ASEAN had been a major recipient of Foreign Direct Investment (FDI) flows even during the Asian financial crisis in 1997-1999 and despite the weak global economic condition in 2000–2001. In 1999, ASEAN had an accumulated FDI stock of US$ 249.7 billion, accounting for 30 percent of total FDI stock in developing Asia. In 2001, total accumulated FDI stock in ASEAN reached US$ 282.919 billion.

Preliminary data indicated that the outbreak of the Severe Acute Respiratory Syndrome (SARS) had limited impact on FDI flows into the region. Approved foreign investments in the manufacturing sector increased by 54 percent in the first half of 2003 compared to the same period in 2002. The AIA Ministerial Council Meeting, held on 1 September 2003 in Phnom Penh, Cambodia, was upbeat on the outlook of FDI flows into the region.

Figure 1:

ASEAN reaffirms its commitment to providing investors with a competitive and attractive environment for investment and business operations. Intra-ASEAN investment cooperation efforts remain focused on deepening the implementation of the AIA Agreement signed on 7 October 1998. The agreement was aimed at providing an environment that will facilitate free flow of direct investment, technology and skilled professionals. The AIA arrangement would allow investors to harness the various complementary advantages of ASEAN Member Countries in order to maximize business and production efficiency at lower costs. The AIA arrangement would provide that opportunity for investors to adopt regional business strategies and establish network operations in the region.

The AIA agreement has now expanded to cover the following sectors: manufacturing, agriculture, mining, forestry and fishery sectors, and services incidental to these sectors. Member Countries are continuously working on improving, if not phasing out, their Exclusion Lists on the granting of national treatment to foreign investment and opening up of industries for foreign investments. On 1 January 2003, Member Countries opened up more industries and granted more investment measures to foreign investment by phasing in the list of sectors and investment measures in the Temporary Exclusion List (TEL). Significant achievements have also been made in transferring sectors and measures in the Sensitive List to the TEL. In addition to their regional commitments under the AIA, Member Countries have, on individual basis, introduced more favourable measures to improve their investment regimes. The end-dates for phasing out the Temporary Exclusion Lists are shown in the table below.