Investment checklist for ASEAN

Investment Outlook 2026: ASEAN and Global Opportunities

Outlook for 2026: Investment in ASEAN

Global growth is set to remain subdued in 2025–26, with investment flows under pressure from trade fragmentation, policy uncertainty, and tighter financing — yet ASEAN looks relatively resilient and continues to attract targeted FDI (digital, manufacturing re-shoring, and green energy), making selective country- and sector-level strategies attractive for 2026. IMF+1

Outlook for 2026: Investment in ASEAN

1) Macro backdrop shaping investment in 2026

• Global growth: Multilateral forecasts point to weak-to-moderate growth into 2026 (IMF projects ~3.1% in 2026; World Bank flags a tepid recovery after a downshift in 2025). This slows demand and raises the bar for productive investment. IMF+1

• Inflation & rates: Central banks have tightened materially in recent years; real rates and risk premia are still higher than pre-pandemic in many advanced economies, which will keep the cost of capital elevated for parts of 2026 — pressuring long-duration and yield-sensitive assets. IMF

• Trade fragmentation & geopolitics: Escalating tariffs and geopolitical uncertainty are already depressing cross-border investment and encouraging regional supply-chain reconfiguration (nearshoring/near-market diversification). UNCTAD and other agencies flag continuing downside risks to FDI. United Nations Media+1

2) Global investment flows / FDI — 2026 picture

• Overall FDI: After declines in 2023–24, UNCTAD reports fragile recovery patterns in 2024 and warns of continued weakness into 2025–26 for productive FDI (infrastructure, manufacturing), even as digital/economic-services FDI expands and concentrates. Expect uneven flows in 2026 — some regions up, many others flat-to-down. United Nations Media+1

• Commodities & capital goods: Falling commodity prices (World Bank outlook) could remove a near-term tailwind for commodity exporters, affecting public revenues and capex in some emerging markets. Reuters

3) ASEAN — why 2026 still matters (and where)

• Resilience & relative attractiveness: Southeast Asia has shown resilience — ASEAN recorded strong FDI inflows in recent periods, and several ASEAN economies are in the top recipients for digital FDI (Indonesia, Vietnam, Malaysia, Singapore). ASEAN’s large domestic markets, improving trade agreements, and supply-chain diversification make it a target for new investment projects in 2026. fDi Intelligence+1

• Country differences (select highlights):

  • Indonesia: Attractive for energy transition (renewables, EV battery value-chain), digital scale plays, and infrastructure. Policy reforms and large domestic demand make it a top pick for selective long-term investors. Asian Development Bank+1

  • Vietnam: Continues to benefit from manufacturing re-allocation (electronics, garments), strong FDI promotion, and trade agreement access.

  • Singapore: Financial hub and data-centre / digital FDI magnet — a gateway for regional capital.

  • Malaysia / Thailand / Philippines: Opportunities in green energy, logistics, and domestic-market services, though each requires country-specific due diligence.

4) Sectors to prioritize in 2026

• Digital economy & data infrastructure: Data centres, cloud services, fintech, and SaaS remain core growth areas — but FDI is concentrated in a handful of countries with strong ecosystems. Invest where regulatory clarity, skilled labour, and strong connectivity exist. fDi Intelligence

• Energy transition & climate infrastructure: Renewables (solar, wind, geothermal in SEA), grid upgrades, green hydrogen pilots, and battery supply chains (especially where nickel/lithium processing is present) are long-run winners. Policy support and concessional financing will be critical enablers. Asian Development Bank

• Advanced manufacturing & supply-chain re-shoring: Electronics, EV components, and strategic manufacturing relocated closer to final markets — ASEAN remains a beneficiary.

• Healthcare & education tech: Demographics and under-penetrated services make these defensive-growth pockets attractive.

• Real assets (selective): Logistics parks, data centre real estate, and energy-transition infrastructure — but watch financing costs.

