INTRODUCTION

Inward-looking policies brought Indonesia close to bankruptcy towards the end of Sukarno's government in the mid-1960s. In contrast, his successor, President Suharto, started to develop a new development strategy by pursuing an outward-looking policy with more liberal trade and foreign investment regime (Thee 2012). The Foreign Investment Law was enacted in 1967 and the Domestic Investment Law was issued in the following year. The “open door” policy succeeded in attracting new foreign investment flows in the oil sector, other mining projects and the mining sector (Hill 1988, p. 81).

As seen from Figure 6.1, inward foreign direct investment (IFDI) flow increased gradually from about US$145 million in 1970 to about US$1.3 billion in 1975. Then between 1976 and 1989, the average IFDI flow was about US$349 million. IFDI flow gradually increased after 1989 and it reached a peak at US$6.2 billion in 1996, then it declined to US$4.7 billion in 1997 (before the economic crisis in 1997–98). On the other hand, the movement of outward foreign direct investment (OFDI) flow was not as quick as IFDI. However, in 1994, the ODFI flow was higher than IFDI. Even, for seven consecutive years (1998 to 2004), the flow of ODFI was higher than IFDI. In 2014, the flow of ODFI was about US$7.1 billion. The ODFI flow has increased more than double compared to its level in 2005. This indicates that IFDI and ODFI flows have increased in the same direction. By 2014, the IFDI stock in Indonesia was about US$253.1 billion, while the OFDI was about US$24 billion (UNCTAD 2015). This indicates that the share of OFDI stocks to inward FDI stock was about 9.5 per cent.

Today, Indonesia lags in the promotion of OFDI. According to the Central Intelligence Agency (CIA), in term of OFDI stock, Indonesia was ranked 48 out of 93 countries. In the ASEAN region, Indonesia lags behind Singapore (rank 18), Malaysia (rank 27), and Thailand (rank 34).1 As seen from Figure 6.2, in 2012, there were no Indonesian firms in the list of top-100 non-financial Transnational Corporations (TNCs) from developing and transition economies. In the list, about 50 per cent of the top nonfinancial TNCs came from China and Singapore. Thus, Indonesia's companies lack in internationalization record compared to other developing countries.

INTRODUCTION

Foreign direct investment (FDI) has long been a key driver of economic growth and industrialization in the Association of Southeast Asian Nations (ASEAN) countries. ASEAN countries have traditionally been attractive destinations for foreign enterprises and multinational companies (MNCs), thanks to abundant natural resources, cheap and motivated labour force, and its strategic location in Asia. Inward FDI ushers in not only capital resources and jobs, but also knowledge, know-how, technology, and organizational expertise through spillovers as well as backward and forward linkage effects. Through these mechanisms, inward FDI has been part and parcel of economic and industrial development strategies and has seen the region play host to FDI since the 1980s.

However, the past two decades have witnessed rapidly evolving global and regional business environments. China and India have emerged as competing hubs for low-cost production since the 2000s, due in no small part to their large domestic markets and improving connectivity through regional production networks. Many ASEAN countries such as Indonesia, Malaysia, and Thailand have also experienced rising labour costs, thereby making them less conducive for low-cost production. These recent developments caution that the conventional FDI strategies will soon reach the limit of offering the pace of economic growth and industrialization they once achieved.

Given the emerging challenges, ASEAN countries have exhibited a shift in FDI strategies towards outward FDI. Although inward FDI has been, and will continue to be, an important element of economic development, it has been vividly observed that more enterprises, especially government-linked and large businesses, have started to seek new business opportunities overseas and venture in foreign markets. This implies that regionalization and industrialization among firms will serve as another catalyst of economic growth and industrialization in the region.

Against this backdrop, this chapter aims to examine the emerging trends of outward FDI from ASEAN countries and characteristics of outward FDI strategies among three major players, namely Singapore, Thailand, and Malaysia. The lessons learnt from the experience of these ASEAN countries potentially provide interesting insights into the essential policies and reforms which will enable other ASEAN countries to successfully ride the waves of internationalization.

