Foreign Direct Investment in Asean: The Moderating Role of Regulatory Quality on Macroeconomic Factors and Political Stability
DOI:
https://doi.org/10.61194/ijjm.v7i1.1973Keywords:
Foreign Direct Investment, Regulatory Quality, Political Stability, Inflation, Interest Rate, Exchange Rate, ASEANAbstract
This study examines the determinants of Foreign Direct Investment (FDI) inflows in developing ASEAN countries, focusing on interest rates, exchange rates, inflation, and political stability, with regulatory quality as a moderating variable. Employing a quantitative, causal-comparative design, the study utilizes panel data from eight ASEAN countries (Malaysia, Thailand, Vietnam, Myanmar, Indonesia, Laos, the Philippines, and Cambodia) spanning the period from 2003 to 2023, sourced from the World Bank and the Worldwide Governance Indicators. Chow and Hausman tests indicate that the Fixed Effects Model provides the best fit for the data. The results indicate that interest rates have a negative and significant impact on FDI inflows, suggesting that higher borrowing costs deter foreign investors. Exchange rates exert a positive and significant influence, suggesting that currency depreciation enhances investment attractiveness. Inflation is found to be insignificant, indicating that investors can tolerate moderate inflation. Political stability shows a positive and significant effect, underscoring its crucial role in reducing investment risk and enhancing investor confidence. Furthermore, regulatory quality significantly moderates the effects of interest rates, exchange rates, and political stability on FDI. Strong regulatory frameworks can cushion the impact of adverse macroeconomic conditions and strengthen investment security. These findings extend institutional theory and emphasize the importance of macroeconomic, political, and regulatory stability in attracting FDI.
Downloads
References
Abimanyu, A. (2004). Decentralization and the challenge for Indonesian fiscal sustainability. Reforming Intergovernmental Fiscal Relations and the Rebuilding of Indonesia.
Adewale, A. A. (2024). The Impact Of Electronic Banking Channels On The Financial Inclusion In Nigeria. Gomal University Journal of Research, 40(4), 425–441.
Adriradwa, N., Safitri, M., Wardani, S., Mubarokah, L., Malasari, N., & Syahwildan, M. (2025). Pengaruh kebijakan nilai tukar dan fluktuasi suku bunga, ekonomi makro terhadap Foreign Direct Investment di Indonesia. Musytari: Neraca Manajemen, Ekonomi, 14(2), 359–367. https://doi.org/10.8734/mmmaev.v12i2.359
Agustin, W., Wahyudin, A. Y., & Isnaini, S. (2021). Language learning strategies and academic achievement of English Department students. Journal of Arts and Education, 1(1), 19–29.
Ainafa’id, D., & Utomo, Y. P. (2024). Faktor Yang Mempengaruhi Foreign Direct Investment di Negara-negara di ASEAN tahun 2020–2022. Universitas Muhammadiyah Surakarta.
Aliber, R. Z. (1970). The Currency Areas Hypothesis. Journal of International Business Studies, 2(3), 1–9.
Bickel, I., & Breuer, T. (2009). FDI in Land in Developing Countries. Rural 21 - The International Journal for Rural Development, 43(2), 12–18.
Bramtteo, F. T., Anggraeni, E., & Restie Utamie, Z. (2025). Pengaruh Nilai Tukar dan Tingkat Inflasi terhadap Produk Domestik Bruto Negara Anggota Organisasi Kerjasama Islam (OKI) Perspektif Ekonomi Islam Tahun 2008–2023. Jurnal Ekonomi Dan Bisnis Islam (JEBI), 5(1), 15–30.
Davis, B. K., & Akbar, M. A.-F. R. (2022). DETERMINAN FOREIGN DIRECT INVESTMENT DI 6 NEGARA ASEAN DENGAN MENGGUNAKAN PENDEKATAN DATA PANEL. Jurnal Ilmiah Ekonomi Bisnis, 27(3), 1–9. https://doi.org/0.35760/eb.2022.v27i3.5555
DW. (2024). Ekonomi Vietnam terus meroket: Apa penyebabnya? DW.Com. https://www.dw.com/id/ekonomi-vietnam-terus-meroket-apa-penyebabnya/a-70509464
Elleuch, N. M., Jaouadi, I. Z., & Jaouadi, S. (2015). Examination of The impact of Political and Country Risk on Foreign Direct Investment Inflows in Tunisia. European Academic Research II, 2(11), 14434–14445.
Fahmi, A. U., & Septiani, Y. (2023). The influence of GDP, inflation, and deposit rates on FDI in Indonesia. Journal of Humanities, Social Sciences and Business, 2(2), 409–423.
Fisher, I. (1930). The Theory of Interest: As Determined by Impatience to Spend Income and Opportunity to Invest It. Macmillan.
