ASEAN economies have progressively liberalised their foreign investment regimes to foster growth, productivity, and global value chain integration, including in sectors relevant to the digital and green transitions. This has led to greater capital inflows, technology transfer, and employment. Evolving geoeconomic dynamics, strategic competition, supply-chain realignment, and the evolution of critical technologies have in many jurisdictions intensified concerns about security implications of certain investment transactions and relationships. This chapter examines how ASEAN Member States (AMS) currently reconcile openness to investment with safeguards to navigate the evolving geoeconomic landscape and potential associated risks. It describes regional and global developments, ASEAN Member States’ approaches, and considers avenues to make investment environments more attractive while managing security interests of host economies.
OECD Review of Investment Policies in ASEAN
Abstract
Foreign direct investment (FDI) inflows have driven infrastructure construction and modernisation, technology transfer, job creation, and productivity-led economic growth across ASEAN Member States (AMS), supporting global integration, value-chain participation, and the development of strategic sectors. This trajectory has been enabled by the progressive liberalisation of FDI regimes worldwide – reducing barriers to entry, limiting discriminatory treatment of foreign firms, and facilitating cross-border capital flows – which AMS have broadly followed.
Open economies can benefit from the opportunities that foreign capital represents, but opportunities may come with certain risks. While most investors pursue commercial objectives, some investments may raise concerns over whether investor motivations or affiliations are compatible with the host country’s security interests. Through their investments, these foreign investors may acquire control over sensitive assets or access to know-how, sensitive information, or sensitive sites. Concentration of economic relations with a single or few other countries may create overdependencies that can also generate such concerns.
Governments have long recognised the risks that may arise from certain foreign investments and maintained investment security policies to manage them. As in many other economies, most AMS have had legal instruments in place for several decades that provide authorities with specific means to address investment security concerns. Over time, however, the context in which these policies operate, and the nature of the security risks they seek to address, have changed significantly. The region has experienced sustained economic expansion and has attracted increasing volumes and new forms of foreign investment in support of its development objectives. At the same time, AMS have been increasingly affected by shifts in the geopolitical and geoeconomic environment, as well as by deeper integration into – and growing reliance on – global value chains and critical supply networks. As a result, countries’ exposure to certain foreign investment has evolved, and policy frameworks designed under earlier economic and strategic conditions may no longer be fully aligned with today’s investment-security risk landscape.
AMS currently rely on a wide range of investment security policies to protect their security interests. The design and calibration of these policies, including their interaction with the objective of attracting foreign investment, are central to ensuring that frameworks remain non-discriminatory, proportionate, transparent, predictable, and accountable. These features support both effective risk management and continued openness to beneficial investment.
Regional and international co-operation can support better outcomes across all dimensions of investment security policy. Co-ordinated approaches can facilitate information sharing on cross-border transactions of common concern and draw on the body of internationally recognised principles and good practices that has emerged from policy experience across jurisdictions. Given the spillover effects that national policy choices can generate in integrated economies, regional dialogue can play a particular role in supporting a shared understanding of investment-related security risks and fostering reflections for more coherent, complementary and effective policy approaches across AMS.
Maintain open investment regimes with clear investment security safeguards: Review investment security policies at regular intervals. Use these reviews to assess whether the rules effectively address identified security risks and whether procedures create unnecessary barriers to foreign investment. Clear and calibrated investment regimes can support security risk management and preserve openness to foreign investment.
Base investment security measures on recognised good practices: Design investment security policies to address identified security risks. Measures should be targeted, transparent, proportionate, predictable, and non-discriminatory. Drawing on internationally recognised principles can help maintain security objectives with a stable and attractive investment environment.
Deepen regional co-operation and knowledge sharing on investment security. Enhance dialogue within ASEAN and with international partners on investment security interests and risks. Greater co-operation and exchange of experience can support more coherent approaches across countries and reduce fragmentation in policy responses.
Security has always been high on governments’ agendas, as testified by the efforts to maintain peace, stability, and sovereignty. Economic policy also strives to ensure security by fostering prosperity, growth, and wellbeing as factors that underpin stability. Protecting these achievements against shocks and pressures is a further important objective of economic policymaking. Evolving circumstances require a steady adaptation of policies to ensure these objectives are best achieved.
Recent geopolitical and geoeconomic evolutions as well as a string of crises have delivered ample illustration of shocks and pressures. Economic and political crises, geopolitical tensions, crises such as the COVID-19 pandemic, episodes of military conflict, and the use of trade barriers and similar instruments have recently stressed economies and tested their resilience. Implications of technological evolutions and the potential disruption transmitted through data- and technology-driven economies have further sharpened awareness of vulnerabilities.
Many governments have responded to these developments by adjusting how they manage the security of their economies. Adjustments include measures to secure access to essential resources such as energy, food, and technology; cybersecurity risks; resilience in strategic industries and supply chains; and continuity in trade of critical inputs. While taking these measures, governments have been careful to maintain channels for beneficial exchanges open to maintain growth and conditions for diversity of supply.
Different experiences and degrees of capacity to adjust policies have led to different trajectories across countries. AMS have focused most of their attention on sector-specific regulation in security-sensitive sectors such as critical infrastructure, digital services, data governance and cyber security. Some AMS have amended existing investment security policies or introduced new ones.
Regional initiatives at ASEAN level reflect the growing attention to security implications in the economies of the region. These initiatives include the Framework on ASEAN Supply Chain Efficiency and Resilience (ASEAN, 2024[1]) that seeks to strengthen supply chain robustness and reduce vulnerabilities linked to disruptions. ASEAN has also developed sector-specific initiatives in strategically significant areas. The ASEAN Framework for Integrated Semiconductor Supply Chain (AFISS) (ASEAN, 2025[2]) focuses on regional value chain connectivity, capabilities, and partnerships in the semiconductor sector. Ongoing work towards the ASEAN Digital Economy Framework Agreement (DEFA) (ASEAN, 2023[3]) seeks to strengthen conditions for deeper digital integration. In this area, issues related to data governance and trust increasingly intersect with economic security considerations.
