For Its COVID-19 Recovery, Southeast Asia Looks to Responsible Investment in Agriculture

The heads of state of the 10 members of the Association of Southeast Asian Nations (ASEAN) have strongly reaffirmed their commitment to promoting responsible investment in agriculture in their region as part of its COVID-19 recovery strategy.

Why does this matter? In the world of investment promotion, signals are key. Countries are often reluctant to raise standards or reform laws and policies for fear of scaring away foreign investors. By putting responsible agricultural investment at the heart of their COVID-19 recovery strategy, the ASEAN member states have sent a strong signal of their own. They will continue to prioritize, pursue, promote, and protect responsible investment in agriculture—not in spite of COVID-19, but because of it—as the crisis has exposed vulnerabilities in food systems and emphasized the need for more and better investment in agriculture.

As COVID-19 continues to take lives, decimate public health systems, and bring economies to their knees, it also has served a severe blow to worldwide flows of foreign direct investment (FDI). The United Nations Conference on Trade and Development (UNCTAD) has reported that global FDI fell by 49% in the first half of 2020. This has prompted commentators (including IISD) to express concerns that competition over dwindling FDI stocks could take the form of a “race to the bottom.” This happens when countries lower their standards to attract FDI quantity, without due regard for FDI quality.

The ASEAN heads of states have, however, sent a clear signal that Southeast Asia will continue to prioritize and promote responsible investment, including in the critical sector of food, agriculture, and forestry, as a key part of its COVID-19 recovery strategy.

Back in June, ASEAN Secretary General Dato Lim Jock Hoi said at the ASEAN Summit that:

• We reaffirmed our commitment to strengthen regional food security through the implementation of the ASEAN Guidelines on Promoting Responsible Investment in Food, Agriculture and Forestry [the ASEAN RAI] that contributes to regional economic development, food and nutrition security, food safety and equitable benefits, as well as the sustainable use of natural resources.

Now, in November, the heads of state have again underscored the importance of responsible investment in food, agriculture, and forestry, and the centrality of the ASEAN RAI to achieving that. On November 12, the ASEAN heads of state adopted the Implementation Plan of the ASEAN Comprehensive Recovery Framework. The plan sets a key priority of promoting sustainable and responsible investment, and implementing the ASEAN RAI is the first in a list of initiatives set out to pursue that goal. In the Framework, ASEAN’s commitment to responsible investment, especially in agriculture, could not be clearer, with statements such as:

• “The ongoing public health crisis presents ASEAN with an opportunity to reset and recalibrate the region’s growth trajectory on a more sustainable, accelerated, and resilient track.”
• “Policy-makers as well as companies and industries shall look beyond efficiency consideration, to also take into consideration resilience, inclusion, and sustainability.”
• “It is in the region’s long-term interest to attract investments that respect social (including labour) and environmental regulations, standards, and the relevant laws and regulations, and that will reinvest in human capital development and local economic development. Thus, properly managed and implemented, sustainable investment will improve economic and social resilience to future shocks.”
• “The impact of the pandemic on food security, through disruptions on the supply chains, has highlighted again the importance of investing in sustainable agriculture and food system.”

Through these statements, ASEAN has put investors on notice that they will not be relaxing investment governance standards to entice back FDI. They have put their governments on notice that they will not be refereeing a race to the bottom, but rather a race to the top. It will now be up to each member state government to ensure that these strong messages go beyond words on a page. For the ASEAN RAI to truly achieve responsible investment in agriculture and support the region’s COVID-19 recovery, its principles must be translated into investment governance frameworks and promotion practices, and enforced on the ground. Whether and how this will be done remains to be seen.

Despite the uncertainties imposed by COVID-19, the signal from Southeast Asia is clear: “ASEAN shall step up efforts to promote sustainable and socially responsible investment policy-making at national and regional levels.”

IISD welcomes this call and looks forward to continuing to assist those efforts by supporting the implementation of the ASEAN RAI, together with the ASEAN Secretariat, Grow Asia, and the Food and Agriculture Organization of the United Nations (FAO).