Using a panel data set containing information on FDI flows from home to host countries, thispaper examines the impact of changes in the quality of government regulatory effectiveness andgovernance practices upon the direction of outward FDI flows between five ASEAN economies ofIndonesia, Malaysia, Philippines, Singapore, and Thailand. The results show that a deterioration inthe effectiveness and enforcement of investment regulations (such as price controls and excessiveregulation in foreign trade and business development) have an adverse effect upon intraASEANFDI, and are significant factors in explaining the recent downward trend in ASEAN FDI flows.These results are robust to changes in a number of controlling variables for various economicconditions that the extant FDI literature consider. Also, these results have several significantimplications for future policy makers in recommending means to revitalize intraASEAN investment.r2006 Elsevier Ltd. All rights reserved.
Trang 1international business review
International Business Review 15 (2006) 401–414
The impact of regulatory quality on intra-foreign direct investment flows in the ASEAN markets
Hussain Gulzar Rammal , Ralf Zurbruegg The University of Adelaide, School of Commerce, 233 North Terrace, Adelaide 5005, Australia Received 7 June 2005; received in revised form 17 December 2005; accepted 3 May 2006
Abstract
Using a panel data set containing information on FDI flows from home to host countries, this paper examines the impact of changes in the quality of government regulatory effectiveness and governance practices upon the direction of outward FDI flows between five ASEAN economies of Indonesia, Malaysia, Philippines, Singapore, and Thailand The results show that a deterioration in the effectiveness and enforcement of investment regulations (such as price controls and excessive regulation in foreign trade and business development) have an adverse effect upon intra-ASEAN FDI, and are significant factors in explaining the recent downward trend in ASEAN FDI flows These results are robust to changes in a number of controlling variables for various economic conditions that the extant FDI literature consider Also, these results have several significant implications for future policy makers in recommending means to revitalize intra-ASEAN investment
r2006 Elsevier Ltd All rights reserved
Keywords: Foreign direct investment policy; Investment incentives; Intra-ASEAN FDI
1 Introduction
The Asian financial crisis in 1997 was viewed by many as an opportunity for the Asian nations to initiate and implement regulatory and institutional reforms that would increase investor confidence, resulting in increased FDI activity (Bremner, Thornton, Prasso, & Foust, 1997; Hornick, 1997; Magnusson, 1997) But recent statistics have revealed that outward FDI from ASEAN markets to other ASEAN neighbors has stagnated Several commentators have inferred that this may be due to under-developed regulatory and
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Trang 2corporate governance practices that have not been strengthened since the 1997 crisis.
environments within some of the ASEAN nations can expose them to further external shocks that may divert FDI away from these countries Given the reliance of some of these ASEAN countries on FDI, especially from China and Japan, the economic consequences can be quite dramatic Moreover, with the growth of more economic trading blocks, such
as FTAA in the Americas and EU expansion into central and Eastern Europe, the competition for FDI will inevitably increase within these ASEAN markets
Separate to the issue of diminishing FDI from non-ASEAN countries, is the drop in outward FDI from ASEAN countries to its fellow member states Despite geographic proximity, in many ASEAN countries outward FDI to member states has not returned to pre-1997 levels (ASEAN, 2004) Although this may in part be due to several economic factors, where some states have not fully recovered from the effects of the 1997 crisis, it may also be in part due to the slow pace of governance reform that has taken place since
1997 With emerging markets in other areas of the world opening up potentially more profitable opportunities, ASEAN FDI within its own borders may have been dampened by lack of reforming institutional commercial practices that would encourage intra-FDI flows
This paper considers whether governance reforms implemented via regulations influence outward FDI between five ASEAN markets of Indonesia, Malaysia, Philippines, Singapore, and Thailand Sections 2 and 3 provide an overview of the existing literature, followed by a discussion of the data used and model utilized to examine the significance of regulatory governance upon outward FDI flows This is accompanied, in Section 4, with the empirical results before a conclusion and policy implications are presented in Section 5
2 Literature review
The 1990s witnessed a change in the geographical patterns of FDI outflows Europe and North America maintained their position as the largest source of FDI flows in the world (Pangarkar & Lim, 2003) However, from 1998, Asia’s share of total FDI fell due to the declining role of Japan as a FDI supplier Inward FDI into the Asian economies was also affected, post-Asian crisis Also, within the East-Asian economies, Malaysia, Thailand, and Philippines were no longer the favored FDI destinations of MNCs (Brooks & Hill,
