The Institute for Democracy and Economic Affairs (IDEAS) has released a new policy brief highlighting the growing need for ASEAN economies to recalibrate their investment regulations in response to rising geopolitical and economic uncertainties, while preserving the region’s competitiveness as a major destination for foreign direct investment (FDI).
Titled Future Proofing Investment Regulation Across ASEAN, the brief examines how recent global developments — including geopolitical tensions, supply chain realignments and the strategic importance of technology, data and critical infrastructure — are reshaping the way countries manage foreign investment.
IDEAS noted that strong FDI inflows have historically underpinned growth in many of ASEAN’s better-performing economies by supporting industrialisation, technology transfer and export-led expansion. However, the global investment landscape has shifted markedly since 2019, prompting governments worldwide to view FDI not only as a growth catalyst but also as a potential source of national security, technological and climate-related risks.
Despite these challenges, ASEAN has remained resilient. FDI inflows into the region rose 8.5% in 2024 to reach US$226 billion, underscoring the bloc’s continued appeal to global investors. IDEAS cautioned, however, that sustaining investor confidence will depend on clear investment rules, transparent procedures and strong governance capacity across member states.
“ASEAN is at a crossroads. The region must continue attracting investments while safeguarding national interest, technology and climate objectives — a balance that will define its competitiveness for decades,” said Mohammad Jamil Hilmi A Ghani, the brief’s lead author and a PhD candidate at the S. Rajaratnam School of International Studies, Nanyang Technological University in Singapore.
The brief observed that while advanced economies have expanded foreign investment screening mechanisms to protect strategic assets, ASEAN countries are now grappling with how to manage risks linked to foreign ownership, exposure in critical sectors and strategic dependency, without undermining capital inflows.
Rather than retreating from openness, IDEAS found that several ASEAN governments are refining their investment regimes to strengthen safeguards while keeping markets broadly accessible. Countries such as Singapore, Vietnam, the Philippines and Indonesia were cited as examples of this evolving approach.
Singapore has introduced the Significant Investments Review Act in 2024, establishing the region’s most comprehensive investment screening framework, centralising oversight while maintaining a pro-investment stance. Vietnam, meanwhile, has pursued selective market liberalisation and reduced investment barriers through a negative list system, even as it introduced tighter regulatory policies to mitigate risks.
In the Philippines, reforms have liberalised foreign investment in selected industries, supported by new policies and the establishment of the Inter-Agency Investment Promotion Coordination Committee to improve investment promotion and coordination. Indonesia has overhauled its investment framework by replacing its negative list with a positive list to lower entry and operating barriers, while also introducing export restrictions to encourage downstream investment.
IDEAS stressed that these experiences demonstrate that stronger regulation does not necessarily come at the expense of openness. “Experiences within ASEAN show that future-proofing investment comes from raising regulatory clarity, not security overreach,” said IDEAS Director of Research Dr Stewart Nixon. “Economic and strategic resilience comes from maintaining the competitive discipline of openness and being a predictable partner to global investors.”
The brief concludes that ASEAN’s long-term competitiveness will hinge on its ability to strike a careful balance between safeguarding strategic interests and remaining an attractive, reliable destination for global capital.
