With this year marking Korea‘s 10th anniversary since the country entered into the free trade agreement with the Association of Southeast Asian Nations, South Korea‘s investment among ASEAN accounts for only five percent of total foreign direct investments, according to a recent report by EY Rediscover ASEAN.

As a global accounting and consulting firm, EY Rediscover ASEAN’s report found that Korea’s investment in Southeast Asian member nations accounted for five percent of total FDIs in 2015, compared to Europe’s 17 percent, followed by Japan at 15 percent, the US with 11 percent and China at 7 percent. 

Compared to other Asian nations such as Japan and China, Korea’s mergers and acquisitions in ASEAN member countries were also low. From 2010 up until last year, M&A transactions in Japan amounted to roughly $33 billion followed by China with $29 billion. Korea’s mergers and acquisitions transactions, however, totaled around $4 billion.

The average annual growth rate of ASEAN countries is expected to be roughly 5.1 percent over the next five years, according to the report with Cambodia, Myanmar and Laos projected to show healthy domestic growth rates of more than 7 percent. Developing markets of Indonesia, Malaysia, Philippines and Vietnam are projected to generate a steady CAGR of 5 to 6 percent from 2017 to 2021.

Total foreign investments in ASEAN countries are still expected to increase. FDI inflows to ASEAN grew at a compound annual growth rate of 11.5 percent between 2005 and 2015.

The report found that 87 percent of American companies 85 percent of European companies intend to increase investment in ASEAN over the next five years. China’s trade deals with ASEAN members are expected to reach $1 trillion by 2020, while its’ investments are projected to reach $150 billion.

By Julie Jackson (juliejackson@heraldcorp.com)