2004) To reverse this trend, governments of ASEAN nations started focusing on macroeconomic reforms (Soesastro, 1998) that would again promote investment and FDI
in their own countries For example, Singapore’s response to the Asian crisis involved undertaking a range of internal reforms and restructuring aimed at improving international competitiveness (Chia, 1998) Malaysia’s response was aimed at reforming its banking systems (Athukorala 1998), while Thailand and Indonesia focused on implementing political, institutional, and regulatory reforms (Chowdhury, 1999; Thomp-son & Poon, 2000) Despite these changes, FDI statistics indicate that these reforms have failed to improve FDI levels in the ASEAN region (ASEAN, 2004) This brings into question the effectiveness of these reforms to begin with, specifically if they were directly dealing with means to promote overseas investment In particular, were corporate governance and regulatory frameworks adequately improved to restore lost investor confidence after the 1997 Asian financial crisis? For ASEAN, this is a particularly pertinent question In particular, growth of intra-FDI trade cannot be ignored, as in part it signals
Trang 3the effectiveness of an economic trading block and is one of the main purpose of ASEAN’s existence (Severino, 2000) Without growth in trade within its own borders, the economic value of actually being an ASEAN member diminishes
The extant literature on the impact of the political and legal environment upon the economy has shown, repeatedly, that good corporate governance leads to increased economic growth Laporta, Lopez-de-Silanes, Shleifer, and Vishny (1997, 1998, 2000)
examine the importance of national legal origin on creditor and shareholder rights, along with the implications of creditor and shareholder rights, and legal enforcement on external finance Levine (1998, 1999),Beck, Levine, and Loayza (2000) and Levine, Loayza, and Beck (2000)extend this research to examine the importance of legal systems for economic growth and financial development An important conclusion is that countries with poor legal rules and law enforcement have narrower debt and equity markets (LaPorta et al.,
1997), and that a well-defined and enforced legal system facilitates greater financial intermediation, and thereby economic growth (seeLevine et al., 2000)
To focus more closely on FDI research, work by authors such asCarstensen and Toubal
highlighted the significance of country risk as a determining factor for encouraging FDI in developing countries Moreover, research byHellman, Jones, and Kaufmann (2003)show that in fact FDI inflows can also help improve standards of governance in transition economies, implying that there is a two-way causality effect between governance standards and FDI As an economic trading zone, FDI also takes on a significant meaning in signaling not only the economic, but also political ties ASEAN members will have with each other
The literature to date, however, on FDI flows within and between ASEAN countries is comparatively restricted, despite the growing economic importance of the South-East Asian region To partially rectify this lack of research, this paper examines a particular component of ASEAN trade, that of examining whether intra-ASEAN FDI is also significantly affected by institutional factors relating to regulatory quality (RQ) and effectiveness that influences the ease by which FDI can enter a country Given the close proximity of each of the ASEAN nations, in terms of both cultural and geopolitical factors, the importance of regulatory effectiveness and governance standards cannot be ignored for MNC’s choice of direct foreign investment within these countries In fact, it would further highlight the need for ASEAN to address not only economic, but also legal and political institutional matters if it is to grow further as a trading zone
3 Data and research method
The dataset used to determine the importance of regulatory matters upon intra-ASEAN FDI flows originates from several different sources The data for the primary variable of this paper, that being outward bound FDI flows from ASEAN countries, was obtained from the ASEAN Finance and Macroeconomic Surveillance Unit (FMSU) database
2002 Only five of the ASEAN states had a complete set of results for this time period and therefore precluded the addition of further countries to this study
Along with data for the above dependent variable, a number of explanatory variables need also to be considered in order to determine their importance in influencing FDI flows There are, in fact, a host of potential explanatory variables that could be collated and used
Trang 4to determine FDI movements In particular, the literature covered in the previous section highlighted the potential importance of country risk and the possibility of institutional political and legal factors in this context The impact of regulation, for example, on FDI is demonstrated by theUnited Nations Conference on Trade and Development (UNCTAD)
changes aimed at creating more favorable conditions for FDI had not only led to more liberal trade and investment policies, but also improved general economic conditions, making these countries a more conducive and accommodating environment for FDI inflow (Fan & Dickie, 2000) Sethi, Guisinger, Ford Jr., and Phelan (2002) refer to these regulations as ‘Pull’ factors (institutional factors)