ASEAN-level dialogue has recently expanded beyond sectoral aspects as reflected in the establishment of the ASEAN Geoeconomics Task Force in February 2025 and the publication in late 2025 of the ASEAN Geoeconomics Report 2025: This Time It Is Different: ASEAN’s Agency in Shaping the New Global Agenda (ASEAN, 2025[4]). This latter report identifies supply chain concentration, dependencies in critical technologies, and exposure of strategic infrastructure as factors that may affect open economies, especially with respect to global economic fragmentation and strategic competition. While these issues are examined primarily through a trade and supply-chain resilience lens, the analysis may also have implications for investment, given the role of foreign investment in shaping production structures, infrastructure ownership, and technological capabilities. A central theme of the report is the need to address these challenges through geoeconomic approaches rather than measures framed primarily around security. It cautions against broad or indiscriminate restrictions that could undermine confidence in the region’s openness, and instead emphasises resilience, diversification, and policy coherence as guiding principles for policy responses in a more contested global environment.
Neither the ASEAN Geoeconomics Report 2025 nor other regional work at the ASEAN level specifically addresses investment security – yet. This may change as investment security is increasingly understood as a part of broader efforts to strengthen economic security; in many economies, investment security was in fact the first concrete implementation of policies to enhance economic security (OECD, 2025[5]).
5.2.1. Evolving risk scenarios shape investment security measures
Investment policies from the early 20th century testify to longstanding awareness that international investment may have security implications. In certain countries, early policies were introduced in wartime contexts, especially during World War I and, to a lesser extent, during the conflicts surrounding World War II. Other economies introduced such policies in later decades. Overall, levels of attention to investment-related risks have fluctuated over time.
The second half of the 20th century and especially the last two decades saw limited attention to potential security implications of foreign investment – the benefits of globalisation dominated most governments’ investment policy agenda. Risk perceptions began to change in the early 2000s. While the desire to keep economies open and attract foreign investment remained strong, new types of investors – such as less transparent Sovereign Wealth Funds – began to play a larger role as international investors, and acquisitions of sensitive assets, including critical infrastructure, attracted particular concern.
Some jurisdictions, mainly advanced economies, began to introduce or reform their investment security policies then. Their scope remained narrow and essentially covered defence industries, sensitive real estate for example in border areas, and, more rarely, critical infrastructure. Designs were mostly simple bureaucratic processes; resources remained unspecified and actual interventions were exceedingly rare. The 2009 Global Financial Crisis focused attention temporarily elsewhere.
Investment security returned as a priority around 2014, this time driven by increasing activity of State-guided and State-subsidised investments to systematically acquire strategic assets to accelerate industrial modernisation and technological leadership. Greater awareness of vulnerabilities resulting from the exponential growth of sensitive data and processing power, and connectedness of critical systems only heightened concerns. Technological advances dramatically expanded the scope of actors that have the capability to disrupt critical systems, where earlier only State actors had such capabilities.
Investments that sought to establish dominance or control over natural resources, transport corridors, or critical infrastructure also contributed to concerns as a race to control access to such assets intensified and first indications emerged of how control over such access could be wielded for strategic interests. Supply chain disruptions and chokepoints that became apparent during the COVID-19 pandemic pushed the priority of investment security, as part of the then emerging concept of economic security to new heights.
In this context, the accumulation of scenarios involving identified risks related to foreign investment transactions has generated substantial material from which to develop a typology of the security risks that foreign investment can create or facilitate. Decision-making power over enterprises, access to know-how, sensitive information, and sensitive sites or leverage as owners of critical infrastructure or assets can all contribute to security concerns. Foreign investments may allow malign actors to:
Conduct espionage: access to sensitive sites or to confidential or strategic information, control over telecommunications networks, and access to assets or processes that generate security-sensitive data can all facilitate espionage.
Disrupt or interfere: this can occur through ownership or operation of critical infrastructure, including electricity generation and transmission, water and other utilities, ports, railways, airports, and transport networks. It can also extend to data-intensive entities, sensitive real estate, or media assets that could affect data integrity and integrity of information environments.
Reduce the diversity of suppliers of critical inputs: limited choice and availability may result in dependencies (“single-supplier” risks).
Advance the military or dual-use capabilities of a foreign country: transfer of technology with defence applications that are not available and cannot be developed in the actor’s home country.
Constrain sovereign decision-making or increase dependencies: reliance of an economy or its strategic sectors on few or just one foreign partners, including for foreign investment and loans may constrain a government’s foreign and domestic policy options.
Different countries are exposed to these scenarios to different degrees, and exposure may evolve over time. In recent years, such concerns have materialised in concrete cases where foreign investment has been assessed as creating potential security risks for host countries, even where the investments may not have been intended to create the security concerns. Examples for illustrative purposes include:
A foreign owner seeking to liquidate their company operating gas supply infrastructure, potentially undermining the host country’s energy supply in a context of heightened geopolitical tensions with the investor’s country of origin; a foreign owner of the last remaining steel production site of a country preparing to terminate steel production irreversibly.
A state-owned company from a country with which the host country has territorial disputes obtained a concession and control of the electricity grid of the host country for a long period.
Foreign investors from non-allied jurisdictions acquiring real estate near military airports and other sensitive facilities where benign interests do not easily explain the proximity or placing radio-equipment directly next to existing ones to capture signals emitted by a corresponding satellite.
Actions by a foreign-owned company operating critical transport infrastructure that facilitated the import of unauthorised or fraudulent products into the host economy by criminal networks from the same country.
A foreign-controlled company operating technologies that could enable a foreign state to introduce backdoors in technological equipment, conduct espionage or disrupt data.
Such scenarios are rare, especially when considered in relation to the number of beneficial investment projects. These experiences nevertheless remind countries worldwide that the opportunities associated with openness to foreign investment are sometimes accompanied by risks, including those related to national security. While situations where such risks materialise may be rare, the consequences can be significant and enduring. The recent deterioration in the geopolitical and geoeconomic environment has heightened governments’ attention to such security risks and has prompted governments to act in this area with the introduction or reform of investment security policies.