5) Key risks investors must monitor in 2026

1. Policy / tariff shocks: Unexpected tariff increases or export controls can rapidly change the economics of cross-border projects. UNCTAD highlights tariff-driven investor uncertainty as a growth limiter. Reuters

2. Financing & rates: Rising or sticky global rates increase project hurdles for long-term infrastructure unless local financing or concessional instruments are available. IMF

3. China slowdown / demand shock: Slower-than-expected demand from China would weigh on trade-linked ASEAN exports. The World Bank

4. Concentration in digital FDI: Digital capital is concentrated — countries that fail to attract digital ecosystems could be left behind. UNCTAD flags a widening digital divide in FDI distribution. fDi Intelligence

6) Practical investment playbook for 2026

• Diversify across styles: Combine defensive (quality credit, high-dividend equities in resilient sectors) with selective growth (digital infrastructure, renewable pipelines).

• Selectivity by country & sector: Favor ASEAN markets with clear reforms, large domestic demand, and sector fit (e.g., Indonesia—energy & digital; Vietnam—manufacturing). Do deep, country-level policy and permitting due diligence. Asian Development Bank

• Use local partnerships and de-risking structures: PPPs, joint ventures with local firms, blended finance (DFIs, concessional loans) reduce political and execution risk for infrastructure/renewables.

• Active risk management: Hedge FX risk where necessary, price-in higher capital costs, and stress-test projects against tariff/policy changes.

• ESG & transition alignment: Prioritize investments that align with decarbonization and social resilience—these attract cheaper capital (DFIs, green bonds) and face lower policy friction.

7) Bottom line (what to expect in 2026)

• Global investment growth will likely be muted overall in 2026, with pockets of strength in digital and green sectors. Multilateral agencies expect only a tepid recovery after 2025’s slowdown. The World Bank+1

• ASEAN remains an attractive regional story — not a blanket buy: it’s about picking the right country/sector combinations (energy transition, data, manufacturing re-shoring). UNCTAD and regional bodies show ASEAN capturing a disproportionate share of certain FDI categories already. fDi Intelligence+1

Investment checklist for ASEAN

1) Indonesia — focus areas: energy transition, digital, heavy manufacturing

Top sectors (2026 focus)

• Renewables (solar — floating & utility, geothermal, grid upgrades), EV battery value chain (nickel processing), digital platforms and data centres, and infrastructure PPPs. Reuters+1

Permitting / regulatory bottlenecks

• Complex multi-agency permitting (central + provincial + local) for land, environmental (AMDAL), and grid connection.

• Long exploration/permitting timelines for geothermal and mining; inconsistent regional interpretations of national rules.

• IP protection and enforcement gaps reported by investors in some sectors. State Department+1

Financing & de-risking options

• PLN PPAs for grid-connected renewables (but negotiate offtake risk and curtailment terms).

• Use blended finance: IFIs/DFIs (World Bank group, ADB, IFC), local banks with project finance, and green bonds/sukuk for large projects.

• Consider local JV partners to navigate regional permits and land issues; use political-risk insurance for large capex. IESR+1

Practical checklist items

• Map all required permits (central, provincial, district) and estimate conditional timeline (best/worst).

• Pre-arrange land access agreements and community engagement plan.

• Engage a local legal/regulatory team and approach DFIs early for blended finance.

2) Vietnam — focus areas: manufacturing, infrastructure, digital services

Top sectors (2026 focus)

• High-tech manufacturing (electronics, components), infrastructure/inland logistics, renewable energy (solar + wind), and digital/IT services. KPMG Assets+1

Permitting / regulatory bottlenecks

• Investment registration and land-use approvals can be time-consuming; environmental clearance and grid-connection queues for renewables.

• Provincial variation in incentives and implementation; careful review of incentives in the target province is needed. PwC

Financing & de-risking options

• Strong FDI ecosystem — project finance via local banks often supplemented by foreign sponsors.

• DFIs (ADB, IFC) active for infrastructure and green projects; export credit agencies (ECA) for manufacturing capex.

• Use BOT/BT structures for large infrastructure; local partnerships recommended for fast track approvals. KPMG Assets

Practical checklist items

• Confirm provincial incentive package in writing (tax breaks, land lease terms).

• Conduct grid-interconnection feasibility study before land acquisition for renewables.

• Pre-qualify local financing partners and ECAs for large-capex manufacturing.

3) Philippines — focus areas: infrastructure, renewables, logistics, digital services

Top sectors (2026 focus)

• Infrastructure PPP (transport, ports, power), renewables (utility & distributed), data centres and logistics/warehousing. Bureau of the Treasury+1

Permitting / regulatory bottlenecks

• Multiple permits across national and local governments; environmental impact assessments and right-of-way acquisition are common delays.

