Competing for Business: Sustainable Development Impacts of Investment Incentives in Southeast Asia

This report examines the effectiveness of investment incentives in attracting foreign direct investment (FDI) and promoting sustainable development in Southeast Asia, analyzing their impact on economic growth, employment, and technology transfer while considering the influence of competition with China and the role of ASEAN.

• Investment incentives, particularly tax breaks and reduced duties on capital goods and raw materials for export production, were initiated by Singapore in the 1960s and subsequently adopted by neighboring Southeast Asian nations.
• While incentives in Thailand, Malaysia, and Singapore helped attract FDI and spur export growth, they are not sufficient on their own; factors like political stability, institutional development, and infrastructure are equally or more important for FDI decisions.
• The ability of FDI to transfer technology and know-how depends on local capacities and domestic linkages; this has been successful in Malaysia and Singapore but limited in the region's least-developed countries.
• FDI has contributed to job creation in Southeast Asia, especially within the manufacturing sector, though employment gains are reduced when investments are capital-intensive or lack local economic linkages.
• Concerns regarding the diversion of FDI to China have influenced the liberalization of investment regimes in Southeast Asia, although some Southeast Asian countries have actually benefited from being part of regional production networks linked to China's growth.

APA

Baumüller,, H. (2009). Competing for Business: Sustainable Development Impacts of Investment Incentives in Southeast Asia. International Institute for Sustainable Development. https://www.iisd.org/publications/report/competing-business-sustainable-development-impacts-investment-incentives

Chicago

Baumüller,, Heike. Competing for Business: Sustainable Development Impacts of Investment Incentives in Southeast Asia. International Institute for Sustainable Development, 2009. https://www.iisd.org/publications/report/competing-business-sustainable-development-impacts-investment-incentives.

Wikipedia

{{cite report |last1=Baumüller, |first1=Heike |title=Competing for Business: Sustainable Development Impacts of Investment Incentives in Southeast Asia |publisher=International Institute for Sustainable Development |date=6 March 2009 |url=https://www.iisd.org/publications/report/competing-business-sustainable-development-impacts-investment-incentives |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{baumller2009competing, author = {Baumüller,, Heike}, title = {{Competing for Business: Sustainable Development Impacts of Investment Incentives in Southeast Asia}}, institution = {International Institute for Sustainable Development}, year = {2009}, month = mar, url = {https://www.iisd.org/publications/report/competing-business-sustainable-development-impacts-investment-incentives}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }