Unlocking investments for ASEAN’s green growth

Foreign direct investment has contributed positively to ASEAN’s growth story- it has created jobs, contributed to skills upgradation, and raised living standards. However, amidst current global uncertainty, Southeast Asian economies face a difficult challenge in attracting sustainable foreign investment.

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The panelists, from the government, multilateral, and private sectors, discussed the findings of a recent paper by the Organisation for Economic Co-operation (OECD), co-sponsored by the Hinrich Foundation, which looked at what governments and businesses in Southeast Asian economies can do to attract sustainable investment.

• Kathryn Dioth, Chief Executive Officer, Hinrich Foundation, in her opening remarks, underlined that FDI was the most significant ingredient to nurture exceptional trade capabilities. Recognizing the inseparable connection between FDI and trade, she emphasized its pivotal role in job creation, elevating living standards, and driving economic development, particularly in the aftermath of the pandemic. She further expressed the Hinrich Foundation’s dedication to identifying pathways for ASEAN to effectively harness FDI in pursuit of sustainable growth.
• Iris Mantovani, Economist, OECD, presented her paper addressing key findings and providing analysis and policy direction on promoting sustainable investment in ASEAN for green growth and decarbonization. Amidst the rapid growth observed among ASEAN member states, an inevitable repercussion had emerged in the form of heightened pollution levels and environmental degradation. In light of this pressing concern, Iris discussed the prevailing challenges encountered by the ASEAN community and explored channels for attracting additional FDI to promote green growth and fulfill climate objectives. Iris stressed that ASEAN member states should establish a unified target setting in terms of commitments and implementation and most importantly, avoid costly investment in high-emission technologies.
• Chris Humphrey, Executive Director, EU-ASEAN Business Council, emphasized that ASEAN stood in a bright spot on our planet where its phenomenal rate of growth had shown great potential in drawing further FDI into the sustainable economy. However, sustainability encompasses beyond the realm of green industries; it extends to encompass responsible business conduct as well. In his perspective, Europe emerges as a wellspring of valuable experiences and insights from which ASEAN can draw guidance and support to fortify its own systems.
• Rino Donosepoetro, Vice Chairman, ASEAN & President Commissioner, Indonesia, Standard Chartered Bank, highlighted three key takeaways gleaned from the published paper. He said that the paper served as a reminder of the heightened awareness among ASEAN countries on aligning FDI with Sustainable Development Goals (SDG) and sustainability objectives at large. It offers a very insightful mapping of differences among ASEAN economies and urges the governments of ASEAN countries to align their collaboration with international standards and become responsible for business conduct. Lastly, the paper highlights the importance of external assistance and collaboration for smoother financing and greater capacities.
• Tan Tai Hiong, Head of Services & Investment Division, ASEAN Secretariat, affirmed that ASEAN was strongly committed to the SDGs and organized policy dialogues regarding emerging investment issues. However, the unfortunate outbreak of the pandemic impeded the progress of these initiatives as ASEAN grappled with the challenging tasks of navigating its exit from the crisis.

This session, moderated by Chuin Wei Yap, Program Director, International Trade Research, Hinrich Foundation, concluded with a fruitful Q&A with the panelists. The panel drew discussions on the challenges facing ASEAN in drawing FDI, the extent of Chinese investment coming in as a part of US-China decoupling megatrends, and the possible convergence of carbon pricing in ASEAN.

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