5.2.2. Growing importance of investment security policies
The growing number of cases in which foreign acquisitions, ownership, or operation of sensitive assets have raised security concerns has prompted policy action in many countries. Figure 5.1 illustrates these dynamics over the past three decades, showing the annual introduction or reform of investment security policies in 98 economies,1 including advanced and transition economies. The figure shows a marked increase in policy activity since around 2014, with a peak in 2020 as countries adjusted policies in response to lessons from the COVID-19 pandemic.
Note: Sample includes a list of 98 economies. More than one measure may be counted for a given economy in a year. Information for 2026 based on information available to the OECD Secretariat as of May 2026.
Source: Elaboration based on OECD Investment Security Database.
Advanced economies with open investment regimes were the first to be particularly active in this policy area. Over time, however, emerging and developing economies have also progressively reformed their approaches to reflect their specific needs and circumstances. Some governments in Southeast Europe, Africa, and South America are also taking greater interest in the security implications of certain foreign investments. New investment security regimes have recently been established, or are in advanced stages of preparation, in countries including Bulgaria, Croatia, Fiji, Greece, Moldova, Ukraine, and Saudi Arabia. In addition, considerations regarding the introduction of such mechanisms, or early design efforts, are underway in most Western Balkan countries as well as in Mongolia.
Some ASEAN economies have been particularly active in developing investment security policies, reflecting heightened attention to evolving risks associated with certain foreign investments. Since 2020, the Philippines and Viet Nam have adopted updated investment security regimes. Ongoing debates and regulatory initiatives as of late 2025 indicate that Viet Nam’s investment framework may remain subject to further adjustment.2 At the same time, it is important to note that the majority of AMS have not yet deemed it necessary to introduce new investment security policies or to reform existing frameworks.
Although global figures indicate that the pace of policymaking to address the security implications of foreign investment has slowed in recent years, an increasing number of economies continue to adopt mechanisms to manage such risks. Recent legislative proposals in Canada, Switzerland, and the European Union, as well as government announcements in countries such as Iceland and Norway regarding future policy intentions, suggest that policy activity in this area is likely to remain significant, at least in the near future.
As an indirect result of this activity, over 80% of the 98 economies covered in this chapter had investment security policies in place as of May 2026 (Figure 5.2). Within this group, all OECD and all AMS maintain at least one policy addressing the security implications of certain foreign investments. Like many other countries worldwide, some of these economies operate multiple mechanisms.
Note: Data show investment review mechanisms in effect in 98 economies. Information for 2026 based on information available to the OECD Secretariat as of May 2026.
Source: Elaboration based on OECD Investment Security Database.
5.3.1. Expanding scope of investment security policies
Changes in the geopolitical and geoeconomic environment, along with evolving assessments of national needs to face increasing security concerns, have led governments to broaden the scope of their investment security policies. While earlier policies were typically sector-specific and limited to a few areas, a growing number of economies now operate policies that can apply across different sectors and even potentially the entire economy.
As Figure 5.3 illustrates, the progressive broadening of investment review mechanisms has led to an expanding list of sectors considered potentially sensitive. Until the 1990s, investment security policies focused almost exclusively on defence industries and real estate in sensitive locations. Since then, their coverage has diversified markedly. Critical infrastructure – where not already included in economy-wide policies – was added to the scope of some mechanisms in the early 1990s. Critical and emerging technologies appeared towards the end of that decade. More recently, additional sectors, including energy, raw materials, and food security, have been explicitly included with increasing frequency.
Note: The graphs present the aggregate frequency with which the indicated sectors are addressed in investment security policies for a subset of 61 economies that maintained such policies in a given year from within the 98 economies considered overall. Sector definitions may vary across jurisdictions, and the data have been aggregated to enhance readability. The dark blue area represents economy-wide mechanisms that apply to the indicated sectors without explicitly referencing them by name. Data for 2024 as of end-February 2024.
Source: Elaboration based on OECD Investment Security Database.
While some of the sectoral additions absorb risks that result from longer-term processes such as privatisation of energy companies or of critical infrastructure, other changes reflect responses to newly identified security risks. The sudden inclusion of biotechnologies and health infrastructure under the scope of a growing number of instruments to manage security implications of foreign investment in 2020, for example, was triggered by the COVID-19 pandemic (OECD, 2024[6]).
In this regard, AMS economies have adopted a rich diversity of approaches. Several of them have investment policies that address countries' security interests that apply economy-wide, covering the whole national economy without singling out any specific sector. Other governments in this region operate sector-specific mechanisms, many of which are long-standing in nature, that tend to focus their attention on the security implications of foreign investment in one single sector, like sensitive land, critical infrastructure, and certain raw materials. Singapore’s new investment management mechanism, the Significant Investments Review Act (SIRA) adopts a different approach. SIRA allows for the designation of entities on the basis that it is in the national security interest of Singapore, with ownership and control obligations imposed regardless of origin of investors, whether foreign or domestic.
In a context of rising geopolitical tensions and frequent global crises, two of the five main security concerns previously identified have become particularly prominent. They have led to greater scrutiny of acquisitions by foreign actors in two areas: in digital economy sectors and over assets and companies essential for the supply of critical inputs.
5.3.2. Progressive inclusion of the digital economy sectors
The first category of concern relates to foreign acquisitions and other forms of foreign investment that may enable the transfer of dual-use technologies. These concerns have increased as international investment has expanded. Private actors now play a larger role in developing and disseminating these technologies. Digital transformation has further intensified these dynamics. While earlier debates often focused on defence-related industries or assets with direct military relevance, contemporary concerns increasingly include advanced and emerging technologies with dual-use potential, as well as enterprises that generate, process, or control large volumes of sensitive or personal data, such as artificial intelligence, quantum computing, advanced semiconductors, and next-generation communication networks. Control over these technologies can confer advantages beyond individual firms or sectors, influencing technological leadership, military capabilities, and broader economic competitiveness. As data flows, digital platforms, and networked systems become central to economic and social activity, foreign ownership or control of data-intensive firms and digital infrastructure introduces new vulnerabilities. These include risks related to cybersecurity, data access and manipulation, intellectual property leakage, and potential disruption of services that underpin critical functions across sectors such as finance, healthcare, energy, and public administration.