In this study, a specific measure for RQ and effectiveness is used The data was obtained from earlier work conducted by Kaufmann, Kraay, and Mastruzzi (2004) as part of a World Bank project The Kaufmann, Kraay, and Mastruzzi (2004) study measured the perception of governance using various tools, with the data being drawn from 25 separate sources and constructed by 18 different organizations across a wide range of countries One of the variables they created was RQ, referring to the incidence of market-unfriendly policies such as price controls or inadequate financial supervision, as well as perceptions of the burdens imposed by excessive regulation in areas such as foreign trade and business development Overall, it provides a measure for a specific aspect of corporate governance that would have a significant bearing on the ease by which foreign firms could directly invest in a host market It is for this reason that RQ is chosen as the principal tool to determine whether RQ and effectiveness significantly influences intra-ASEAN FDI trade The RQ indicator is measured in units ranging from about 2.5 to 2.5, with higher values corresponding to better governance outcomes
Apart from using RQ as a means to determine the significance of RQ and effectiveness
in influencing FDI flows, it is also necessary to incorporate a number of controlling variables into the model This would allow for the model to account for such issues as the impact of adverse economic conditions upon general foreign investment into a country
exchange rate, technology, human capital, and openness of the economy all have a significant impact on outward FDI positions for countries
For this study, a selection of control variables that are regularly used in the FDI literature is applied Specifically, four macroeconomic variables were also extracted from the FMSU database (ASEAN, 2005) These include a measure of economic activity (annual GDP per capita), economic growth (change in GDP year on year), annual inflation rates (measured as a function of the local consumer price index), and an annual measure of the risk-free rate of return (interest on 3-month time deposits) The first two measures relate directly to the size and health of an economy, and one would expect a positive relationship to emerge between them and increasing FDI The relationship that exists between inflation rates plus interest rates with FDI is not so clear cut, though it would generally be argued that higher inflation and interest rates would be a disincentive to invest
in a country As the relative cost of borrowing and those costs associated with operating in
an inflationary environment would diminish the opportunity costs from investing in the economy
Along with the above macroeconomic variables, a selection of more finance-based factors were also collected from the World Bank’s (2005) financial development and structure database As a means of providing a basic robustness test for the empirical results
Trang 5that will be presented, two separate sets of control variables are utilized Doing so will provide a means to determine whether any results that indicate the significance and importance of RQ in influencing outbound FDI is not wholly sensitive to the choice of control variables accompanying the model
The extra variables chosen are total stock turnover (ST) and liabilities (L) ST is a ratio
of the value of total shares traded over average real market capitalization for any particular year As a ratio, it provides a measure for how active the financial market is in a host country It can provide an indirect measure for the activity within the economy, which may encourage FDI The second variable, L, is a ratio measuring liquid L to GDP The greater amount of liquid L within a market, the more constrained it may be to grow However, it could also represent willingness to accumulate debt as a means to invest Therefore, it could also be interpreted as a positive signal to investors The relationship it would therefore share with FDI flows would also be dependent on the level of interest rates within an economy, where higher interest rates would imply a greater cost on the economy for having a significant amount of L outstanding Its importance in influencing FDI flows, however, cannot be ignored as a basic measure of debt within the economy
To provide the robustness test in determining the impact of RQ upon outbound FDI, two separate series of regressions were run for each country A total of ten regressions are presented in the empirical section, where each country’s FDI to the other four countries in the sample were regressed against a set of control variables plus RQ As there are four series (countries) of outward FDI for each regression, a panel dataset was created With regard to the particular econometric model applied, the majority of quantitative research that have previously examined the determinants of FDI utilize either a cross-country or pooled data approach to modeling Although cross-cross-country analysis is useful for providing averages across a large cross-section of countries, this paper adopted the latter method Given that there is only limited data for intra-FDI flows within ASEAN it is important to make use of the temporal dimension of the dataset to increase the degrees of freedom within the model Also, panel data modeling can explicitly account for within-country variability across time (seeIslam (1995)andFolster and Henrekson (2001)), which