FoEh, J., Suryani, N. K., & Silpama, S. (2020). The Influence of Inflation Level, Exchange Rate and Gross Domestic Product on Foreign Direct Investment in the ASEAN Countries on 2007 - 2018. European Journal of Business and Management Research, 5(3), 21–29. https://doi.org/10.24018/ejbmr.2020.5.3.311
Hicks, J. R. (1939). The Foundations of Welfare Economics. The Economic Journal, 49(196), 696–712.
Hossain, Md. S., Voumik, L. C., Ahmed, T. T., Alam, M. B., & Tasmim, Z. (2024). Impact of geopolitical risk, GDP, inflation, interest rate, and trade openness on foreign direct investment: Evidence from five Southeast Asian countries. Regional Sustainability, 5(4), 100–123. https://doi.org/10.1016/j.regsus.2024.100177
Huda, B., Sukidin, S., & Wahyuni, S. (2019). Pengaruh Kualitas Pelayanan, Prosedur Kredit, Dan Tingkat Suku Bunga Terhadap Keputusan Nasabah Dalam Mengambil Kredit Pada Pt. Bank Perkreditan Rakyat Sukowono Arthajaya Jember. JURNAL PENDIDIKAN EKONOMI: Jurnal Ilmiah Ilmu Pendidikan, Ilmu Ekonomi Dan Ilmu Sosial, 13(1), 87–95. https://doi.org/10.19184/jpe.v13i1.104 25
Hussain, F., Jianfu, S., & Kamran, M. (2023). EXAMINING MACROECONOMIC FACTORS & CAPITAL STRUCTURE CHOICES IN PAKISTAN’S MANUFACTURING INDUSTRY: AN EMPIRICAL ANALYSIS. Journal of Social Research Development (JSRD), 4(2), 252–261.
Kaufmann, D., Kraay, A., & Mastruzzi, M. (2011). The Worldwide Governance Indicators: Methodology and Analytical Issues. Hague Journal on the Rule of Law, 3(2), 220–246. https://doi.org/10.1017/S1876404511200046
Kellard, N. M., Kontonikas, A., Lamla, M. J., Maiani, S., & Wood, G. (2022). Risk, financial stability and FDI. Journal of International Money and Finance, 120(6), 102232. https://doi.org/10.1016/j.jimonfin.2020.102232
Keynes, J. M. (1936). William Stanley Jevons. London: Palgrave Macmillan UK.
Kottaridi, C., & Thomakos, D. (2018). Regulate me not”: The regulatory failures of taxation: A tale from Greece. Managerial and Decision Economics, 39(8), 863–871.
Kurul, Z., & Yalta, A. Y. (2017). Relationship Between Institutional Factors and FDI Flows in Developing Countries: New Evidence from Dynamic Panel Estimation. Economies, 5(2), 1–10. https://doi.org/10.3390/economies5020017
Mariotti, S., & Marzano, R. (2019). Varieties of capitalism and the internationalization of state-owned enterprises. Journal of International Business Studies, 50(5), 669–691.
Merian, S., & Aimon, H. (2024). Analisis Determinan Investasi Asing Langsung (FDI) Kelompok Negara Middle Income di ASEAN. Media Riset Ekonomi Pembangunan (MedREP), 1(3), 1–9.
Mirkovikj, B. K., Gkasis, P., & Golitsis, P. (2024). Regulatory Quality and Foreign Direct Investment: A Case Analysis of North Macedonia. Theoretical Economics Letters, 14(5), 1883–1913.
Mishkin, F. S. (2008). Ekonomi Uang, Perbankan, dan Pasar Keuangan. Edisi 8. Jakarta: Salemba Empat.
Mundell, R. A. (1961). Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates. Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates, 27(4), 479–487.
Napitupulu, J. H., Ellyawati, N., & Astuti, R. F. (2021). Pengaruh literasi keuangan dan sikap keuangan terhadap perilaku pengelolaan keuangan mahasiswa Kota Samarinda. Jurnal Pendidikan Ekonomi (JUPE), 9(3), 138–144.
North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.
Nugraha, P. (2024). Pengaruh Kualitas Kebijakan Terhadap Penanaman Modal Asing Langsung pada Negara ASEAN. Journal of Ecotourism and Rural Planning, 1(2), 1–11. https://doi.org/10.47134/jerp.v1i2.169
Open Development Mekong. (2024). Open Development Mekong. Laos.Opendevelopmentmekong.Net. https://laos.opendevelopmentmekong.net/topics/foreign-direct-investment-in-laos/
Paramita, E. A. (2021). PENGARUH LIKUIDITAS, KUALITAS ASET, SENSITIVITAS PASAR DAN EFISIENSI TERHADAP RENTABILITAS PADA BANK UMUM SWASTA NASIONAL DEVISA. SEKOLAH TINGGI ILMU EKONOMI PERBANAS SURABAYA.
