THE EFFECTS OF REAL GDP, INFLATION, FDI, AND BUSINESS REGULATION TO DOMESTIC INVESTMENT: A CASE OF THE ASEAN 5 IN 2003-2012
Abstract
ASEAN as a group of developing economies or emerging markets and strategic market becomes a place for
investment that attracts many investors. ASEAN 5 namely Indonesia, Malaysia, Singapore, the Philippines and
Thailand showed a unique movement in the period before the 2008 global financial crisis to post-crisis. Seeing the
movement of the economic growth, it is needed to see how the investment role in supporting the growth of a
country's output. Which investment is definitely an important factor needed by all countries as a driver of economic
and domestic development. So it is important to find out how the other important macroeconomics variable namely
real GDP, inflation, FDI, and business regulation in the period 2003 to 2012 affect domestic investment in ASEAN 5
countries.
By using Panel Data Analysis, this research found that several important points regarding those objectives.
Revealed that real GDP has a significant positive effect on domestic investment. While FDI and business regulation
have significantly negative effects on domestic investment. But Inflation is likely not a big deal for domestic
investors which it is insignificant affecting the domestic investment in ASEAN 5 for 2003-2012 case. Those findings
explain that the government has to manage or even put more intensive effort towards GDP performance by
implementing pro-investment policy. And also fiscal policy is one of important drivers for domestic investment. Each
country has to increase the quality of human resources, infrastructure, while in the same time, good governance and
efficient regulation is needed in most countries. Reduction of procedures and bureaucracy quality improvement are
the most priorities in the ASEAN 5 countries. And domestic investors and government together have to put more
efforts in making improvement and technological innovation.
Keywords: Domestic Investment, Real GDP, Inflation, FDI, Business Regulation, ASEAN 5.
investment that attracts many investors. ASEAN 5 namely Indonesia, Malaysia, Singapore, the Philippines and
Thailand showed a unique movement in the period before the 2008 global financial crisis to post-crisis. Seeing the
movement of the economic growth, it is needed to see how the investment role in supporting the growth of a
country's output. Which investment is definitely an important factor needed by all countries as a driver of economic
and domestic development. So it is important to find out how the other important macroeconomics variable namely
real GDP, inflation, FDI, and business regulation in the period 2003 to 2012 affect domestic investment in ASEAN 5
countries.
By using Panel Data Analysis, this research found that several important points regarding those objectives.
Revealed that real GDP has a significant positive effect on domestic investment. While FDI and business regulation
have significantly negative effects on domestic investment. But Inflation is likely not a big deal for domestic
investors which it is insignificant affecting the domestic investment in ASEAN 5 for 2003-2012 case. Those findings
explain that the government has to manage or even put more intensive effort towards GDP performance by
implementing pro-investment policy. And also fiscal policy is one of important drivers for domestic investment. Each
country has to increase the quality of human resources, infrastructure, while in the same time, good governance and
efficient regulation is needed in most countries. Reduction of procedures and bureaucracy quality improvement are
the most priorities in the ASEAN 5 countries. And domestic investors and government together have to put more
efforts in making improvement and technological innovation.
Keywords: Domestic Investment, Real GDP, Inflation, FDI, Business Regulation, ASEAN 5.
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