As investors seek growth potential of the region, they also need to be mindful of the risks of investing in the region. The 2022 Transparency International Corruption Perception Index placed eight of the 10 Asean countries in the higher risk category for corruption risks. Over the years, Asean regulators have responded to corruption and fraud risks by establishing anti-corruption agencies aligned with the United Nations Convention Against Corruption treaty, leading to more stringent legislations, enhanced enforcement actions and cross-border collaboration. Examples include Malaysia’s first prosecution under Section 17A of the Malaysian Anti-Corruption Commission Act 2009, as well as the ramping up of anti-corruption efforts in Vietnam, Thailand and Indonesia.
With a population of over 666 million people and a GDP growth rate rivalling India and China’s, Southeast Asia’s burgeoning middle class is driving strong consumer demand that is attractive to foreign investors. The Asean Investment Report 2023 indicated that foreign direct investment (FDI) inflows into Asean reached an all-time high of US$224 billion ($300 billion) in 2022, despite a 12% decline globally.
Increased regulatory scrutiny, cyber crime and sustainability obligations
