Vietnam, Myanmar and Laos emerge as FDI magnets

VIENTIANE -- Foreign direct investment into Southeast Asia's less developed countries surged in the runup to the creation of the ASEAN Economic Community at the end of last year, a new report shows. Cambodia, Laos, Myanmar and Vietnam reaped a 38% increase, as multinationals clearly saw opportunities in the envisioned single AEC market.

The overall picture was less rosy, however. According to the ASEAN Investment Report 2016, overall FDI flows to the Association of Southeast Asian Nations bloc declined by 8% in 2015, to $120 billion. Investment from the EU fell 20% to $20 billion, while the figure from the U.S. dropped 17% to $12.2 billion.

The report was announced on Tuesday by the ASEAN Secretariat and the United Nations Conference on Trade and Development at the ASEAN Business and Investment Summit (ABIS) 2016.

On the brighter side, FDI from Japan increased 11% to $17.4 billion. China's number rose 17% to $8.2 billion, and India's swelled 107% to $1.3 billion.

The strongest growth was seen in the so-called CLMV countries, with the 38% jump bringing their figure to $17.4 billion, from $12.6 billion in 2014. Their share of FDI in the region increased to 14%, from 10%.

Vietnam led the CLMV bloc, taking in $11.8 billion worth of investment, a 28% increase. Myanmar followed with $2.8 billion, representing a whopping 211% increase. Laos saw $1.2 billion, thanks to 71% growth. FDI in Cambodia remained flat at $1.7 billion.

The report noted a rapid rise in investment in Vietnam by South Korean companies over the past several years, led by electronics groups Samsung and LG. "To further reduce the costs of parts or inputs used in its mobile phones, Samsung encouraged its Korean subsidiaries and subcontractors to invest in Vietnam, operating close to its assembly plants," the report said. Samsung is also procuring from non-South Korean enterprises, such as Japanese, German and British suppliers as well as local Vietnamese companies.

"At least 97 firms in Vietnam are supplying parts and accessories to the company," the report said.