Security, capital and control: APAC’s shifting FDI landscape
Across Asia-Pacific, national security, competition for capital and industrial and economic strategy are reshaping the foreign direct investment landscape. Governments are modernizing screening regimes, balancing openness with tighter controls over sensitive sectors, supply chains and technology.
In brief
Foreign direct investment (FDI) regimes across Asia-Pacific are undergoing significant recalibration, driven by national security pressures, geopolitical uncertainty, competition for capital and evolving industrial and economic policies. Several emerging markets that previously restricted or closed off key sectors – such as Indonesia, Thailand and Vietnam – are now opening them to foreign capital, often subject to screening. More developed economies, including Australia, China, India, Japan, Korea, New Zealand and Singapore, are introducing new FDI rules, modernizing or tightening their frameworks to address perceived risks to supply chains, sensitive technologies and strategic assets.
Despite the broader shift toward heightened scrutiny, governments across the region increasingly recognize the need to maintain competitiveness and avoid over-deterrence. Many are adopting risk-based models that distinguish between high- and low-risk investors and sectors. These approaches concentrate regulatory resources on transactions involving national security or critical infrastructure, while accelerating approval for investments deemed beneficial to economic growth.
Selected juristinctions
Australia maintains a consolidated, highly technical FDI regime that applies across sectors through mandatory and voluntary filings. Reviews are conducted by the Treasurer, supported by the Foreign Investment Review Board, which assesses whether a proposed transaction is contrary to Australia’s national interest or national security. The Register of Foreign Ownership of Australian Assets, established in July 2023, requires foreign investors to report a broad range of interests, with information shared across government agencies.
In May 2024, the Treasury announced a shift toward a risk-based model that closely mirrors New Zealand’s approach. High-risk investments – especially those involving critical or sensitive sectors – will attract close scrutiny, while lower-risk proposals, including those from passive institutional investors or investors with strong compliance track records, will move more quickly. From January 2025, the Treasury aimed to process 50% of investment proposals within the 30-day decision period.
Key takeaway – Australia: Australia is moving toward differentiated, risk-based screening that accelerates low-risk investments while tightening scrutiny of strategic sectors. The regime remains complex, however, requiring meticulous analysis both on reportability and substantive risk.
Looking ahead
Across Asia-Pacific, governments are tightening their approach to foreign investment in line with national security priorities, data-protection concerns and industrial and economic strategy. At the same time, they are seeking to attract investment through streamlined, risk-based processes and clearer guidance. For global investors, understanding sector and political sensitivities, jurisdictional triggers and data-related risks is now fundamental to planning and executing transactions in the region.
