Southeast Asia’s quiet FDI manufacturing redistribution
A few years ago, I sat with a Miami-based company that was choosing markets to run part of its expansion, potentially including production of their technology products. On paper, several locations offered comparable incentives, though what tipped the decision for the chosen country at that time, the UAE, was culture: the team judged the UAE’s […] The post Southeast Asia’s quiet FDI manufacturing…
Southeast Asia's quiet shift in foreign direct investment (FDI) manufacturing is gaining traction, particularly in sectors like electric vehicles, renewable energy, and semiconductors. This shift is driven by factors beyond just macroeconomic numbers, as companies prioritize People, Product, Process, and Capital in their decision-making.
In Malaysia, the Johor Corporation and other national conglomerates are investing in data centers, aiming to establish AI infrastructure hubs. However, upskilling the workforce and addressing grid stability and water availability remain challenges. Meanwhile, in Indonesia, both Jakarta and Batam are pushing to scale while facing similar limitations in grid stability, water availability, and transitioning to sustainable, renewable energy sources.
In contrast, Brazil boasts a clean power base built on hydroelectricity, but logistics and execution hurdles hinder its expansion. The region shows a race to build the necessary infrastructure, rather than being "ready" to receive capital.
The fiscal risk of FDI is often overlooked, with tax repatriation rates influencing decisions. A case in point is an Abu Dhabi sovereign wealth fund considering investment in Brazil, but ultimately bypassing it due to a 25% capital repatriation tax, which made Brazil less attractive than China.
Southeast Asia may offer a second chance for Brazil, but only for companies willing to collaborate with local partners and set realistic timelines. The real winners will be those that tackle the puzzle's individual pieces before capital loses interest.
Written by urgent.news from e27's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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