Southeast Asia foreign direct investment climbed to nearly US$250 billion, according to DBS Group Research Senior Economist Radhika Rao, as changing global supply chains and manufacturing expansions position the region as one of the fastest-growing destinations for capital inflows.
Southeast Asia Investment Surge Outpaces Traditional Hubs
Foreign direct investment into Southeast Asia rose from approximately US$225 billion in 2024 to nearly US$250 billion, according to data presented by DBS Group Research. Asia remains the primary magnet for global foreign investment, with East Asia drawing approximately US$245 billion in 2025.
According to Radhika Rao, speaking during a media briefing in South Jakarta, the investment surge is driven by global supply chain relocations and growing international interest in the ASEAN market. Multipolar economic developments offer opportunities for Indonesia to reinforce its position as a new growth center.
Growth Projections and Country Performance Across ASEAN
Vietnam leads the region’s growth, followed closely by the Philippines and Indonesia. Vietnam and the Philippines are expected to exceed 6% growth, with the Philippines projected at 6.1% driven by infrastructure and renewable energy projects, according to DBS Bank Managing Director and Chief Economist Taimur Baig.
Indonesia’s economy is predicted to expand by 5.7%, supported by rich resources, an expanding population, and a vibrant startup sector. Meanwhile, Malaysia is projected to grow at 4.5% with a focus on semiconductors and data center expansion, while Thailand and Singapore are projected at 2.8% and 2.5%, respectively.
Did You Know?
Malaysia’s expanding data center industry has the potential to more than double Singapore’s current data center capacity, challenging the city-state’s regional dominance in the sector, according to regional economic reports.
Indonesia’s Path to Capturing Capital Inflows
For Indonesia, future advantages depend on more than natural resources and domestic market size. Radhika Rao stated that tech-driven investments, domestic value chain strengthening, digital economy expansion, and macroeconomic stability are vital for boosting investment appeal.
Supply chain strategies such as “China+1” and “Taiwan+1” models prompt companies to produce outside China and Taiwan. This realignment helps establish Indonesia as an electric vehicle manufacturing hub. Furthermore, the industrial downstreaming agenda elevates the value added of national industry while unlocking capital in energy, infrastructure, and strategic manufacturing sectors, according to DBS research.
Navigating Risks and Corporate Banking Needs
Multinational corporations face compounding risks from shifting interest rates, foreign exchange volatility, regulatory updates, and local economic sentiment, according to Natalia Ratulangi, Head of Large & Multinational Corporates in the Institutional Banking Group at DBS Bank Indonesia.
According to Natalia, businesses require banking partners capable of delivering sharp insights to navigate local market trends. DBS Indonesia advocates for measures that broaden foreign investment and build an integrated investment ecosystem to assist multinational corporations in scaling operations throughout Asia.
Frequently Asked Questions
What drove the rise in Southeast Asian FDI in 2025?
According to DBS Group Research, the surge is driven by global supply chain relocations, manufacturing expansion, and growing international interest in the ASEAN market amid changing global economic developments.
What are the projected economic growth rates for major ASEAN economies?
According to DBS Bank reports, Vietnam and the Philippines are expected to exceed 6% growth, Indonesia is predicted to expand by 5.7%, Malaysia at 4.5%, Thailand at 2.8%, and Singapore at 2.5%.
What factors will determine Indonesia’s future investment appeal?
According to DBS Group Research, Indonesia’s success depends on attracting tech-driven investments, strengthening domestic value chains, expanding the digital economy, and maintaining macroeconomic stability.
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