This growing concern has concretely translated into greater scrutiny of acquisitions by foreign actors in critical and emerging technologies (CET), as well as in other assets essential for their development and use, such as digital infrastructure.
For CET, as early as the late 1980s, before the end of the Cold War, several OECD economies considered the security implications of foreign ownership of CET-related enterprises. These enterprises were covered by some countries’ economy-wide mechanisms and appeared explicitly in investment security policies from around 2006. It took until 2015 for these sectors to become more widely covered under investment security policies of a growing number of jurisdictions.
Note: The graphs present the aggregate frequency with which the indicated sectors are addressed in investment security policies for a subset of 61 economies that maintained such policies in a given year from within the 98 economies considered overall. Sector definitions may vary across jurisdictions, and the data have been aggregated to enhance readability. The dark blue area represents economy-wide mechanisms that apply to the indicated sectors without explicitly referencing them by name.
Source: Elaboration based on OECD Investment Security Database
In 2024, individual critical and emerging technologies, including artificial intelligence, semiconductors, and quantum technologies, were covered in over 28% of the 61 economies in the sample that had investment security policies at the time (Figure 5.4). About 14% of these countries explicitly use these technologies as criteria to trigger review under their policies. Semiconductors were the first technologies explicitly included. More recently, many countries have added quantum technologies and robotics to their lists of covered sectors.
Compared to investment security policies in OECD countries, emerging economies have so far almost only covered other assets essential for the development and use of CETs, such as digital infrastructure, in the scope of their policies. Communication infrastructures and services appear on the list of covered sectors in an increasing number of countries’ mechanisms, such as those recently adopted in Fiji, Moldova, and the Philippines.
5.3.3. Reinforcing the control over the supply of critical inputs
A second concern that has become more prominent relates to the diversity of suppliers, particularly of critical inputs. Recent disruptions have drawn attention to vulnerabilities in tightly optimised and geographically concentrated supply networks. Production and logistics disruptions during the COVID-19 pandemic, as well as the recent use of tariffs and trade restrictions between countries, exposed shortages of essential goods and inputs. Governments now assess more systematically which goods, services, and technologies are indispensable for societal well-being and economic functioning. They also examine how secure and sustainable access to these inputs can be ensured. Foreign investment plays an ambivalent role in this context. It can enhance resilience by diversifying sources of supply, spreading risk, and facilitating access to technology and capital. It can also lead to excessive concentration and reinforce dependencies on single suppliers or jurisdictions. Such dependencies may arise when foreign investors hold decisive positions in critical nodes of value chains. These include the extraction and processing of critical raw materials, semiconductor manufacturing, and the operation of transport infrastructure. In these situations, control over strategic assets may enable investors to artificially limit supplier diversity or restrict access to transport links. Such outcomes can affect national resilience and, in some cases, national security.
Since 2020, external shocks have disrupted supply chains for essential goods and services, drawing governments’ attention to their resilience. The focus on critical suppliers has a long history, as shown by historical emphasis on defence production. The COVID-19 pandemic, and to a lesser extent the use of trade restrictions as coercive tools, prompted countries to reassess supply chain vulnerabilities and secure access to critical inputs. Beyond securing their own access to these inputs, governments seek to position themselves as reliable participants in global value chains. In sensitive sectors, such as critical raw materials, this requires ensuring economic partners have secure access to resources, transparent and reliable ownership of strategic infrastructure, and confidence in government institutions.
To address these risks, several countries have adjusted their investment policies, applying investment screening and similar tools to strengthen supply chain resilience. As Figure 5.5 shows, these policies now increasingly cover industries providing goods and services considered critical, including the supply of raw materials, energy, food, and health-related products and services.
Note: The graphs present the aggregate frequency with which the indicated sectors are addressed in investment security policies for a subset of 61 economies that maintained such policies in a given year from within the 98 economies considered overall. Sector definitions may vary across jurisdictions, and the data have been aggregated to enhance readability. The dark blue area represents economy-wide mechanisms that apply to the indicated sectors without explicitly referencing them by name.
Source: Elaboration based on OECD Investment Security Database.
Changes in scope are not the only way countries have incorporated supply chain resilience into investment security policies consideration. Implementing authorities now consider factors such as concentration of ownership or control by foreign investors in critical supply chains, the presence of alternative suppliers at national and international levels, and the implications for supply relationships with other critical industries or government entities affected by the transaction. Recent screening legislations in Estonia, Luxembourg, Malta and the Slovak Republic explicitly require authorities to assess the supply of critical inputs when evaluating security risks. The United States and Japan have issued policy statements and guidance specifying how these factors should be considered.
In the Asia-Pacific region, Australia recognises that foreign investment can affect access to and control over sensitive organisations and assets,3 including critical infrastructure. Investment scrutiny applies in sectors where supply chain resilience is a concern, where sensitive data, technology, or capabilities require protection, or where ownership concentration may influence global supply of a product or service. Some AMS members have introduced measures covering critical infrastructure and strategically important segments of global value chains.
Relatively few AMS seem to have expanded security-related investment policies in ways that explicitly target digital sectors and strategically important segments of supply and global value chains. For the majority of ASEAN members, investment policy frameworks continue to rely primarily on general establishment rules and sectoral entry conditions, without an explicit national-security investment policy that is tailored to digital activities or supply-chain-critical assets. The Philippines maintains a foreign investment national security review framework focused on strategic sectors, whereby foreign participation may be restricted in activities related to defence, critical infrastructure, and public welfare.4 Although the framework does not explicitly target supply chains, its scope effectively covers supply chain–relevant sectors – such as transport, telecommunications, and energy – through the review of critical infrastructure and strategic assets. The 2022 amendments to the Public Service Act further empower authorities, including the National Security Council, to scrutinise foreign investments in areas deemed vital to national security. Singapore’s SIRA has a cross-sectoral investment mechanism including infrastructure/services companies central to supply chains and supply-chain nodes.
Beyond the types of transactions and sectors considered sensitive, certain categories of investors receive closer attention. Many countries review investments by State-controlled or State-guided enterprises due to their potential connection to foreign governments. These investors may hold influence over access to natural resources, critical infrastructure, or sensitive data. Most OECD countries apply enhanced scrutiny to investments by such enterprises. Among ASEAN economies, only one currently applies stricter controls to State-linked investors.