INTRODUCTION

Since the launch of market-oriented economic reforms in 1986, Vietnam has become one of the fastest growing countries in Southeast Asia. During this period, the Vietnamese government has quickly joined the competition for inward foreign direct investment by restructuring the domestic economy and by opening its economy to the external trade and investment.

Foreign direct investment (FDI) is one of the most significant features of Vietnam's movement from a planned economy to a market economy. Since Vietnam's government regulations on foreign investment abroad were signed in 1999, the number of outward FDI (OFDI) projects as well as registered capital has increased steadily. In 2013, the registered capital of Vietnam's outward FDI was more than 157 times of that in 2003 and 789 times of that in 1999. The average registered capital of Vietnam's FDI outflow annually amounted to US$887.5 million. The average value of a project is about US$23.9 million. Although Vietnam's outward direct investment is still small relative to its huge inward FDI, it increased dramatically in Vietnam over time. So how has Vietnam's OFDI performed since economic reforms were carried out in 1986? What are the prospects for the country's OFDI? What policies has the country implemented to increase its direct investment overseas in the long run? This study intends to address these specific questions.

The structure of this chapter is organized as follows. Section 2 presents an overview of the Vietnamese economy's performance. Section 3 briefly shows the development of outward FDI policies in Vietnam. The next section presents the current state of OFDI in Vietnam. Section 5 explains the prospects of Vietnam's FDI outflows. The final section deals with conclusions and policy implications.

THE PERFORMANCE OF VIETNAM's ECONOMY

After Vietnam gained independence in 1975, the country adopted a centrally planned economic regime. This economic model under this regime was based on the classic Soviet-type command economy with strong governmental control over all economic decisions. At this time, all of economic decisions were taken by the State, not by the market. The State not only assumed management functions such as issuing policies, laws, regulations, monitoring and inspecting foreign trade activities, it also fulfilled the functions of guiding business decisions such as fixing the list of trade products, trade markets, and export-import prices.

INTRODUCTION

Inward foreign direct investment (FDI) has been one of the important driving forces for Thailand's economic growth during the last few decades. Thailand is an important production and assembly base in Southeast Asia for many industries such as automobiles and hard disk drives. The country has attracted tremendous investments from multinational enterprises based in developed countries such as Japan, the European Union, and the United States. FDI was a crucial factor behind the miraculous economic growth in Thailand and East Asian countries during the 1990s (Jansen 1995; Chen and De Lombaerde 2009). The more recent study by Cheewatrakoolpong and Sabhasri (2012) showed that FDI from developed countries leads to technology transfers and knowledge spillovers as well as promoting employment, productivity and international trade in Thailand.

Given Thailand's status as a middle-income country with significant inward FDI, what explains outward FDI (OFDI) from Thailand? The goal of this study is to examine the factors influencing Thailand's OFDI. It analyses the determinants of Thailand's OFDI in ASEAN-5 and CLMV countries. In addition, this study also investigates the opportunities and effects of adopting ACIA on Thai economy. Finally, this study will consider two case study sectors, namely food processing, and textile and garments. Both are among the prioritized sectors for Thailand's OFDI.

OFDI AND THE FLYING GEESE THEORY

Kojima (1975) proposed the “Flying Geese Theory” to explain Japan's OFDI in the region. The theory attempts to explain Japan's OFDI into the newly industrialized countries such as Singapore, Hong Kong, South Korea and Taiwan in the 1960s. In the more recent study, Aminian, Foong and Hitomi (2007) have argued that the cost of production has increased in Singapore, Hong Kong, South Korea and Taiwan. This has led to a loss of competitive advantage which could have resulted in investment being relocated to countries with lower cost of production such as Malaysia, Thailand and Indonesia. Hiratsuka (2006) has argued that the flying geese theory can be used to explain the recent OFDI in Malaysia, Thailand and Indonesia.

INTRODUCTION

Over the past decade, developing economies have been actively investing abroad. This is reflected in their share of the world foreign direct investment (FDI) outflows which increased significantly from 11.87 per cent in 2000 to a record of 35 per cent in 2014 (Table 1.1). In particular, due to the surge in outward foreign direct investment (OFDI) from Asian developing economies since 2005, developing Asia became the world's largest investor region for the first time in 2014, accounting for approximately one-third of the global FDI outflows (UNCTAD 2015).

