But Asian outgoing FDI is assuming greater importance, accounting for 10% of the stock of FDI in the world. Some Asian firms have grown to rank among the top transnational corporations in the world.

Asian small and medium-sized enterprises (SMEs) have also become an important source of this new outward FDI, as more of them need to invest abroad to maintain and improve their competitiveness. However, most FDI promotion measures tend to target large transnational corporations, thus missing out on the various strengths and advantages that SMEs may be able to offer host countries.


Outflowing Asian FDI may have been limited to date partly because of lack of knowledge among Asian investors about opportunities, but bureaucratic impediments have also played a part. UNCTAD suggests that policy reforms for attracting FDI from Asia should be considered. These may include expediting visa-granting procedures, provision of serviced land and/or factory shells, strengthening investment promotion activities abroad, introducing wage policy reforms and seeking solutions to problems associated with being landlocked.

Possible regional initiatives to promote FDI could include reducing non-tariff barriers, improving regional infrastructure and avoidance of a regional race. In addition, I suggest that investment promotion agency (IPA) staff be trained to think ‘long term’.

With many Asian firms just venturing abroad to invest, the Asia outflowing FDI curve can only grow upward. Savvy IPA staff would benefit much by reforming their FDI policies and using more Asian private sector expertise to attract the increasing flood of new Asian FDI.

Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asia market research and investment/trade promotion services.

E-mail: Lawrence@asiabizstrategy.com