India FDI to SE Asia - by www.InvestAsiaPacific.com, division of AsiaBIZ Strategy

There has been an increase in investment into South East Asia (SE Asia). According to the World Investment Report 2006, FDI inflows to SE Asia increased to US$37 billion, a 45% 

increase in 2005. This 45% growth of SE Asia was at some expense to China in terms of percentage growth with gains enjoyed by India.

In the Fourth ASEAN-India Summit held in Kuala Lumpur, 13 December 2005, the ASEAN Secretariat reported that progress was made in the areas of cooperation including Trade & 

Investment, Science & Technology, (including IT, Biotechnology, Advanced Materials, Space Sciences and their applications, etc), Tourism, Human Resource Development, 

Transport & Infrastructure, and Health and Pharmaceuticals. These are sectors which investors need to scrutinise more carefully and explore investment opportunities.

SE Asia with its high economic growth rate is attractive to investors seeking to expand markets and reduce costs. Asia offers attractive big markets as it contains more than 60% of 

the world's human population, with 3.96 billion people in 2006 and over 600,000 communities and numerous subcultures. Economies like ASEAN thus provide a big middle class 

base of consumers which no investors can ignore.

Global investors are constantly looking for fresh market opportunities. I expect India investors to behave the same way except that this time round, they will meet formidable 

competitors from within Asia and Europe sharing the same hunting grounds in Asia.

Some Asian countries still continue to stand out as hotspots for investment. The highest growth in FDI inflows in South, East and South-East Asia was recorded in a number of 

member ASEAN States such as Cambodia, Thailand and Indonesia. Large cross-border M&As accounted for the growth. Structural reforms in Indonesia has improved its economy 

and therefore helped increase investor sentiment. Also, SE Asian investment promotion agencies have improved their investment incentive packages, helping to drive down investor 

costs and increase their yield.

Government public administration by themselves alone cannot address market inefficiencies in investments. Private investors will still need to take the lead to conduct Asia market 

research, evaluate market feasibility, identify and explore investment opportunities, explore ways to legally work around market inefficiencies and check that their own companies 

have the necessary human resource capability to manage their Asian investments.