5.4.1. Different types of investment security instruments are used in AMS
Authorities can use different instruments to identify, assess, and mitigate risks associated with certain foreign investments. Each of these instruments is characterised by the transaction types that it covers, by the specificity of the response to risk associated with each individual transaction, by the implication of authorities in its execution, and by the level of detail of its regulation.
Instruments can also be distinguished by the means they employ to mitigate risk. Some manage the acquisition- and or the ownership of sensitive assets, while others regulate their use and operation.5 Some instruments allow for constant intervention on an asset or its use by a foreign investor, while some provide for this opportunity only once. Some control ownership of sensitive assets by foreigners, while others manage risk that relates to their use; again, other instruments only determine whether certain projects are eligible for government support. Examples of investment security instruments observed in economies worldwide include investment screening mechanisms, foreign ownership ceilings, security-related divestment procedures, company registration processes, licensing procedures, concessions frameworks, incentive schemes, and outbound investment reviews (Box 5.1).
Different types of investment security instruments exist. Examples include:
Investment screening mechanisms: administrative review that allows host governments to assess individual investment transactions through an established, defined, and resourced security risk assessment process. Investment screening applies to transactions that fall within a class defined by specific security risk criteria. When a risk is identified during the review, authorities can determine whether mitigation measures – or, in exceptional cases, prohibitions – are necessary. Well-designed screening mechanisms can target risks precisely, provide authorities flexibility in their management, and, if effectively implemented, pose minimal obstacles to beneficial and low-risk investment. Evidence suggests that investment screening mechanisms dominate recent efforts to manage security implications of foreign investment, particularly in advanced economies.
Ownership ceilings: restrict the extent to which foreign investors may acquire assets or enterprises. Authorities apply these caps in sectors where they consider that a defined level of foreign ownership can generate security concerns. The caps limit foreign participation above a threshold set in legislation. Once an investor reaches that threshold, authorities do not allow additional foreign ownership. The rules aim to keep a share of ownership in national hands. Structurally, they represent a partial restriction on investment, with a full prohibition corresponding to a 0% ceiling.
Administrative authorisation: can govern foreign acquisitions of assets, property, or strategic enterprises. These mechanisms are organised to allow authorities to approve only transactions that meet conditions set in advance in the law. These conditions aim to address security considerations identified by the legislator. An operation can proceed only when it meets all criteria set by the control rules. Administrative authorisation mechanisms involve a verification exercise based on clear legal conditions. Authorities check whether an operation meets the characteristics set out in the law or implementing decrees. If the operation does not meet these characteristics, authorities do not approve it. The process leaves no scope for discretionary judgement adapted to each transaction.
Registration processes: seek to formalise a company’s existence under national law. It also establishes rights and obligations for this company. This set of rules is primarily focused on the creation of new enterprises. The registration review model is generally neutral regarding nationality. Registration generally centralises information on company activity and ownership. Security checks aim to ensure that new companies do not pose security risks. In general, authorities cannot use it to review foreign stakes in already established companies. Once a company is registered, no registration review can occur. A limited number of registration processes allow authorities to review security risks beyond the moment of registration. If authorities identify risks during a company’s operations, they may in that case deregister the company. Deregistration prevents the company from operating in the national market.
“Golden shares”: are arrangements that grant the holder of the golden share – here the host government – a disproportionate influence over decisions related to the company in which the golden shares are held when compared to committed capital. They are occasionally used in lieu of State ownership of the enterprise in which the golden share is held. The golden share allows the government or entity that holds the golden share for significant influence over the company without having to commit capital to the enterprise (and typically without benefitting from the economic success or being exposed to negative economic developments in the enterprise).
Public procurement: frameworks provide public authorities with a range of instruments to address potential security risks arising from foreign participation in public contracts. These instruments may include powers to approve or exclude suppliers during procurement procedures, terminate existing contracts, or debar suppliers from all or selected public tenders. Beyond individual procurement decisions, these mechanisms also contribute to safeguarding the integrity of public-sector supply chains and protecting critical public investments from suppliers that may present security risks.
Licensing procedures: respond to security risk associated with the operation of an enterprise rather than an ownership position in the enterprise. Where suitable, licensing requirements allow governments to manage security risk while still permitting that private and foreign investment is pledged to the concerned enterprise and the host economy. Licenses find their limits where the enterprise cannot pursue ventures if the license is not granted, as the investment is not economically usable under these circumstances.
Figure 5.6 shows the distribution of four of the most frequently used approaches to managing security risks in foreign investment over the past four decades across a subset of 61 economies from within the 98 economies considered overall in this chapter. Over this period, the design of policies has evolved. Early approaches relied mainly on administrative authorisations for investment and, to a lesser extent, on foreign ownership ceilings. Together, these mechanisms accounted for approximately 70% of all policies in force in 2000. Since 2014, investment screening mechanisms dominate efforts to manage investment-related security risks. Few new policies use other approaches.
Note: Sample composed of all mechanisms in effect in a subset of 61 economies from within the 98 economies considered overall. Data show relative frequency of approaches, counting individual mechanisms separately; “100%” corresponds to the total number of distinct mechanisms of one of the four categories in force in a given year. Data for 2025 as of early May 2025.
Source: Elaboration based on OECD Investment Security Database.
In general, most of the investment security policies in AMS were designed several decades ago reflecting the economic structures and risk perceptions prevailing at the time of their adoption. To address security considerations associated with certain foreign investment transactions, AMS have not, historically, relied on standalone, economy-wide, investment review mechanisms. Instead, they developed a diverse set of investment security–related policy instruments (see Table 5.1). Taken together, AMS employ a broader and more heterogeneous range of tools than those typically observed in OECD economies, including several mechanisms with no direct equivalent in OECD countries. In practice, most AMS rely on ownership ceilings, administrative authorisation requirements, and procedures linked to the establishment or registration of foreign – and, in some cases, domestic – companies for security-related purposes.
