Why Southeast Asia has attracted strong FDI inflows, from advanced manufacturing to the digital economy

Uncertainty has become the new normal for global businesses, with a mix of geopolitical tensions and macroeconomic concerns forcing them to prioritise resilience and restructure supply chains. This has impacted global Foreign Direct Investment (FDI), which fell by 11 per cent in 2024, following a 10 per cent drop in 2023, according to the ASEAN Investment Report 2025.

Against this backdrop, Southeast Asia has defied the odds and emerged as the bright spot for growth, with foreign direct investment (FDI) growing year on year. In 2024, Southeast Asia accounted for 15 per cent of global FDI inflows, attracting US$226 billion, a rise of 8 per cent from 2023. Since 2021, annual FDI inflows have consistently exceeded US$200 billion, above the previous decade’s annual average of under US$130 billion.

In fact, FDI stock in ASEAN rose from US$1 trillion in 2010 to US$3.6 trillion in 2024, equivalent to 1.2 times the combined stock in Africa and South America. Here are five highlights from the report that explain why MNCs are doubling down on Southeast Asia and why Singapore is their strategic hub for expansion.

1. More greenfield investments across diverse manufacturing sectors

Investments into Southeast Asia are increasingly driven by new and expansionary projects. More than two-thirds of inflows comprise of equity capital, while cross-border mergers and acquisitions fell by 61 per cent from 2023.

This signals that businesses are not simply acquiring firms or restructuring their balance sheets. Instead, they are establishing new operations, expanding production capacity, and building long-term capabilities across the region.

Furthermore, manufacturing FDI rose sharply, increasing by 147 per cent year-on-year, particularly in supply chain-intensive sectors such as automotive, electronics and semiconductors. Many of these big-ticket investments were either first-time entries into Southeast Asia or involved significant upgrading and expansion of existing facilities. These investments were driven by rising regional demand and the adoption of advanced manufacturing technologies to improve efficiency and resilience.

Investment spanned major economies, with Chinese firms active in automotive and apparel, US firms in pharmaceuticals and semiconductors, UK investors in aerospace and energy, and other Asian multinationals across automotive and electronics.
 

2. Digital economy investment is accelerating

Alongside manufacturing growth, investment in Southeast Asia’s digital economy is rising rapidly. Greenfield investment in digital-related sectors more than doubled to US$16 billion in 2024, reflecting rising demand and growing investor confidence in the region’s digital infrastructure, connectivity, and technology ecosystem.

This growth was driven by expansion in data centres, cloud services, software development and technology-enabled business activities. These investments are critical as they strengthen the region’s digital backbone – supporting advanced manufacturing, supply chain coordination, digital trade and cross-border services.

Some of these investments in Singapore include Amazon’s AWS APAC Hub, OpenAI’s APAC Hub, and Databrick’s Asia Pacific & Japan Hub.

Artificial intelligence (AI) is emerging as a key digital technology across Southeast Asia, with companies adopting AI to enhance their supply chains by optimising logistics and improving inventory management. Singapore, Malaysia, and Thailand are leading the region in industrial robot installations, with Singapore ranking second globally in robot density, with 730 robots per 10,000 employees in 2023 – significantly above the global average of 162.
 

3. Singapore anchors Southeast Asia’s investment and innovation ecosystem

Singapore continues to play a pivotal role in the region’s investment landscape. In 2024, it attracted a record US$143 billion in FDI, a 6 per cent year-on-year increase and the highest level on record, supported by a significant rebound in manufacturing investment.

Beyond manufacturing, Singapore continues to be the region’s base for innovation and hub activities. It secured US$22 billion in professional, scientific, and technical investment – including R&D, headquarters, and holding-company activities – accounting for majority of such flows within the region.

The year also saw a notable wave of Swiss investments. Firms across financial and professional services – including Kendris and Julius Baer – alongside family offices such as Tetra Pak, Bouchard and AEK, established or expanded their presence. Sulzer launched a new Innovation Technology Hub, while Novartis expanded its biopharmaceutical manufacturing site, reinforcing Singapore’s strengths across headquarters, innovation and manufacturing.

Alongside its role as a key investment destination, Singapore is also the region’s leading source of intraregional investment, accounting for 75 per cent of flows. Nearly 90 per cent of intraregional investment in information and communication activities originated from Singapore, particularly in data centre and digital infrastructure projects. Together, this underscores Singapore’s role as a key investment hub for MNCs structuring and deploying capital across the region.
 

4. Southeast Asia is a growing global supply chain hub

Between 2020 and 2023, the region accounted for more than 9 per cent of global merchandise exports and 14 per cent of global FDI inflows, despite representing only around 3 per cent of global GDP. This indicates that the region plays a disproportionately large role in global trade and investment flows.

The region has also built depth in various industries. It accounts for about 23 per cent of global semiconductor exports and 26 per cent of global critical mineral exports. Major sectors such as electrical machinery, consumer electronics, automotive, semiconductors, and apparel all expanded between 2020 and 2023 – reflecting sustained demand and production capacity growth.

At the policy level, ASEAN has also launched a regional agenda aimed at improving supply chain efficiency, diversifying markets and suppliers, strengthening risk management, and integrating sustainability standards into production systems.

Together, these developments provide businesses with access to more resilient and integrated supply chains, supported by established supplier ecosystems and cross-border manufacturing networks across the region.
 

5. Semiconductors, electric vehicles, and pharmaceuticals are powering the region’s next phase of growth

Southeast Asia is strengthening its role in industries that sit at the heart of global supply chains.

In semiconductors, the region accounts for over 20 per cent of global assembly, testing and packaging, and attracted around US$12 billion annually between 2021 and 2024 – or 12 per cent of global greenfield semiconductor investment. Nearly all of the world’s top 30 semiconductor firms operate in the region, with major players such as Intel, GlobalFoundries and On Semiconductor deriving significant revenue from their region’s operations.

Automotive and electrical vehicle (EV) investment is also accelerating. Greenfield investment doubled between 2015 - 2018 and 2021 - 2024, averaging US$6 billion annually, while project numbers rose from 30 in 2020 to 82 in 2024 – lifting Southeast Asia’s global share from roughly 5 per cent to 9 per cent. Investment spans the full EV value chain, from minerals and batteries to vehicle assembly.

Pharmaceutical investment is growing as companies such as Novo Nordisk, Brenntag, ACG Capsules, and SMS Pharmaceuticals have established or expanded operations across the region to enhance supply chain resilience and meet growing Asian demand.
 

Singapore continues to strengthen our business, talent and innovation ecosystems to remain a critical global node for advanced manufacturing, a trusted hub for Southeast Asia and a conducive base for value creation through innovation. Read about EDB’s priorities and how we partner businesses here.

Find out more about The Workshop – a tailored, one-to-one consultation platform curated by Singapore Economic Development Board to connect companies with credible service providers who bring proven expertise, market insights, and networks to support companies in their expansion from Singapore.