• Land titling and community consent (ancestral domain issues in some provinces) can extend timelines. State Department+1

Financing & de-risking options

• Government PPP framework and pipeline; multilateral and bilateral DFIs active (ADB, World Bank, JICA).

• Local banks provide construction finance; green/sustainable bonds are being used for energy projects.

• Use government viability gap funding or guarantees for transport and social infrastructure projects. Bureau of the Treasury+1

Practical checklist items

• Do ancestor/land-title due diligence early if project in rural/indigenous areas.

• Engage PPP unit and DFIs early to structure guarantees and blended finance.

• Build community-benefit agreements into the project to speed local approvals.

4) Malaysia — focus areas: green finance, high-tech manufacturing, services

Top sectors (2026 focus)

• Green finance & sustainable infrastructure, high-value manufacturing (semiconductors, EV components), digital services and Islamic finance products (sukuk). Invest Malaysia+1

Permitting / regulatory bottlenecks

• Regulatory clarity is generally good, but complex licensing for specific sectors (e.g., foreign equity limits in select services), and environmental approvals for large land projects.

• Currency/FX exposure management matters for exporters and cross-border financing. Invest Malaysia

Financing & de-risking options

• Attractive tax incentives, Industrial Master Plans and MIDA facilitation.

• Strong domestic capital market — sukuk and green bonds; Malaysian banks and institutional investors active in project finance.

• Use government grant/incentive schemes and capital-allowance regimes; consider local manufacturing incentives for tech investors. Invest Malaysia+1

Practical checklist items

• Apply for incentive approval (MIDA/Relevant agency) prior to major capex for tax certainty.

• Evaluate sukuk or green bond issuance for longer tenor financing.

• Confirm foreign ownership limits in the target sub-sector.

5) Thailand — focus areas: advanced manufacturing, EVs, green tech, supply chains

Top sectors (2026 focus)

• Automotive & EV manufacturing and batteries, advanced electronics, food/agri-tech, and green infrastructure (sustainable transport). BOI actively promotes high-value projects. Reuters+1

Permitting / regulatory bottlenecks

• BOI approvals streamline many processes but require precise eligibility and documentation; some local environmental and land use permissions remain separate and can delay projects.

• Labour skilling and certs for advanced manufacturing can be a non-trivial operational hurdle. State Department+1

Financing & de-risking options

• BOI incentives (tax holidays, import duty exemptions) and, recently, direct funding/skills support initiatives for industry (newer BOI schemes).

• Local banks and international project financiers support large capex; ADB/IFC active in green projects. Consider BOI facilitation to access incentives. BOI Thailand+1

Practical checklist items

• Secure BOI promotional status early (it materially changes tax and permit landscape).

• Map local labour-training needs and seek BOI or public skills programs to speed workforce readiness.

• Negotiate supplier localization clauses if relying on ASEAN supply chain content incentives.

6) Singapore — focus areas: financial services, data centres, HQ & regional functions

Top sectors (2026 focus)

• Financial services, fintech, data centres & cloud infrastructure, REITs, and regional HQ/services (shared services, HQ functions). Singapore remains a gateway for regional capital. State Department

Permitting / regulatory bottlenecks

• Highly transparent and efficient permitting; constraints are more commercial (land scarcity, high operating costs) and regulatory (data centre compliance, environmental cooling/water rules).

• Tight planning controls for large land-intensive assets (data centres/industrial parks). State Department

Financing & de-risking options

• Deep capital markets and sophisticated financial ecosystem — easy access to equity, green bonds, and syndicated loans.

• Use Singapore as a legal/holding jurisdiction for regional investments and to issue debt/sukuk. Multilateral banks and private wealth pools are concentrated here. State Department

Practical checklist items

• Factor high land/operational costs into financial model; optimize footprint (edge + regional hubs).

• Use Singapore entity for regional treasury and securitization to access cheaper capital.

• Ensure compliance for data localisation, power/cooling efficiency for data centre projects.

Cross-cutting de-risking playbook (apply to any of the six countries)

1. Pre-engage DFIs & commercial banks: line up term sheets and explore blended finance early. (ADB, IFC, EBRD/if local, JBIC, JICA). Bureau of the Treasury+1

2. Local partner + regulatory counsel: indispensable for land, environmental and social permits.

3. Community & ESG plan: required by lenders/insurers — prepare E&S management plans upfront.

4. Permitting timeline buffer: add 20–40% time contingency for environmental and land clearances.

5. Currency & offtake risk: hedge or structure FX-linked revenues; secure long-term offtake/anchor tenants where possible.