Several AMS’ rules on the registration of new entities allow for a review against national security interests. These rules primarily concern the establishment of new enterprises with foreign capital. Such mechanisms exist in, among others, Brunei Darussalam and Cambodia. By contrast, comparable forms of security control embedded directly in company registration procedures are generally not found in OECD investment security regimes.
Another characteristic of AMS practice is the predominance of pre-establishment investment controls. These include sector- or activity-based restrictions, foreign equity limitations, and conditional market access regimes, typically enshrined in investment laws, sector-specific legislation, or implementing regulations. The legal justifications for these controls frequently invoke concepts such as “public order,” “national security,” or broader “strategic” or “public-interest” considerations. In several AMS, including Cambodia, Indonesia, Lao PDR, Philippines, Thailand, and Viet Nam such controls are operationalised through negative or restrictive lists. These lists identify activities that are closed to foreign participation, subject to quantitative ownership ceilings, or open only under specified conditions. While legal techniques vary, from negative lists to reserved-sector classifications or "controlled business" regimes, they share a common logic: security concerns are addressed before a transaction takes place by defining the level of permissible foreign participation, rather than through case-by-case review. At the same time, list-based approaches are not always exhaustive and may, in practice, either understate or overstate the actual constraints applicable to foreign investors.
In practice, these approaches are frequently complemented by licensing and authorisation mechanisms that confer administrative discretion on public authorities to assess individual investment projects. Foreign investment in network industries and infrastructure – such as telecommunications, electricity transmission, transport services, and public utilities – typically requires licences or concessions granted by sectoral regulators. At the same time, some of these licensing and authorisation frameworks may also serve as an entry point for investment-related security considerations, particularly where foreign participation is involved in assets regarded as strategic. Through these mechanisms, authorities may impose conditions, restrict subsequent changes in control, or deny entry where an investment is assessed as posing risks to service continuity, system integrity, or the protection of strategic assets.
In addition, investment administration bodies in several AMS often play a role in reviewing or conditioning investment proposals, particularly for projects involving large-scale infrastructure, land-use rights, natural resources, or geographically sensitive areas. For example, Viet Nam applies specific security controls to investments located in sensitive sectors and areas, including islands, border communes, wards, towns, and coastal communes.6 Authorisation frameworks administered by investment promotion or co-ordination agencies – such as permit or endorsement systems – enable governments to retain oversight over selected investments even in otherwise liberalised environments. While these arrangements do not typically constitute national security reviews in the strict sense, they allow security-relevant considerations to be integrated into broader assessments of project eligibility, regulatory compliance, and expected economic contribution.
Relatively few instruments have been introduced or substantially updated in recent years in response to changing economic conditions and evolving strategic considerations. Where reforms have occurred, they have tended to align with broader global trends. In particular, a limited number of AMS have recently introduced a policy instrument that had previously been largely absent from the regional investment security landscape: a dedicated national security screening mechanism for foreign investment.
5.4.2. Recent focus on investment screening mechanisms
National security investment screening mechanisms dominate the new efforts to manage investment-related security risks. These mechanisms are designed to address potential risks arising from foreign ownership, control, or influence over assets deemed sensitive. Relevant legislation typically defines the categories of transactions subject to individual review on the basis of specified risk criteria. While in some jurisdictions, screening mechanisms may apply to a broad range of transactions – including the creation of new entities, real estate acquisitions, or, in certain cases, licensing and concession arrangements – their primary focus in most economies remains to review the acquisition of existing companies or assets.
Under investment screening, governments intervene only in investments that meet clearly defined risk criteria. Decisions follow a detailed security risk assessment. When a security risk is identified, authorities may impose specific obligations or, in rare cases, prohibit the investment. Screening mechanisms focus on concrete risks, unlike broad ownership ceilings or general administrative approval requirements. This allows authorities to adopt measures tailored to the security concerns involved. Figure 5.7 shows that these mechanisms have spread rapidly across the OECD area. By 2025, more than 80% of OECD Members operated one.
As shown in Figure 5.7, investment screening mechanisms have spread rapidly across the OECD area – by 2025, over 80% of OECD Members were operating one. Initially concentrated in advanced OECD economies, investment screening mechanisms are now being adopted by an increasing number of transition and emerging economies. These include countries in West Asia, Southeast Europe and the Pacific Islands and, since 2020, also in several AMS.
Note: Data regarding national security investment screening mechanisms in effect in OECD Members. Data for 2026 as of May.
Source: Elaboration based on OECD Investment Security Database.
Recent reforms in some ASEAN Member States have sought to address security risks arising from the acquisition of existing companies or asset – risks that earlier investment security instruments generally did not cover. Singapore’s SIRA provides a clear illustration of this approach. SIRA complements existing sectoral safeguards, establishing a legal basis for reviewing significant investments and changes in ownership and control in designated entities considered critical to national security, while also granting residual powers over any entity whose conduct had been contrary to Singapore’s national security interests. The scope of SIRA’s application is deliberately targeted to safeguard Singapore’s national security interests, operating within a broadly open investment framework and highlighting the selective, risk-based nature of the approach. The framework combines pre-transaction notification and approval requirements for designated entities with post-transaction intervention powers for both designated entities and non-designated entities, including the ability to issue orders and directions, or in certain circumstances the unwinding of transactions when necessary. The design of SIRA thus incorporates innovative features, such as a formal regulated process for designating critical entities and clearly defined intervention powers.
In the Philippines, recent reforms have introduced two investment screening mechanisms to review foreign investment transactions in a limited set of strategically important sectors. One of these mechanisms was established in 2022 through amendments to the Public Service Act (PSA) and applies, among other areas, to activities classified as critical infrastructure, including electricity transmission and distribution, water distribution, and certain transport services. In addition to introducing case-by-case reviews of acquisitions in these sectors, the amended framework implicitly recognises that State-owned or government-controlled entities may present additional risks and, accordingly, introduces specific restrictions on investments by such entities.
5.4.3. Procedural disparities among investment security policies
Policy developments in the area of investment security have gradually led to increasingly differentiated procedural designs between earlier frameworks and more recently adopted approaches. First-generation investment security policies, typically established in the early stages of regulation, are generally characterised by relatively basic provisions governing review conditions, institutional responsibilities, and procedural steps. By contrast, second-generation policies rely on more comprehensive and detailed regulatory structures, reflecting a more sophisticated approach to managing investment-related security risks.
