FDI Key to Bridging Asia-Pacific’s $1.5 Trillion SDG Gap

Windmills are at the backdrop of a highway in Ninh Thuận, Vietnam. Governments should invest in renewable energy and infrastructure as part of financing for development to close SDG gaps in Asia and the Pacific.

Over the past two decades, foreign direct investment (FDI) has been the single largest and most stable source of external development capital in Asia and the Pacific.

In 2022 alone, FDI flows into the region exceeded US$300 billion, outpacing official development aid (ODA), remittances, and portfolio investment flows. Even in 2023, when global investment slowed due to higher interest rates and geopolitical uncertainty, FDI into the region remained close to $290 billion.

For a region facing a $1.5 trillion annual financing gap to achieve the Sustainable Development Goals (SDGs), this underscores the vital role of FDI in the future of development finance and the 2030 Agenda.

From the Addis Ababa Action Agenda (2015) to the recent Sevilla Commitment (2025), the global community has emphasised the importance of FDI for sustainable development. Unlike ODA, remittances, or portfolio investments, FDI offers stability, scale, and long-term productive capacity—building renewable energy plants, expanding digital infrastructure, and creating jobs.

However, the impact of FDI depends on aligning investments with SDG priorities. Investment promotion agencies (IPAs) have a crucial role in:

Aligning investment attraction strategies with SDGs.

Leveraging regional cooperation to attract cross-border investments.

Developing impact measurement tools to track contributions to sustainable development.

Regional initiatives—such as ASEAN’s Regional Investment Promotion Action Plan and Central Asia’s “Boosting Exports through FDI” programme—demonstrate how collaboration can unlock larger, more sustainable flows of investment.

FDI has already supported clean energy, digital connectivity, and decent job creation. To fully realise its potential, governments and IPAs must adopt strategic, collaborative, and impact-driven approaches.

ESCAP stands ready to assist its member States in promoting FDI that advances the SDGs.