Investment Outlook 2026: ASEAN and Global Opportunities

Global Investment Landscape 2026

Key Trends

• Slower global growth (~2.8%) amid tight monetary policy.

• Renewed focus on energy transition, digital infrastructure, and supply chain resilience.

• Investors pivot toward emerging markets — ASEAN as the “Next Growth Engine.”

• Geopolitical diversification away from China fuels ASEAN+India manufacturing shift.

ASEAN in the Global Context

Why ASEAN Matters

• 680M population, world’s 5th largest economy (projected GDP > USD 4.2T by 2026).

• Strategic hub between India–China trade routes.

• Consistent FDI inflows (USD 200–230B annually).

• Regional frameworks: RCEP, ASEAN Economic Community, and Green Finance Initiatives.

Indonesia – Energy, Minerals & Digital Growth

Top Sectors

• Renewable energy (solar, geothermal, hydro).

• Nickel & EV ecosystem (battery value chain).

• Digital economy & fintech (fastest in ASEAN).

• Tourism & logistics (new capital development).

Permitting Bottlenecks

• Land acquisition and local licensing remain complex.

• ESG compliance increasingly required for mining & energy projects.

Financing Options

• Green Sukuk (state-issued).

• Sovereign Wealth Fund: INA co-investment platform.

• Multilateral: ADB, IFC, Islamic Development Bank (IsDB).

Vietnam – Manufacturing Powerhouse

Top Sectors

• Electronics & semiconductors.

• Renewables (solar & wind).

• Textiles & high-tech exports.

• Data centers & logistics hubs.

Permitting Bottlenecks

• Complex environmental permitting for solar/wind projects.

• Delays in power purchase agreements (PPA) with EVN.

Financing Options

• Green bonds & PPP structures.

• Support from JICA, World Bank, and Korean EXIM Bank.

Philippines – Infrastructure & BPO Evolution

Top Sectors

• Infrastructure (roads, airports, ports).

• Business Process Outsourcing (AI & IT-enabled services).

• Renewables (offshore wind, geothermal).

• Agritech and logistics modernization.

Permitting Bottlenecks

• Bureaucratic red tape, especially for PPP approvals.

• Grid connection delays for renewable projects.

Financing Options

• Private Infrastructure Development Facility (PIDF).

• ADB, IFC, and U.S. DFC funding.

Malaysia – Green Tech & High-Value Manufacturing

Top Sectors

• EV and semiconductor supply chain.

• Green hydrogen and solar manufacturing.

• Islamic finance & digital banking.

• Healthcare and biotech innovation.

Permitting Bottlenecks

• Environmental clearance for heavy industries.

• Local participation (Bumiputera equity) requirements in certain sectors.

Financing Options

• Green bonds and Sukuk (Malaysia as regional leader).

• MIDA and Khazanah investment incentives.

Thailand – Smart Industry & Tourism 5.0

Top Sectors

• EV manufacturing (Thailand 4.0).

• Smart agriculture & food processing.

• Digital health and medtech.

• Tourism & creative economy.

Permitting Bottlenecks

• Industrial zoning and EIA process length.

• Foreign land ownership restrictions.

Financing Options

• BOI incentives and EEC development fund.

• Thai EXIM and green loan programs.

Singapore – Financial & Digital Capital

Top Sectors

• Fintech, digital assets, and AI innovation.

• Green finance & carbon trading.

• Biotech and sustainable urban solutions.

• Data centers and cybersecurity.

Permitting Bottlenecks

• Limited land availability and high operating costs.

• Data center energy quota tightening.

Financing Options

• MAS green finance grants and carbon credit market.

• Temasek, GIC, and global venture capital hubs.

Key Takeaways for Investors (2026)

✅ ASEAN remains a safe haven for diversification amid global volatility.
✅ Governments emphasize green transition & digital economy.
✅ Financing increasingly tied to ESG and sustainability metrics.
✅ Strategic partnerships with local firms ease market entry.
✅ Policy predictability and infrastructure readiness remain key differentiators.