Comparative analysis across jurisdictions worldwide indicates that the overall depth and sophistication of investment security regulation has increased steadily over time. This evolution has primarily occurred through the introduction of new, more detailed mechanisms, and to a lesser extent through the reform or replacement of existing policies. As illustrated in Figure 5.8, the adoption of first-generation frameworks appears to have plateaued between approximately 2006 and 2018, with only limited subsequent growth, whereas the number of more advanced frameworks has continued to rise. Consequently, the share of advanced investment security policies among all mechanisms has expanded markedly since 2009.
Public information on the planned introduction of additional investment security policies, suggests that the share of “modern” policies in place will continue to increase. Nonetheless, in several jurisdictions, first-generation mechanisms continue to operate in parallel with modern, second-generation frameworks.
Note: Data regarding investment security policies in effect in 98 economies. Data for 2025 as of May 2025.
Source: Elaboration based on OECD Investment Security Database.
Across AMS, the procedural design of investment security policies differs markedly between more recently adopted frameworks and longer-standing regulatory arrangements. Recent regimes introduced in Singapore and the Philippines tend to feature more developed procedural architectures, including articulated assessment criteria, clearly defined procedural stages, and explicit institutional responsibilities. By contrast, a number of earlier investment security policies applied in other AMS provide more limited guidance to investors regarding the application of security rules, the information to be submitted, and the security-related factors that may be taken into account during review processes. More broadly, these earlier regimes do not always establish dedicated authorities with a clear mandate to conduct case-by-case, multi-dimensional assessments of potentially sensitive transactions. Nor do they consistently provide for investigative powers or structured processes for formulating and substantiating recommendations to decision-makers. In the absence of extensive implementation experience, it therefore remains uncertain whether such frameworks are equipped to support the use of tailored and proportionate risk-mitigation measures, as opposed to more categorical or binary forms of intervention.
In a context where a number of AMS have taken steps – or signalled their intention – to reform their investment security policies, the regional landscape is characterised by a wide diversity of approaches, shaped by differing national rules, tools, and procedural frameworks. Within this environment, a potential gap may emerge between countries that have recently adopted more modern national security investment security mechanisms, explicitly recognising the need for updated frameworks, and those that continue to consider their existing instruments sufficient to address current and anticipated security risks.
AMS are placing increasing emphasis on strengthening supply chain resilience and reducing strategic dependencies. Addressing these challenges is unlikely to rely solely on national-level measures and may benefit from being embedded in regional and international co-ordination and co-operation frameworks. In this context, investment security tools can play a supportive role; their effective implementation depends on both alignment in policy design, as well as a shared understanding among countries regarding their objectives, necessity and application.
5.5.1. Interest of regional and international dialogue on investment security issues
As the policy context in which investment security frameworks operate continues to evolve, economic security considerations have gained greater prominence in policy discussions worldwide. Heightened strategic competition, increased focus on supply-chain resilience, and growing technological interdependence have all contributed to this shift. While these dynamics are also relevant within ASEAN, investment security has not yet assumed the same degree of policy salience as other issues on the regional agenda.
Experience in other regions suggests that, in integrated economic spaces and globally interconnected supply chains, policy decisions related to investment security taken by individual countries – whether through action or inaction – can generate spillover effects beyond national borders (OECD, 2022[7]). In this context, dialogue and co-operation on investment security can help foster a shared understanding of security-risk perceptions associated with foreign investment and contribute to more coherent and complementary policy approaches, supporting both investment openness and security objectives.
Beyond individual cases, engagement at bilateral, multilateral, and/or regional levels can provide valuable platforms for information-sharing and for identifying common areas of concern. Such exchanges can also facilitate, where appropriate, voluntary co-ordination in addressing investment-related security issues, helping to avoid fragmentation of the legal landscape and the emergence of undue barriers to international investment. These forms of engagement can complement efforts undertaken at the national level, providing an additional forum for economic and security authorities to better understand other countries’ norms, practices, and approaches to investment security.
5.5.2. Regional and international work on good practices
The investment policy community has long recognised the legitimacy of measures aimed at managing risks to national security, and many international instruments include corresponding carve-outs to provide countries with the necessary policy space to regulate in this area. In the context of investment security policies, the need to address national security risks effectively – while avoiding undue constraints on beneficial foreign investment – has encouraged countries to engage in regional and multilateral collaboration, facilitating the exchange of experiences and the identification of good practices.
Initial efforts in this area took place at the OECD, where, in 2009, OECD Members agreed on a non-legally binding standard for the design of investment security policies: the 2009 Guidelines for Recipient Country Investment Policies relating to National Security (OECD, 2009[8]). These Guidelines represent the culmination of approximately four years of discussions among OECD Members, some partner countries and relevant stakeholders aimed at identifying core principles in this area. They recommend that governments considering or introducing investment policies to safeguard national security be guided by the principles of non-discrimination, transparency, predictability of outcomes, proportionality of measures, and accountability of implementing authorities. The 2009 Guidelines operationalise these principles through a detailed set of agreed practices, providing concrete guidance to ensure that national investment policies are aligned with these overarching principles. The standards set out in the guidance also serve as reference framework for ongoing peer-review in this area.
Although not all OECD countries had investment security policies in place at the time, the 2009 Guidelines seem to have provided useful guidance for policymakers. Subsequent reforms and newly adopted policies have largely reflected their recommendations. Indeed, all policies introduced or reformed after 2009 in OECD economies are generally considered second-generation frameworks, characterised by more comprehensive and detailed regulatory structures and a sophisticated approach to managing investment-related security risks, are following these principles (Figure 5.9).
Note: Data regarding investment security policies in effect in OECD economies.
Source: Elaboration based on OECD Investment Security Database.
