Developing Asia remained the world’s largest destination for foreign direct investment (FDI) among developing regions in 2025, receiving $644 billion, according to the World Investment Report 2026 by UN Trade and Development (UNCTAD). This figure represents about 40% of global FDI and more than 70% of flows to developing economies. Yet the region’s significance now lies not only in the volume of investment it attracts, but also in where within the region that investment is going. Companies reassessed supply chains, governments competed for new industries, and investors sought growth opportunities in an uncertain global economy. The result is a shifting map of investment across developing Asia.
FDI can help economies move into higher-value production, digital services, logistics and regional supply chains, but only if investment connects to domestic firms, skills and infrastructure. China remained one of the world’s largest FDI recipients, despite a decline in inflows from about $116 billion to $105 billion. It continued to attract commitments in higher value-added activities, research and development and pharmaceutical manufacturing. Overall, the region’s performance reinforces Asia’s central role in global investment decisions. At the same time, the balance within Asia itself continues to evolve.
South-East Asia gains ground
One of the most notable developments in 2025 was the rise of South-East Asia as the largest recipient subregion in developing Asia. While inflows declined in East Asia, investment increased in South-East Asia, South Asia, West Asia and Central Asia. India played a major role in that shift, recording a 44% increase in FDI inflows and helping drive growth across South Asia. At the country level, concentration remains high: eight of the ten largest developing-economy recipients of FDI are in Asia. Together, they account for about 60% of total inflows to developing economies and more than 80% of regional inflows.
A changing global investment landscape
Investment is increasingly flowing into sectors linked to semiconductors, digital infrastructure, artificial intelligence, advanced manufacturing and energy-transition technologies and services. Together, these industries accounted for 44% of global greenfield investment in 2025, up from 16% five years earlier. Many Asian economies enter this period with advantages including established manufacturing capacity, supplier networks, large consumer markets, growing industrial ecosystems and deep integration into regional production networks. However, these advantages are uneven, and not all economies can compete for the same projects. Competition for capital is becoming more intense.
For policymakers, the priority is not simply to offer more incentives. The report points to the need for investment facilitation, stronger supplier ecosystems, reliable energy and logistics, workforce skills and regional integration that allows smaller economies to connect to larger production networks. Governments across the world are using industrial policies, including incentives and other tools, to attract projects linked to future growth industries. For Asian economies, the challenge is no longer simply attracting foreign investment but remaining competitive in a world where capital, technology and industrial capabilities are increasingly concentrated in strategic sectors. The next phase will depend on which economies can connect foreign investment to industrial upgrading, jobs, supplier networks and broader regional development.
