Only 36.5% of the respondents — down from 48% a year earlier — indicated the region as offering the best prospects worldwide for offshore direct investments between 2011 and 2014, the 2011-12 ASEAN — Business Advisory Council (ABAC) Survey on ASEAN Competitiveness found.

The decline in the region’s attractiveness, the report noted, corresponded with an increase in share of countries identified as “others” — more (27%, up from 12%) were said to have become keen on investing in economies such as Australia, Brazil, France, Germany, Japan, Qatar, Russia, South Korea, and the United Kingdom

China came in second (27.9%) to the ASEAN region. However, it also saw a similar decline in its attractiveness owing to a tightening labor market and rising wage levels.

“It should be noted, however, that despite some evidence of ASEAN’s rising appeal over China, business sentiments toward investment in China have remained largely positive,” the ABAC report noted.

In the region, Singapore and Vietnam (7.9%) were tagged as the most preferred destination, followed closely by Malaysia (7.3%). Indonesia and Thailand were tied in third (3.8%), followed by Laos (2.2%) and Myanmar (1.9%).

Cambodia and the Philippines (0.6%), meanwhile, both ranked as the second least preferred investment destination with Brunei (0.3%) finishing last.

Limiting the choices to the 10 ASEAN member economies, Indonesia topped the investment attractiveness rating with a score of 6.89 points out of 10, followed by Vietnam (6.29), Singapore (6.07) and Thailand (6.04).

The Philippines ranked sixth with a score of 4.84, placing it after Malaysia (5.69) and before Laos (4.77).

Despite Vietnam’s attractiveness, respondents identified it as having the toughest business constraints (3.64 out of 5.0) followed by the Philippines and Indonesia (3.5).

Businesses based in Singapore (2.32) reported the lowest level of constraints, followed by those in Brunei (2.71).

Corruption, strict laws and regulations, and hefty tax rates were the top three obstacles often faced by respondents in half of the ASEAN countries.

For the Philippines, the three major constraints were said to be infrastructure, corruption, and laws and regulations.

The poll, conducted by the National University of Singapore from September 2011 to March 2012, involved 405 companies from ASEAN’s 10 member-economies, with Indonesia accounting for over a quarter. Singapore, Vietnam, Thailand and the Philippines accounted for 47%. — Eliza J. Diaz, Businessworld