is an important factor for this particular dataset, given the changes to trade openness and the impact of the 1997 financial crisis has had on the ASEAN countries Therefore, the two sets of empirical results presented in the following section follow a standard panel model specification, given as
yi;t¼bxi;tþvi;t; i ¼ 1; N; t ¼ 1; ; T , (1) where y is the dependent variable, FDI, and x being a set of explanatory variables over time, t, and between countries, i The term vi,t captures the stochastic component of the data with vi;t¼aiþui;twhere airepresents the country effect for which aið0; s2
aÞand ui,tis
a stochastic disturbance such that ui;tð0; s2
uÞ The model is estimated using generalized least squares
Given the restrictive nature of the data (in terms of degrees of freedom), only results obtained from a fixed-effects model is presented This implies there is an assumption that there is within-group variation, where the differences among countries are captured by allowing for a different intercept, ai, for each country included within the regression The alternative to this is to run with a random effects model, implying country effects are randomly distributed and unobservable The latter option is not very common, but in this study’s case it is also not possible to feasibly examine, as it requires a larger cross-section of
Trang 6countries than is available In fact, there needs to be a greater number of countries in the sample than independent variables, which is not the case for the model presented in this paper One of the limitations of this study is the lack of usable data To an extent, it in fact precluded previous econometric research in this area, as a sufficient time series for a minimal number of countries was simply not available
4 Empirical results
Focusing the attention on the descriptive statistics presented in Table 1, a number of stylized facts emerge First, they show that there exists a huge gap in the GDP per capita among the ASEAN nations that are in the sample Singapore’s GDP per capita for the period studied was US $22,873.43 In comparison, the other four ASEAN nations had a far lower GDP Malaysia’s per capita GDP was $4,060.71, Thailand’s was $2383.71, Philippines’ was $1034.71, and Indonesia’s GDP per capita was $851.71
The economic growth rate has been low for the five ASEAN nations over the sample period compared to growth achieved in the early to mid-1990s Singapore’s growth rate is the highest at 5.15%, followed by Malaysia (4.97%), Philippines (4.02%), Indonesia (2.27%), and Thailand (1.54%) The results inTable 1also show that Indonesia has the highest inflation and interest rates In comparison, the other four nations seem to have these economic variables under control Malaysia has the highest L ratio, followed by Singapore, Thailand, Philippines, and Indonesia The result for ST shows that Malaysia has the highest ratio, followed by Singapore, Philippines, Thailand, and Indonesia The
RQ scores reveal that Indonesia is the only country with an overall negative score Singapore has the highest score for RQ, while Malaysia, Philippines, and Thailand have very similar scores
Focusing a little more on the two primary variables of interest, FDI and RQ, Table 2
shows their scores prior to, and post the 1997 Asian crisis This provides a basic picture for how the performances of these two variables have behaved over the course of the sample period Scores reveal that with the exception of the Philippines and Thailand, which have
Table 1
Descriptive statistics for the control parameters and regulation quality
Mean Std dev Mean Std dev Mean Std dev Mean Std dev Mean Std dev Economic activity ($US) 851.71 264.87 4060.71 629.65 1034.71 111.39 22873.43 2210.89 2383.71 544.75
Regulation quality 0.06 0.24 0.48 0.20 0.44 0.19 1.79 0.38 0.41 0.15 The sample consists of annual data extending from 1996 to 2002 Economic activity is measured as GDP in $US Economic growth, the inflation rate and interest rates are measured in percentage terms, with economic growth being expressed as a logarithmic growth rate of the underlying annual change in GDP The inflation rate is the annual change in the consumer price index and interest rates are taken from 3-month treasury deposit notes.
Trang 7shown a slight improvement, the other three nations have actually shown deterioration in the quality of regulations in the post-Asian crisis period
The Asian crisis also affected the level of outward FDI within the five ASEAN nations
and Thailand the worst hit The negative score for Thailand indicates disinvestments, post-Asian crisis
The principle results for the panel data models are presented in Tables 3 and 4 They both tabulate results for individual regressions on each country’s level of outbound FDI flows to the other four countries in the sample BothTables 3 and 4also include the level of foreign RQ as an explanatory variable, measuring RQ and effectiveness in the market that
Table 2
Change in the regulation quality index and outward FDI prior to and after the 1997 Asian economic crisis
Outward FDI
Figures represent average annual figures Outward FDI represents the total US$ value of all FDI originating for one particular country to the other four countries in the sample.