A number of countries from the Association of Southeast Asian Nations (ASEAN) have become major players in the investment arena. Even though ASEAN countries have been major recipients of FDI, they have evolved into an emerging source of investment for many developing economies, especially in the ASEAN region (ASEAN Secretariat 2013). The overall FDI outflow from ASEAN rose rapidly from US$8.97 billion in 2000 to US$56.36 billion in 2013 (Table 1.1).

Among the top source countries for OFDI, two leading investors from ASEAN — Singapore and Malaysia — made it to the 10th and the 17th rank respectively in 2014 (Table 1.2). Other major investors from East Asia are Hong Kong, Korea, Taiwan and China. The first three have long been leading global investors since the past few decades while China has become the major source of OFDI recently, with a rapid rise in overseas investment. Aside from Singapore, Malaysia and Thailand have emerged as net investors in 2007 and 2011, respectively.

This new FDI landscape in ASEAN has been shaped by many factors including the increase in mergers and acquisitions (M&As) and the rising importance of the region as a key player in the global value chain. In addition, ASEAN's outward investment has been enhanced by regional economic integration. The ASEAN Economic Community (AEC) aims to achieve a single market and production base in the region. Governments of ASEAN member states have been actively encouraging their national companies to invest abroad to take advantage of the benefits of the AEC (ASEAN Secretariat 2013).

Most scholars would contend that Common Era India has contained two great and discrete hubs of civilization, each of which served the needs and reflected the aspirations of quite distinct peoples. Burton Stein has termed these hubs “Hindu Aryan India” (centred on the Gangetic Plains/Chambal Basin) and “Hindu Dravidian India” (South India defined as that portion of Peninsular India which falls south of the Karnataka watershed — excluding the modern state of Kerala in the west and the Kistna [Krishna]-Godavari delta in the east). Stein, following other scholars, asserts that the shared social, cultural and political histories of Hindu Dravidian India are such as to constitute it as a recognizable and sufficiently coherent unit for the purposes of study. He identifies the essential acculturating core of this region as the Tamil Plain and its immediate hinterland.

While the origins of the South Indian peoples remains speculative, archaeological evidence confirms that the Peninsula has been continually inhabited since very early times. This culture was given distinctive expression through, inter alia, the development of the Tamil language, which comprises one strand of a discrete linguistic family later known as “Dravidian”. The most ancient surviving Tamil writings, located in caves that were once occupied by Jain ascetics, date from the second century BCE and used Devanagari script common among Ashokan inscriptions found in North India. This suggests that even at this early juncture contacts between South India and the Gangetic Plains were well established.

South Indian Hinduism has developed its own distinctive societal mores, modes of spiritual inquiry and systems of philosophical speculation. This chapter will provide a general overview of the development of Tamil Hinduism and highlight some of its most enduring institutions and characteristics. This does not make any pretence to be an exhaustive historical survey, nor does it attempt to document all the detailed inflections of the many Hindu traditions and forms of worship located within the Tamil country (Tamilakam). The chapter will demonstrate that the continual reworking of Tamil Hinduism, especially the mutable boundaries of Agamic religion, provided multiple sites of particularistic religious expression, ranging from textual, philosophical and Agamic forms to those whose cosmologies inhere within the context of ritual and which may not recognise the putative authority of Brahmanic Hinduism.

In the Introduction I argued that many scholars who had written about Thaipusam in Malaysia had constructed interpretations of the festival and the associated forms of worship (especially the kavadi ritual) which suggested their own rationales for Thaipusam. It was contended that each of these analyses was superficially convincing, but when subject to close examination relied upon ethnographies that were far from complete. In treating Thaipusam as sui generis, these scholars had failed to situate either the festival or the kavadi ritual within a sufficiently broad cultural or comparative framework. The main objective of this study has been to closely examine Thaipusam from the “inside”, as it were, and to trace the layers of meaning and the recondite vocabularies of this multifaceted and complex festival in terms of its continuing relevance to Malaysian Hindus. In the following paragraphs I will conclude that Thaipusam at Batu Caves, far from being a cultural aberration, a product of time, place and the peculiar circumstances of Hindu Malaysians, is constructed from deep-rooted elements of South Indian culture, and can only be fully comprehended by locating it within Tamil history, philosophies and belief structures, and in particular those associated with the Tamil deity Murugan.

