Foreign direct investment (FDI) in Southeast Asia has reached its highest level in six years, marking a significant shift in global investment flows. According to the World Investment Report 2025 by the United Nations Conference on Trade and Development (UNCTAD), FDI in the region surged by 10 percent in 2024, rising from US$205 billion to US$225 billion. This upward trend highlights the growing appeal of Southeast Asia amid shifting geopolitical and economic dynamics.
Southeast Asia Investment Growth Driven by FDI Surge
UNCTAD’s report attributes the increase in Southeast Asia investment growth to strong FDI inflows into five key countries: Indonesia, Malaysia, Singapore, Thailand, and Vietnam. These nations collectively attracted the highest level of foreign investment in the region since 2018.
Indonesia recorded US$24 billion in FDI, a significant jump from US$21 billion in 2023.
Investors showed strong interest in sectors such as mineral processing, energy, and data centers. This robust performance stands in contrast to the broader decline in investment across developing Asia, where FDI dropped by 3 percent—from US$622 billion in 2023 to US$605 billion in 2024.
Indonesia Among Top Beneficiaries of Investment Boom
Indonesia has emerged as one of the top beneficiaries of this investment wave. The country’s natural resources and growing pool of skilled labor continue to attract international investors. Sectors like renewable energy and mineral refining are becoming key pillars of Indonesia’s industrial growth.
“This trend shows that Southeast Asia, including Indonesia, is increasingly becoming a strategic location for global investment relocation and expansion,” said Deputy Minister of Industry Faisol Riza during a working meeting with Commission VII of the House of Representatives (DPR RI) on July 2, 2025.
His statement reflects confidence in Indonesia’s ability to leverage its economic fundamentals and policy reforms to remain competitive on the global stage.
Read More: Indonesia Digital Economy Investment to Reach $130B by 2025
Foreign Investment Relocation Trend from China to ASEAN
The foreign investment relocation trend away from China and toward Southeast Asia has accelerated in recent years. According to the Council on Foreign Relations, only 42 percent of companies chose China as their production base in the first quarter of 2025. This marks a sharp decline from 61 percent in 2019.
In contrast, Southeast Asia’s share grew from 14 percent in 2019 to 26 percent in 2025. “Geopolitical tensions are driving the relocation of investments from major manufacturing countries to Southeast Asia as part of their strategy,” Faisol noted.
He added, “This is a positive signal that relocation and diversification strategies are becoming the primary options for reducing dependency on a single country.”
Solar Panel Industry Shift Highlights New Opportunities
The solar panel industry illustrates this shift. Since the U.S. imposed reciprocal tariffs on Chinese products during Donald Trump’s presidency, Chinese solar panel manufacturers have started relocating production facilities to ASEAN countries. This shift aims to maintain global market access and competitiveness.
“Although Indonesia’s solar panel exports to the U.S. are still small—US$0.47 billion in 2024—it shows strong potential as an alternative relocation site for investments from China,” said Faisol, as cited by CNBC Indonesia. Strategic partnerships with local companies underscore this trend. Collaborations include PT Lesso New Energy, Pertamina NRE, PT Tinra Mas Agro, and PT Thornova Solar Indonesia.
Read More: Indonesia’s First Nuclear Power Plant Backed by Pertamina NRE
Outlook: Southeast Asia as a Strategic Investment Hub
As global companies seek to diversify operations, Southeast Asia stands out as a strategic investment hub. Indonesia, in particular, offers vast potential with its natural resources, industrial capacity, and increasingly investor-friendly climate.
Faisol concluded, “This condition signifies that Southeast Asia, including Indonesia, is becoming strategic in the expansion of global investment.”
The region’s ability to attract sustained FDI amidst global uncertainty signals a long-term shift in production and investment priorities, with Southeast Asia positioned at the center of this transformation.
Source: cnbcindonesia.com, tempo.co
Image: Codrut Evelina / Canva Images