Table 3
Panel regression results for determining outward FDI
Indonesia Malaysia Philippines Singapore Thailand Host country economic activity 15.1303 532.4027 72.8967 1566.8590 138.3981 a
(35.4193) (350.5989) (84.9931) (1218.6420) (80.7362)
Host country regulation quality 38.4591 c 16.7268 70.0155 a 1207.3591 b 139.5873 b
(12.2372) (101.8816) (36.5156) (585.9297) (58.3517) Home country economic activity 24.5490 725.2806 b 129.5480 2731.2314 130.6264
(26.5768) (365.0416) (150.3433) (2936.7828) (194.9942)
(0.1135) (30.3218) (4.7884) (177.2969) (4.8675) Home country regulation quality 17.3086a 172.7273 63.4494 611.0538 12.9934
(9.5804) (269.8804) (44.8762) (438.5181) (60.9409)
All coefficient estimates are from a fixed-effects panel regression of outward FDI from the specified country to the remaining four countries in the sample Each regression is run from a balanced panel dataset consisting of 24 observations over four cross-sections (countries) Economic activity is measured as the logarithm of GDP in $US Weighted cross-sections are utilized and figures in brackets are White heteroscedastic-corrected standard errors.
a Represents significance at the 10% critical level.
b Represents significance at the 5% critical level.
c Represents significance at the 1% critical level.
Trang 8the FDI is flowing to The tables do differ, however, in the set of control variables utilized within each of the regressions To start with, inTable 3the model incorporates both home and host country RQ, plus both home and host inflation rates, and level of economic activity (measured as the logarithm of GDP)
The reason for the inclusion of both home and host values for inflation, GDP and RQ is
to consider the possibility that a multinational enterprise’s decision to invest abroad is partially determined by the difference in opportunity cost of investing in their home market, as opposed to a host market This may also lead to a situation whereby a company would prefer to invest in a neighboring country because its home market’s level of corporate governance processes and RQ makes doing business in its own market too difficult relative to outside investment Therefore, to account for this fact, the role of both home and host economic and regulatory factors are considered in this context of determining whether only the host and/or source country plays a role in determining a company’s decision to invest abroad
The results for Table 3 are intriguing The first noticeable point is that there is not a consistent macroeconomic factor determining outward FDI for any of the five countries examined Partly, this may be due to the use of a small sample (there are 24 observations for each regression), potentially limiting the ability of the model to pick up significant economic relationships However, one would still expect the most predominant economic variables showing a degree of significance It could very well be that due to the diverse reactions the different countries took to handling the 1997 crisis, the economic variables that are examined have all had a different impact on FDI flows between the countries leading to no single factor being significant in all the markets
The level of host economic activity in determining the level of FDI is only significant (at the 5% critical level) for one country, Thailand The value of examining local GDP is also
Table 4
Alternative panel regression results for determining outward FDI
All coefficient estimates are from a fixed-effects panel regression of outward FDI from the specified country to the remaining four countries in the sample Each regression is run from a balanced panel dataset consisting of 24 observations over four cross-sections (countries) Economic activity is measured as the logarithm of GDP in $US Weighted cross-sections are utilized and figures in brackets are White heteroscedastic-corrected standard errors.
a Represents significance at the 5% critical level.
b Represents significance at the 1% critical level.
c Represents significance at the 10% critical level.