Priyadi, U., Susantun, I., & Shidiqie, J. S. A. (2024). The Impact of Policy Quality and Political Stability on Foreign Direct Investment in ASEAN Countries: An Institutional Economics Analysis. Journal of Ecohumanism, 3(6), 1561–1572. https://doi.org/10.62754/joe.v3i6.4104
Putri, G. L., Kesuma, A. S., Syukur, I., & Kesuma, M. el-K. (2025). Integration of SWOT and TTCI Models for Indonesian Halal Tourism: Global Competitiveness Improvement Strategy. KnE Social Sciences, 10(8), 519–538. https://doi.org/10.18502/kss.v10i8.18471
Rastiati, R., & Khoirudin, R. (2025). Determinants of foreign direct invesment in eight ASEAN countries. Optimum: Jurnal Ekonomi Dan Pembangunan, 14(2), 263–271. https://doi.org/10.12928/optimum.v14i2.10236
Rugman, A. M. (1980). Internalization as a General Theory of Foreign Direct Investment: A Reappraisal of the Literature. Weltwirtschaftliches Archiv, 116(2), 365–379. https://doi.org/10.1007/BF02708194
Shafiq, M. N., Hua, L., Bhatti, M. A., & Gillani, S. (2021). Impact of Taxation on Foreign Direct Investment: Empirical Evidence from Pakistan. Pakistan Journal of Humanities and Social Sciences, 9(1), 10–18. https://doi.org/10.52131/pjhss.2021.0901.0108
Simanjuntak, D. (2018). FDI, Political Risk, and Government Policy. Eko-Regional Jurnal Pengembagan Ekonomi Wilayah, 13(1), 34–39. https://doi.org/10.20884/1.erjpe.2018.13.1.1162
Simanjuntak, S. D. A. (2025). Terhambat regulasi, kontribusi FDI ke PDB Indonesia terendah di ASEAN. Bisnis.Com. https://ekonomi.bisnis.com/read/20250209/9/1838039/terhambat-regulasi-kontribusi-fdi-ke-pdb-indonesia-terendah-di-asean
Siyoto, S., & Sodik, M. A. (2015). Dasar Metodologi Penelitian. Yogyakarta : Literasi Media Publishing.
Sottilotta, C. E. (2012). Political Risk: Concepts, Definitions, Challenges. LUISS School of Government Annual Conference 2012 “Investing in the Age of Political Risks.,” 1–9. https://doi.org/10.13140/2.1.3205.9846
Subagyo, E. A., & Restikasari, W. (2025). THE EFFECT OF INVESTMENT, LABOR, AND EDUCATION LEVEL ON ECONOMIC GROWTH IN INDONESIA IN 2019-2023. Journal of Finance, Economics and Business, 4(1), 28–44.
Suddaby, R. (2013). Institutional Theory. In Encyclopedia of Management Theory (pp. 379–384). SAGE Publications, Ltd. https://doi.org/10.4135/9781452276090.n132
Sugiyono. (2015). Metode Penelitian Kuantitatif Kualitatif Dan R & D (19th ed.). CV Alfabeta.
Sukirno, S. (2013). Makroekonomi: Teori Pengantar. Jakarta: PT. Raja Grafindo Persada.
Syarifudin, S., & Mundiroh, S. (2020). Analisis Pengaruh Makro Ekonomi dan Resiko Ekonomi Terhadap Keputusan Investasi Asing di Indonesia (Studi pada Bank Indonesia Periode 2014-2016). Jurnal Disrupsi Bisnis, 3(3), 49–66. https://doi.org/10.32493/drb.v3i3.8373
Synergy Policies. (2021). Dampak kudeta Myanmar terhadap Indonesia dan geopolitik Asia Tenggara. Synergy Policies. https://www.synergypolicies.com/post/dampak-kudeta-myanmar-terhadap-indonesia-dan-geopolitik-asia-tenggara
Todaro, M. P., & Smith, S. C. (2012). Economic development (11th ed.). London : Addison Wesley.
Vidinopoulos, A., Whale, J., & Fuentes Hutfilter, U. (2020). Assessing the technical potential of ASEAN countries to achieve 100% renewable energy supply. Sustainable Energy Technologies and Assessments, 4(2), 101–115. https://doi.org/10.1016/j.seta.2020.100878
Vietnam Briefing. (2024). Why Invest ini Vietnam? Vietnam Briefing. https://www.vietnam-briefing.com/doing-business-guide/vietnam/why-vietnam
Widianatasari, A., & Purwanti, E. Y. (2021). Pengaruh kualitas institusi, pengeluaran pemerintah, dan foreign direct investment terhadap pertumbuhan ekonomi. Ecoplan, 4(2), 86–98.
Wilantari, R. N., Saragih, G. S., & Prianto, F. W. (2020). Persepsi Korupsi dan Kondisi Makroekonomi Terhadap Investasi Asing Di Indonesia, Filipina dan Thailand. Media Trend, 15(1), 174–184. https://doi.org/10.21107/mediatrend.v15i1.6745
World Bank. (2025). Foreign direct investment, net inflows (% of GDP). Worldbank.Org. https://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS
Downloads
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
