ASEAN-5: Diverging Capital Flows Between FDI and Portfolio Investment

(Source) IMF International Financial Statistics, Central bank reports and online databases from Bank of Thailand, Bank Negara Malaysia, Bank Indonesia, Bangko Sentral ng Pilipinas, and State Bank of Vietnam

This chart highlights the contrasting trends in Net FDI (Foreign Direct Investment) and Portfolio Investment across ASEAN-5 (Indonesia, Thailand, Philippines, Malaysia, and Vietnam) from 2016 to 2024.

Key Points:

• FDI remains resilient and stable: Despite a dip in 2020 due to COVID-19, net FDI has stayed consistently positive and robust, hovering around USD 40–50 billion annually since 2021.

• Portfolio investment shows persistent volatility and net outflows: Since 2020, portfolio flows have remained negative, with net outflows expected to deepen to around USD -30 billion in 2024.

• A structural divergence: Long-term capital (FDI) continues to flow into the region, while short-term capital (portfolio investment) is increasingly pulling out, reflecting global risk aversion and regional capital market fragility.

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Implication:

The ASEAN-5 economies continue to attract strategic, long-horizon investments, but face challenges in retaining short-term capital. This divergence underscores the importance of macroeconomic stability, investor confidence, and governance reform in maintaining a balanced capital inflow profile.