The Indian population in Malaysia can be traced to two major streams of migration; namely, those recruited to serve as a labour force within the colonial economy, and a minority of technical, professional and business migrants attracted by the economic opportunities offered in British Malaya. Labour recruitment produced a variegated population consisting of the general spread of castes below the Brahman level. Skilled and professional migrants included an influential Chettiar merchant/moneylending class, Jaffna Tamils, as well as Malayalees, North Indians, Sikhs and professional and artisan Tamils. The Indian population was characterized by a clear social and vocational chasm between the middle-upper class and the labour force, the former dedicated to maintaining their distance from the despised “coolies”. The social divisions between middle-upper class and working Indians established by the conditions of colonial labour and non-labour migration remain as fixed and potent in contemporary Malaysia as they were in pre-war Malaya.

Since Merdeka, Indian political social and economic weaknesses have been repeatedly exposed, especially in the period following the implementation of post-1969 economic, educational and cultural policies designed to increase social and economic opportunities for Malays.

The large-scale migration of Indians to Malaya throughout the nineteenth century and the first few decades of the twentieth century led to the creation of a distinctively Malaysian Indian society. One of the most conspicuous features of this community is the sharp division between the minority upper classes — the middle, professional and commercial classes — and a majority working class which comprises over eighty per cent of Indian Malaysians. In general it may be claimed that this disjunction has its origins in the differing circumstances of each class's migration to Malaysia. Thus the descendants of “labour” recruitment — those who were contracted under indenture, kangany or other labour schemes, to work in the plantation estate sector or within government utilities — now make up an underclass which continues to fill a range of labouring and unskilled occupations within modern Malaysia. Conversely, the background of the middle and upper classes can generally be traced to “non-labour” migratory streams; that is, their forbears were those Indians who were appointed to clerical and technical positions in colonial Malaya, or who established themselves in professions and business. Most “non-labour” Indians maintain their social distance from “labour” Indians, and in some instances may even deny all bonds of common ethnicity.

While the earliest Indian labour throughout the colonial period was furnished by transported convicts, the overwhelming majority of Indian workers who arrived in Malaya between 1840 and 1910 were recruited under a system known as indenture. The colonial preference for South Indian labour was informed by an official perspective which viewed the “Madrassi” as docile and easily managed. Indeed, the supposed “cringingly servile” Tamil was portrayed both as an alternative and as a counterweight to the potentially ambitious and assertive Chinese worker. In his landmark study, K.S. Sandhu estimates that in this period a total of 250,000 indentured labourers were contracted to work in Malaya. These were mainly landless agricultural labourers drawn from the lower and Adi Dravida (Dalit) castes. The British government terminated the recruitment of Indian indentured labour to Malaya in 1910.

This chapter will explore the kavadi ritual at Thaipusam through the structures of the Tamil Hindu pilgrimage ritual. This will examine theoretical notions of pilgrimage and the implications for the individual participant. The chapter will also investigate how Hindu ritual performs its work, and how it enables the devotee to affect a paradigm shift in the circumstances of his/her mundane existence through an appeal to and interaction with the Divine. This process involves substantial modification and transformation, which must be undertaken at a ritually propitious moment. At Thaipusam this follows the installation of the king-deity Murugan in his mountaintop palace, and his consequent readiness to grant audience to his devotees. The chapter looks at asceticism and change, the liminality of trance and its application as an agent of transformation at Thaipusam, and the multivalent symbology of the journey to the caves. Finally, this chapter makes reference to the Idumban puja, in which the devotee is restored to society, as well as the heat–colour paradigm.

At this juncture it may be germane to offer some basic observations regarding the role, function and potentially catalytic power of religious ritual. In the previous chapter we noted that ritual is the enactment of myth, in effect testing the validity and inner truth of that myth. The anthropologist Arnold van Gennep postulated that ritual fell into three distinct phases, namely: