Navigating the Recent Normal: The State of FDI in Asia and the Pacific
Foreign direct investment (FDI) is far more than a metric of economic confidence; it’s a critical engine for financing sustainable development, building resilient infrastructure, and creating high-quality jobs across the Asia-Pacific region. However, the investment landscape is shifting. As volatility becomes the “new normal,” the region is grappling with a decline in new project announcements and a surge in protectionist policies that threaten long-term growth goals.
The Decline in Greenfield Investments
Recent data reveals a cooling trend in new investments. In 2025, the Asia-Pacific region saw US$ 348 billion worth of Greenfield projects announced. This represents a 16 per cent decrease compared to 2024, when the region recorded US$ 413 billion in announcements, according to UNESCAP.
This downturn isn’t happening in a vacuum. The slowdown is largely driven by heightened uncertainty regarding market access and cross-border production. The primary culprits are the proliferation of tariffs, protectionism, and discriminatory measures that make corporate investors more cautious about committing capital.
The Rise of Trade Protectionism
The investment environment has become increasingly volatile as discriminatory trade policy interventions have spiked over the last five years. The scale of this shift is evident in the records of these policies:
- 2020: 121 discriminatory measures (reflecting the average of the preceding decade since 2010).
- 2022: 231 discriminatory measures.
- 2023: 443 discriminatory measures.
- 2025: 462 discriminatory measures.
This trend extends beyond trade into general investment policy. Since January 2025, 230 new investment policies have been issued globally, accounting for 26 per cent of all such policies implemented since 2020, as reported by BusinessGhana.
Closing the SDG Financing Gap
The stakes for maintaining a healthy flow of FDI are incredibly high. The Asia-Pacific region currently faces an annual financing gap estimated at US$ 1.5 trillion to meet its Sustainable Development Goals (SDGs). Well-targeted FDI remains one of the most significant sources of private capital available to narrow this gap and ensure sustainable regional growth.
Regional Spotlight: Ghana’s 2025 Performance
While the broader region faces headwinds, some specific markets continue to attract significant interest. In the first half of 2025, Ghana attracted US$ 862.96 million in FDI, spanning 76 registered projects, according to the Ghana Investment Promotion Centre (GIPC).
Defining the Regional Landscape
To understand these trends, it’s vital to define the scope of the region. According to the Asian Development Bank (ADB), “Asia” in this context refers to 49 members in Asia and the Pacific. This includes 46 developing economies alongside Australia, Japan, and New Zealand.
- Investment Drop: Greenfield FDI announcements fell 16% from US$ 413 billion in 2024 to US$ 348 billion in 2025.
- Policy Volatility: Discriminatory trade measures rose from 121 in 2020 to 462 in 2025.
- Funding Need: A US$ 1.5 trillion annual gap exists for achieving Sustainable Development Goals in the region.
- Global Shift: 26% of all investment policies since 2020 were issued since January 2025 alone.
Frequently Asked Questions
What are Greenfield projects?
Greenfield investments are a mode of entry where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up, as opposed to acquiring existing businesses through mergers and acquisitions.
Why is FDI declining in the Asia-Pacific region?
The decline is attributed to increased uncertainty caused by the proliferation of tariffs, protectionist stances, and discriminatory trade policy interventions that hinder market access and cross-border production.
How does FDI help the Sustainable Development Goals (SDGs)?
FDI provides the necessary private capital to finance sustainable development, build resilient infrastructure, and create quality jobs, helping to fill the US$ 1.5 trillion annual financing gap in the region.
Summary and Outlook
The Asia-Pacific region is at a crossroads. While the decline in Greenfield FDI and the rise of protectionism present significant challenges, the fundamental need for capital to meet the SDGs remains. For policymakers and corporate investors, the priority now is to navigate this volatility by understanding the drivers of current investor behavior and leveraging FDI to support long-term, sustainable resilience.