1. Malaysia ranks No. 1 in emerging Southeast Asia as the country with the most potential to attract foreign investors, according to the 2022 Milken Institute Global Opportunity Index. This annual assessment, created to help inform investor and policymaker global investment decisions, evaluates an economy’s investment landscape using variables such as macroeconomic outlook, access to financial services, the potential for future innovation and development, and more.
2. The 2022 Global Opportunity Index includes a report focusing on emerging Southeast Asia, a region where an influx of capital could lead to increased innovation, job creation, and competitiveness.
3. Emerging Southeast Asia scores well compared to other emerging and developing economies in three key areas: 1) having a strong economic performance, 2) offering a highly qualified workforce, and 3)being firmly integrated with the global economy.
4. Malaysia, home to the third-largest bond market in Asia (after Japan and the Republic of Korea), has taken steps in recent years to relax restrictions and enact policies to capitalize on trade developments, helping the country claim its first-place ranking in this year’s Index.
5. “In this year’s report, we identify several policies that will help emerging Southeast Asia remain competitive when it comes to investment opportunities,” said Claude Lopez, PhD, head of the Research Department at the Milken Institute. “Governments in the region must strengthen their institutional frameworks, deepen regional integration to take advantage of each country’s unique resources and opportunities, and maximize social impact by leveraging global capital flows to advance development.”
KEY FINDINGS FROM 2022 GLOBAL OPPORTUNITY INDEX
1. Sweden maintained its No. 1 rank from 2021 as the country with the most potential to attract foreign investment, followed by the UK at No. 2 and Denmark at No. 3. The US dropped from third place in 2021 to ninth place this year, mostly driven by weaker economic fundamentals and financial conditions.
2. Malaysia, Thailand, and Indonesia took the top spots in emerging Southeast Asia. Malaysia received the highest ranking in the region due to its strong performance across all categories measured. Vietnam and the Philippines rounded out the top five countries in emerging Southeast Asia, in that order.
3. New this year, the Global Opportunity Index added seven environmental, social, and governance (ESG) variables, including CO2 emissions and the proportion of women in government positions. These variables have been included to reflect the growing appetite of investors to incorporate ESG data into business decisions.
HOW GLOBAL OPPORTUNITY INDEX EVALUATES COUNTRIES
1. To create the index, the Milken Institute evaluates investment opportunities through 100 variables organized into five categories and 14 sub-categories.
2. The five major categories included: Business Perception, Financial Services, International Standards & Policy, Economic Fundamentals, and Institutional Frameworks.
3. The variables within these categories measured all angles of a countries’ investment potential, including economic openness and performance, business constraints, and workforce talent and diversity.
4. Data sources included the World Bank, the International Monetary Fund, the United Nations, the Bank for International Settlements, and the Global Health Data Exchange.
RESEACH BRIEF'S POLICY IMPLICATION
1. Better Institutional Frameworks. Most governments in emerging Southeast Asia must take action to strengthen their institutional frameworks—particularly as they relate to corporate and government transparency.
2. Deeper Regional Integration. As emerging Southeast Asia becomes more fully integrated, foreign investors will be able to better coordinate production processes within the region and take advantage of each country’s unique resources and opportunities.
3. Maximize Social Impact. Governments must leverage global capital flows to advance the region’s development agenda, thereby delivering inclusive and sustainable growth across all segments of the population.
Source:
https://milkeninstitute.org/article/malaysia-top-country-southeast-asia-foreign-investment
https://milkeninstitute.org/sites/default/files/2022-01/GOI-research-brief-final.pdf
