INSTITUTIONAL QUALITY AND FOREIGN DIRECT INVESTMENT IN ASEAN BEFORE AND AFTER ASEAN ECONOMIC COMMUNITY

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International Journal of Business and Economy (IJBEC) eISSN: 2682-8359 [Vol. 3 No. 3 September 2021]

Journal website: http://myjms.mohe.gov.my/index.php/ijbec

INSTITUTIONAL QUALITY AND FOREIGN DIRECT INVESTMENT IN ASEAN BEFORE AND AFTER ASEAN

ECONOMIC COMMUNITY

Mutiara Nibras Sakinah^1*and Ahmad Setiawan Nuraya^2*

1 2 Faculty of Economics, STIE Indonesia Banking School, Jakarta Selatan, DKI Jakarta, INDONESIA

*Corresponding author: [email protected]; [email protected]

Article Information:

Article history:

Received date : 31 August 2021 Revised date : 16 September 2021 Accepted date : 20 September 2021 Published date : 29 September 2021 To cite this document:

Sakinah, M., & Nuraya, A. (2021.

INSTITUTIONAL QUALITY AND FOREIGN DIRECT INVESTMENT IN ASEAN BEFORE AND AFTER ASEAN ECONOMIC COMMUNITY.

International Journal of Business and Economy, 3(3), 87-103.

Abstract: This study aims to determine the effect of institutional quality and macroeconomic variables on Foreign Direct Investments in ASEAN during the 2013- 2018 period with a cut-off in 2015 to see the difference in the influence of independent variables on Foreign Direct Investment before and after the AEC. The objects studied are ASEAN member countries that have implemented the AEC agreement. The sample selection was by using the purposive sampling method and obtained a sample of 9 countries. The dependent variable is Foreign Direct Investment, and the independent variable of institutional quality is proxied by Regulatory Quality and Political Stability and Absence of Violence, and macroeconomic variables are proxied by Gross Domestic Product and labor Force. This study uses panel data as measured by multiple linear regression analysis methods. The results of this study indicate that the Political Stability and Absence of Violence and Gross Domestic Product have a significant effect on Foreign Direct Investment.

Keywords: Foreign Direct Investment, Regulatory Quality, Political Stability and Absence of Violence, Gross Domestic Product, Labor Force, AEC (ASEAN Economic Community).

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1. Preface

The increasingly developing technology is driving the globalization of economies around the world, directing the international economy to influence domestic economic activities which cannot be avoided (Maharda & Kurnia, 2019). This economic activity includes the integration of international trade flows and payments, which allows the free entry and exit of capital flows.

This integration has resulted in the flow of investment from one country's financial market to another country's financial market to be very dynamic (Witiastuti & Chakimatuzzahroh, 2018).

The international capital flows can be in the form of Foreign Investment and Foreign Investment (Law No.25 of 2007). Foreign Investment or commonly referred to as FDI is a long-term investment made directly by a company in another country. This investment is not only in the form of money but also in the form of technology transfer and investment related to productive assets such as factories, land, and buildings (UNTCAD, 2007).

Foreign Direct Investment has been seen as one of the main driving forces behind the growth of developing and transition economies (UNCTAD, 2006). The importance of the role of investment in the economy of a country causes the need for a forum for cooperation to attract foreign investment. Therefore, countries in the Southeast Asian region cooperate with what is known as ASEAN (Association of Southeast Asian Nations). ASEAN was formed in order to encourage joint development efforts. The member countries that are members are expected to be able to support each other's attractiveness to foreign investment. The implementation of ASEAN cooperation has directed ASEAN member countries to enter into the AEC (ASEAN Economic Community) agreement. MEA is an economic integration carried out to increase the competitiveness of ASEAN member countries. Likewise, with Foreign Investment, which was predicted by the World Bank in 2014 that the implementation of the MEA in the ASEAN region would increase FDI inflows in the region by up to 63% (Kemenkeu.go.id, 2014).

The flow of FDI in the ASEAN region is dynamic, and its sources are increasingly diverse. In addition to intra-ASEAN strength, sources from other countries also contributed to the increase in FDI in the ASEAN region, such as the European Union (EU), Japan, Hong Kong, China, India and the Republic of Korea. Competition in attracting foreign investors is currently increasing, so it is very important for the ASEAN economy to look for other instruments where these instruments can be an advantage over competitors. In other words, the future economic conditions of the host country have an important role in current investment decisions because FDI requires clear regulation in order to last longer in the host country. Therefore, the country must create an attractive business environment to retain and attract more foreign investors (Bissoon, 2011).

So that apart from considering macroeconomic variables as traditional determinants such as market size as proxied by Gross Domestic Product and labor variables proxied by the Labor Force as independent variables that determine FDI inflows to ASEAN. This study also includes factors that are also important in attracting FDI flows and as the main objective of the study, namely the institutional quality variable. This variable demands the role of government institutions/institutions to be even better in issuing policies that support foreign investment in accordance with the interests of the country as a whole.

