ASEAN Investment Area (AIA) Council

The goal of the ASEAN Economic Community is to establish ASEAN as a single market and production base that will make ASEAN more dynamic and competitive. In this context, one of the five core elements of an ASEAN single market and production base is the free flow of investments. A free and open investment regime is key to enhancing ASEAN’s competitiveness and attracting foreign direct investment (FDI) as well as intra-ASEAN investment. Sustained inflows of investments will promote and ensure the dynamic development of ASEAN.

ASEAN cooperation in promoting investment flows was implemented through the 1998 Framework Agreement on the ASEAN Investment Area (AIA) and the ASEAN Agreement for the Promotion and Protection of Investment 1987 or commonly known as the ASEAN Investment Guarantee Agreement (IGA). In 2007, the 39th ASEAN Economic Ministers Meeting agreed to review the AIA Agreement the ASEAN IGA, with a view towards consolidating these two agreements towards creating a free and open investment regime to attract investments and to achieve ASEAN economic integration. 

In February 2009, the ASEAN Comprehensive Investment Agreement (ACIA) was signed. The Agreement is scheduled to enter into force by the end of 2009. ACIA is a comprehensive agreement covering liberalisation, protection, facilitation and promotion and includes new provisions as well as improvements to AIA/IGA provisions. 

With the conclusion of ACIA, ASEAN is confident of remaining in the forefront as a major recipient of FDI flows.  In 2008, FDI flows to the region remained resilient even in the face of adverse global circumstances. Since the Asian financial crisis, FDI inflows into ASEAN has regained its strength, tripling from its low of US$ 23 billion in 1998 to a high of US$ 69 billion in 2007.  Despite the 2008 global economic and financial crisis, FDI inflows into ASEAN remained strong at US$ 59 billion.

In particular, intra-ASEAN FDI flows have proven more robust than anticipated, expanding by an exceptional 13.4% in 2008 to US$ 10.7 billion. The increase in intra-ASEAN flows reflects well on ASEAN integration efforts and the success of trade and investment policies that promote intra-ASEAN liberalisation through strengthened rules for trade in goods, services and investment.

The European Union remains ASEAN single largest investor in 2008, with a share of 21.9% or investment amounting to US$ 12.9 billion, followed by Japan at 12.1% or US$ 7.1 billion. The United States was third with a share of 5.1% or US$ 3.0 billion in 2008. FDI flows continued to predominate in the services and manufacturing sector, accounting for 51.0% and 29.7% of total FDI flows into ASEAN or US$ 30.1 billion and US$ 17.5 billion in 2008 respectively. The mining and quarrying sector is also becoming more important, with a share of 5.0% or US$ 2.8 billion in 2008.

A number of investment publications would provide further information on the investment situation on ASEAN. These are:

1. ASEAN FDI Statistics 2008
2. ASEAN Investment Report
3. ASEAN – Your Gateway to an Economic Community
4. ASEAN Facts and Figures 2008