional Investment Promotion Action Plan (RIPAP) 2025–2030. Jakarta: ASEAN Secretariat. United Nations Conference on Trade and Development (UNCTAD). 2026. World Investment Report 2026. Geneva: United Nations.

[1] Through the Global Anti-Base Erosion (GloBE) Model Rules developed under Pillar Two of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).