Foreign Direct Investment and Recovery in Southeast Asia

The financial crisis in Asia has brought to the fore the question of the appropriate policies for recovery and for future sustainable development. One area of particular importance is the treatment of foreign investors. Foreign direct investment has played a leading role in many of the economies of the region, particularly in export sectors, and has been a vital source of foreign capital during the crisis. The four countries reviewed in this study - Indonesia, Malaysia, the Philippines and Thailand - have all tended to welcome inward investment for its contribution to exports but have often been less willing to open up the domestic market to such investors. This study discusses the role assigned to foreign firms in the development strategies of the four countries in the past and looks at how a more balanced approach to the treatment of foreign investors could contribute to a more sustainable development path in the future.