At the regional level, the European Union (EU) has established a formal framework for co-operation on investment security through Regulation (EU) 2019/452. This Regulation sets up a mechanism for co-ordination between Member States’ authorities and the European Commission regarding investments in the Union that may affect security or public order. It also specifies certain mandatory elements that EU Member States’ screening mechanisms must include and emphasises the importance of exchanging best practices. In particular, the EU’s expert group on FDI screening is tasked with engaging Member States in ongoing discussions to “share best practices and lessons learned and exchange views on trends and issues of common concern relating to foreign direct investments.” From the outset, these exchanges have involved experts from both Member States that already had national investment screening mechanisms and those that had not yet adopted such frameworks, enabling the latter to draw on shared experiences in designing and implementing their new systems.
Beyond these examples, other regions have promoted less formalised forms of co-operation on best practices, with some also issuing specific guidelines. Experience from these international cases suggests that having modern investment security instruments is not a prerequisite for countries to collaborate in this area. On the contrary, sustained dialogue and experience-sharing enable countries without advanced frameworks to benefit significantly, and when they do adopt policies in this area, these tend to align with internationally recognised best practices, with policies that support both investment openness and security objectives.
As AMS have recently brought economic security discussions to a regional level, countries might want to consider if this forum can also provide an avenue for analytical exchange and policy dialogue on investment security policies. Such engagement would not entail convergence of national frameworks but could contribute to greater clarity regarding policy objectives and institutional roles as well as identifying and promoting best practices that are tailored for the region’s needs and challenges.
References
[2] ASEAN (2025), ASEAN Framework for Integrated Semiconductor Supply Chain (AFISS), https://www.eria.org/uploads/clean-afiss-22-sept---for-aem-endorsement--final-.pdf/.
[4] ASEAN (2025), ASEAN Geoeconomics Report 2025: This Time It Is Different: ASEAN’s Agency in Shaping the New Global Agenda, https://asean.org/book/asean-geoeconomics-report-2025-this-time-it-is-different-aseans-agency-in-shaping-the-new-global-agenda/.
[1] ASEAN (2024), Framework on ASEAN Supply Chain Efficiency and Resilience, ASEAN Secretariat, https://asean.org/book/framework-on-asean-supply-chain-efficiency-and-resilience/.
[3] ASEAN (2023), ASEAN Digital Economy Framework Agreement (DEFA), https://asean.org/our-communities/economic-community/asean-e-commerce/key-documents/.
[5] OECD (2025), Economic Security in a Changing World, New Approaches to Economic Challenges, OECD Publishing, Paris, https://doi.org/10.1787/4eac89c7-en.
[6] OECD (2024), Managing security implications of international investment: Policy developments in a changing world?, https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/investment-and-national-security/natsecconf2024.pdf.
[7] OECD (2022), Framework for Screening Foreign Direct Investment into the EU: Assessing effectiveness and efficiency, OECD Publishing, Paris, https://doi.org/10.1787/f75ec890-en.
[8] OECD (2009), Recommendation of the Council on Guidelines for Recipient Country Investment Policies relating to National Security, OECD Publishing, Paris, https://legalinstruments.oecd.org/en/instruments/OECD-LEGAL-0372.
← 1. The economies considered in this dataset include Andorra, Angola, Argentina, Australia, Austria, Belgium, Brazil, Bosnia and Herzegovina, Botswana, Bulgaria, Burkina Faso, Brunei Darussalam, Cambodia, Canada, Chile, China (the People’s Republic of), Colombia, Comoros, Costa Rica, Croatia, Czechia, Democratic Republic of Congo, Denmark, Ecuador, Egypt, El Salvador, Estonia, Eswatini, Fiji, Finland, France, Germany, Greece, Guatemala, Honduras, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Korea, Lao PDR, Latvia, Lesotho, Lithuania, Luxembourg, Madagascar, Malaysia, Malawi, Malta, Mauritius, Mexico, Morocco, Mozambique, Myanmar, Namibia, Netherlands, New Zealand, Nigeria, North Macedonia, Norway, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Romania, Russian Federation, Saudi Arabia, Serbia, Seychelles, Singapore, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Tanzania, Thailand, Timor-Leste, Togo, Tunisia, Türkiye, Ukraine, United Kingdom, United States, Uruguay, Viet Nam, Zambia, Zimbabwe and the European Union.
← 2. Statements and legislative developments in 2025 indicate that Viet Nam’s investment framework, including its investment-security-related components, continues to evolve. The National Assembly adopted a revised Law on Investment in December 2025 (Law No. 143/2025/QH15), effective from 1 March 2026, which removes 38 business lines from the conditional-sectors list and narrows the category of projects subject to investment policy approval, and introduces a procedural adjustment under which certain foreign investors may establish an enterprise prior to issuance of an Investment Registration Certificate (IRC). The revised conditional-sectors list (Article 7 and Appendix IV) takes effect later, from 1 July 2026. The Government issued the principal implementing instrument, Decree No. 96/2026/ND-CP, on 31 March 2026, replacing Decree No. 31/2021/ND-CP (together with Decrees No. 19/2025/ND-CP and No. 239/2025/ND-CP); it sets out the revised market-access negative list for foreign investors and shifts regulatory emphasis from pre-approval control toward post-registration supervision. In parallel, the Government and the Ministry of Public Security issued statements and released a draft decree for consultation in 2025 (consultation period 12-22 September 2025) on integrating national-security considerations into socio-economic activities. The draft sets out principles and procedures for the involvement of security authorities in the assessment of investment projects and economic activities that may affect national defence and security, including projects undertaken by foreign investors and those located in sensitive areas such as border, coastal and strategically important zones. While the draft does not establish a standalone investment screening mechanism, it would formalise the role of public security authorities in providing security-related opinions as part of existing investment approval and implementation processes.
← 3. Which may provide opportunities for espionage, sabotage or other activities contrary to Australia’s national security interests.
← 4. Transactions involving military-related industries, cyber infrastructure, pipeline transportation, or such other activities that may threaten territorial integrity and the safety, security and well-being of Filipino citizens are subject to review.
← 5. These approaches may be combined.
← 6. Which reflects similar trends observed in other economies across regions such as Europe and Latin America. These instruments indicate AMS may have a broader strategy to manage risks of sensitive investments in strategic geographic areas, especially amid disagreements on maritime and territorial borders in its vicinity. Similar regulatory approaches – particularly for land and real estate near sensitive sites – are increasingly common in national security investment regimes worldwide.