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Several previous studies have found that the importance of policies designed by state institutions is an attractive vehicle for the entry of FDI flows. One of the most important determinants of FDI flows into a country is the quality of its institutional framework (Kosteve, Redek, & Susjan, 2007). Well- developed government institutions increase the overall benefits of FDI on economic growth (Masron & Abdullah, 2010). Research on the role of institutions by North (1990), shows that institutions are a stimulus for economic activity and investment in general. Poor quality institutions can put foreign investors at risk of being treated unfairly, leading to a decrease in investment flows. So it can be concluded that the incentives formed by institutions have a significant effect on FDI flows. The importance of institutional quality is the key to the high absorption of FDI (Mudambi, Navarra P, & Delios, 2013).

2. Theoretical Basis 2.1 Literature Review 2.1.1 Signaling Theory

Signals or cues are important information needed by investors and business people in making decisions. This information is used by investors as an analytical tool to determine future investment directions, such as changing the valuation of a company (Brigham & Huostune, 2015). houses can adopt cooperative policies to provide a friendly image for FDI to attract more FDI from other countries. Therefore, the presence of FDI has the opportunity to realize cooperative relations between countries (Malepati, Venkataramanaiah, Gowri, C. Mangala, 2017). Therefore, indirectly, the quality of institutions will provide a signal for investors as an illustration of the country's potential to attract the attention of foreign investors.

2.1.2 FDI Theory and External Environment on Strategic Management

Investment is a commitment to a number of investment funds or other resources made at this time, with the aim of obtaining returns in the future (Tandelilin, 2019). Sharpe et al. (2005) defines investment as a sacrifice of assets owned now to get assets in the future with a larger amount. Investment activities can vary, such as investing in financial assets (deposits, stocks, or bonds) and investing in real assets (land, gold, machinery or buildings). For investors who dare to take greater risks, investments can also be made on an international scale, not only domestically. In investing, every investor has considerations before making investment decisions. In general, investors will decide to invest on the basis of investment decisions, namely Return and Risk. Return is the profit generated from an investment, the return is divided into expected return and actual return. The expected return is the return requested by the investor at the beginning of the investment agreement, and if the investment period has elapsed, the investor will get the actual return which may differ from the expected return. The difference between the actual return and the expected return is something that must be considered in the investment process (Tandelilin, 2019).

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2.1.3 Foreign Direct Investment

Foreign Direct Investment is an international flow of capital invested by a company (investor) in another country, both using fully foreign capital and foreign investors in joint ventures with domestic investors UNCTAD (2018). Neo-Classical Economic Theory argues that FDI has a positive contribution to development. host country economy. This is because the incoming investment encourages more domestic production. Therefore, in various international collaborations, it is necessary to create a conducive investment climate, provide legal certainty and justice and be efficient while taking into account the interests of the national economy.

2.1.4 Government Institutional Quality Concept

Institutional quality is the government's ability to formulate and implement sound policies and regulations that enable and encourage private sector (World Bank) development. The quality of government institutions means the existence of institutional capabilities in exercising government power and authority. The government in a country has the main goal of prospering its people. The government focuses on the process of making and implementing policies that must be carried out by institutions (Borghi & Van Berkel, 2007). All policies made and implemented by the government also include investment in a country. So far, the difficulty that is often faced by foreign investors in investing in a country is the convoluted bureaucracy. A government with a proportional size where the size fits the needs, as well as a simpler bureaucracy will be more efficient for investment mechanisms, and reduce investor costs in the host country (Bénassy Quéré, Coupet, & Mayer, 2007).

2.1.5 Regulatory Quality

Regulatory Quality is a measure of the government's ability to formulate and implement policies and regulations as well as the ability to encourage private sector development (Worldbank). The Regulatory Quality Index includes price controls, inadequate bank supervision, and the perceived burden of over-regulation in areas such as foreign trade and business development (Buchanan, Le, & Rishi, 2012).

2.1.6 Political Stability and Absence of Violence

Political stability and non-violence include several indicators that measure perceptions of possible unconstitutional government changes, domestic violence, and terrorism (World Bank).

Political stability refers to how the government in a country can be stable and remain strong despite attempts to overthrow it from outside and within the country. Political stability will lead to security for foreign investors because it will ensure that no violence will harm businesses in the host country.

2.1.7 Market Size

Market Size or market size in this study is proxied by GDP (Gross Domestic Product) also known as GDP (Gross Domestic Product). GDP is defined as the total income that everyone in the economy earns. GDP measures two things at once, namely the total income of each person in the economy and the amount of expenditure on goods and services produced by the economy (Greg Mankiw, 2012). According to the Statistics Department of Bank Indonesia (2016), GDP is one of the important indicators to determine the economic development of a country in a certain period, both on the basis of current prices and on the basis of constant prices.