Trang 9only significant in one country, Malaysia The importance of the host inflation rate as a determinant of outward FDI is also not strongly supported, with it only being significant for one country, Malaysia The negative relationship shows that an increase in the inflation rate lessens FDI in that country For the home inflation rate, none of the results are significant Overall, these results are not particularly strong in outlining any particular macroeconomic factor that drives outbound FDI for this period of study
Finally, with regard to regulation quality, RQ, it is by far the most representative significant variable withinTable 3 The quality of host regulation guides and assessment is
a significant factor in determining FDI for three of the five countries Only for Malaysia and Thailand is no significant relationship found In fact, it is only for Malaysia that neither home nor host RQ is significant in influencing the level and direction of outbound FDI This may be partially due to the fact that Malaysia, after the October currency crisis that threatened to significantly devalue the Ringgit, set strict capital controls limiting the movement of its currency abroad This would lead to a dramatic shift in the ability for local firms to directly invest abroad This is also noticeable in the statistics presented in
drop of outbound FDI, having diminished to less than 90% of its original value To a large extent, it would also lead to the importance from examining RQ in both its own and host markets to be of a lesser concern in determining outward FDI, relative to the ability to deal with capital controls imposed on the market when trying to invest abroad
Table 4shows results for a second set of regressions where an alternative collection of control variables is used L, ST, interest rates, and economic growth are now included for the host country L and ST provide measures of how well the financial markets are performing in the host country, while interest rates and economic growth measure the general investment climate within each country Only host country factors are now examined, primarily to limit the number of independent variables within the model
It is very interesting to note that as withTable 3, the most consistent variable for being significant is that of RQ RQ is significant, to at least the 5% critical level, in all countries with the exception of Malaysia As with Table 3, the results for Malaysia not being significant may be primarily due to the capital control restrictions imposed on the market The overall results, particularly for the significance of RQ in determining outbound FDI, therefore compliment the figures inTable 3, showing the benefit from examining RQ as a determinant of outward FDI In particular, the results indicate that multinational enterprises do place a significant emphasis on the quality, effectiveness, and enforcement of the host county’s trade and investment regulations when determining where to directly invest RQ, as a factor in influencing FDI is at least as important as the macroeconomic environment of a host country These results are consistent with the findings of Buckley
Of the remaining variables tabulated in Table 4, only short-term interest rates and economic growth are significant for more than one country Economic growth, in fact, seems to be a very effective parameter, being significant to at least the 10% critical level in all the regressions, with the exception of the Philippines Interest rates as a determinant of outbound FDI is significant in three of the countries, all showing a positive relationship This is a bit surprising, as one would expect a higher interest rate environment to discourage investment However, it may be that during the period under investigation, the high interest environment most countries were operating in led to an advantage for host firms to capitalize in the market if they could borrow in their home market at rates lower
Trang 10than in the host country High borrowing rates for local firms may have led to a distinct advantage for foreign firms that did not require borrowing money in the market This view can be supported with the work ofDesai, Foley, and Hines Jr (2004)who found that in the case of American affiliates, the decision to borrow capital from the home or host nation is a response to local inflation and political risks, and is more costly in countries with underdeveloped capital markets and those providing weak legal protections for creditors
Finally, and as a supplement to the above analysis, Tables 6 and 7 re-examine the models in the context of only measuring intra-ASEAN outward FDI within the five countries of analysis Instead of examining the level of outward FDI from the home to host country, the dependent variable is now measured as the proportion of outward FDI to a host country over the total outward FDI from the home country to all other countries in the sample Doing so will account for the fact that in recent years, a large outflow of capital has occurred from ASEAN nation states to other growth areas, in particular China China’s ability to attract FDI has allegedly made it more difficult for other emerging markets to attract FDI The then Prime Minister of Malaysia, Mahathir Mohammad, explained his country’s fall in foreign direct investment from RM 19 billion in 2001 to RM
2 billion in the first half of 2002 by stating: ‘‘Everyone is feeling the pinch because the amount of FDIs has shrunk and then, a lot of that is going to China’’ (cited inMcKibbin
& Woo, 2003)
While the number of FDI source countries in China is quite large, only a handful of countries account for the sums invested Hong Kong is the largest single investor and the newly industrialized economies (NIEs) have been the largest investors as a group Four ASEAN countries (Indonesia, Malaysia, Philippines, and Thailand) have substantially increased their presence in China since the early 1990s Also, the overseas Chinese network
in Singapore has made her the largest investor in China from the ASEAN region, accounting for more than twice the combined investment of the other four ASEAN countries up to 1998 (seeTable 5) Since, 1998, this has been further pronounced (Wong &
has not necessarily been at the expense of ASEAN Some commentators suggest other reasons for the lack of FDI flows to ASEAN nations in recent times.Wu, Siaw, Sia, and
result of the Asian financial crisis in 1997–1998, and have remained subdued due to an unfavorable investment climate
The results from the panel regressions inTables 6 and 7which use proportional data, however, do re-affirm the previous results in Tables 3 and 4 When outward FDI is
Table 5
Accumulated FDI stock in China by ASEAN-5 countries (US$ million, %)
Note: The ASEAN-4 countries include Thailand, Philippines, Malaysia and Indonesia.
Source: FDI statistics, MOFTEC.