Investment in Southeast Asia: From IFIs to BRI
The following article is derived from an IBON International input on key investment trends in Southeast Asia, at the plenary of the Convergence Space on Trade, Investment and Corporate Power of the ASEAN Civil Society Conference/ASEAN Peoples’ Forum. It was originally delivered 10 September 2019.
Asia is among the largest destinations of foreign investment, receiving 39% (more than USD 500 billion) of the world’s investments in 2018, with 11% flowing into Southeast Asia alone at USD 149 billion. China, the United States, and Japan are among the top investor economies in developing Asia. [i]
In 2018, there is an increase in foreign investments in Singapore, Indonesia, Vietnam, and Thailand, with the latter having the steepest growth in the subregion. Meanwhile, foreign investments in Malaysia and the Philippines are declining. [ii]
What we know is that the situation for investors are said to be promising in SEA, with "improved investment environments." But who benefits? It is mainly the corporate investors who exploit the "low-cost, resource-rich countries” that are “attractive FDI destinations."
Trend 1: GVCs, investment liberalisation
Corporate-led production today is in global chains and networks, with rich states outsourcing production to many Asian countries in so-called global value chains (GVCs). Sixty-one percent of East and Southeast Asian exports are along GVCs, and these cross-border networks increase monopoly capitalist super-profits at the expense of our rights and the environment.
Governments and corporations are still pushing investment in areas with cheap labour. Dominant policy tilts our economies toward extractive industries such as mining [iii] and energy, which affect our region’s workers, indigenous peoples, farmers and rights defenders at the frontlines. Another result is how some ASEAN nations such as Timor Leste, Myanmar and Laos remain dependent on exports of agricultural products and minerals. [iv]
This rampant promotion of freedom for profit-seeking capital only worsens inequality and sells out our rights. It is part of today's world situation, with slowing global growth, the urgent climate crisis, and rising mergers of transnational corporations (TNCs). [v] Globally, the ratio of TNC profits increased 58% in relation to revenue from 1995 to 2015. [vi]
This first trend of continued investment liberalisation – the unrestrained opening up of our economies to foreign investment – is a concern for us, as it would worsen corporate plunder against our rights.This makes the RCEP negotiations that will still push investment liberalisation concerning. This is why international finance institutions’ (IFIs) blanket promotion of “better business climates” is dangerous. This is why it is also an issue that 32 national laws for investment liberalisation were crafted in 2018 in developing Asia. [vii]
Thailand enacted the Eastern Corridor Economic Act with fiscal incentives for investors and which already had negative impacts on communities. [viii] The Philippines continues to relax foreign ownership restrictions, as the government continues to attack unionised workers, farmers asserting their right to land, and indigenous peoples asserting their right to self-determination.
Trend 2: Corporate capture of development
Another trend in the region is how foreign direct investment (FDI) and private investors are sold to be important in financing