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2.1.8 Labor Force

Manpower according to Law no. 13 of 2003 Chapter 1 article 1 paragraph 2 is anyone who is able to do work with the aim of producing goods and services, both to meet the needs of himself and the community. Simanjuntak (1998) in Saputri (2011) explains that the workforce is residents who are already or are working, who are looking for work and who carry out other activities. The workforce in this study is proxied by the Labor Force or the workforce. The labor force is the total number of workers, including those who have jobs or those who do not have jobs.

2.1.9 Economic Integration Concept (ASEAN and AEC (ASEAN Economic Community) Economic integration is the process by which the economies of different countries become connected due to the removal of government rules, taxes, restrictions etc. from trade between countries. These rules can become economic barriers such as discrimination and political unification (policies), as well as economic regulations and procedures between two or more countries (Nurhayati, 2012). Based on Balasa's theory (1961) the stages of integration are divided into 5 (Free Trade Area, Custom Union, Common Market, Economic Union Integration, Total Economic). Based on these stages, FDI in the ASEAN region is at the Common Market level where production factors, especially capital, move freely between ASEAN member countries to achieve profit and production efficiency goals. The existence of economic integration in ASEAN will create formidable competitors, and is also a major stimulus for global growth, trade and investment (Balassa, 1961).

2.2 Hypothesis

2.2.1 Regulatory Quality and Foreign Direct Investment

The decision to invest in the host country's market is influenced by the existence of strong economic fundamentals (Dunning, 1998). The purpose of implementing regulations is to improve the national economy (OECD, 2005). Therefore, the preparation of appropriate regulations is an effort that needs to be done because it is long term. Kokko and Gustavsson (2004) state that one of the most important aspects of economic fundamentals is trade policy on a macro scale. This research is in line with (Rammal & Zurbruegg, 2016) which states that in the ASEAN region the decision of multinational companies to invest in a country is influenced by the quality of regulations that aim to encourage FDI, if these regulations are not institutionalized and fully implemented by the ASEAN regional government, the ASEAN region may not be able to compete because it becomes less attractive to multinational companies. This proves that the quality and effectiveness of the quality of regulation and investment in the host country have a significant effect on FDI entering the host country (Rammal & Zurbruegg, 2016).

H1: There is a Positive Effect of Regulatory Quality on Foreign Direct Investment

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2.2.2 Political Stability and Absence of Violence dan Foreign Direct Investment

Political stability refers to how strong a government is to withstand internal and external disturbances, while non-violence refers to turmoil in a country related to security and acts of violence that may occur in a country. This affects how government stability is able to attract FDI into the country (World Bank). Companies will be willing to invest in a relatively stable country, rather than risking capital in a country whose government is unstable and prone to conflict because it will cause various kinds of investment barriers (Allen & Aldred, 2013);

(Toretti & Ikpe, 2015).

H2: There is a positive effect of political stability and the absence of violence on foreign direct investment

2.2.3 Market Size dan Foreign Direct Investment

Market size is a determinant of FDI based on previous studies, as well as the most important and statistically significant indicator (Minh, 2019). In this study, market size is proxied by the Gross Domestic Product variable. Gross Domestic Product shows the economic growth of a country, this is because rapid GDP growth will increase the capital needed by the host country, so it will demand more Foreign Investment. Furthermore, this rapid economic growth will build the confidence of potential foreign investors who will invest their funds in the host country (Mehrara et al. 2014).

H3: There is a Positive Effect of Gross Domestic Product on Foreign Direct Investment

2.2.4 Labor Force dan Foreign Direct Investment

Labor is an important indicator for FDI (Trinh and nguyen, 2015). because in the future, the training courses provided to the workforce in the host country will affect most levels of employees from those with simple skills to advanced technical and managerial skills. In addition, multinational companies also contribute to their human resources by conducting research and development activities. FDI is a combination of capital, knowledge, and technology and can increase job opportunities for people in the host country, reduce the import burden in the host country through import substitution, increase competition in the host country market, and provide ready-to-use markets using facilities. access to world markets and act as a conduit for host countries to participate in the globalization process (Mehrara et al. 2014).

Mudambi and Navarra (2002) argue that labor availability is considered a key indicator of the profitability of investment locations and international trade.

H4: There is a Positive Effect of Gross Domestic Product on Foreign Direct Investment

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2.3 Logical Framework

Source: Minh (2018) & Saidi et.al (2013) (modified)

3. Research Methodology

3.1 Research Object and Research Period

This study has the object of countries listed as member countries of ASEAN (Association of Southeast Asian Nations). ASEAN accommodates the cooperation of 10 countries in Southeast Asia whose economies are still in the developing stage. Now countries in the ASEAN region are facing a big challenge to increase their competitiveness and attractiveness as hosts in attracting foreign investors. The goal is economic development that brings prosperity to its citizens. The selection of objects in this study was done by purposive sampling method.

3.2 Population and Research Sample

The population is all the elements that will be used as a generalization area consisting of objects/subjects that have certain magnitudes and properties, where the population element is the entire subject to be measured and is the unit to be studied (Sugiyono, 2019). The population in this study are countries that are members of ASEAN (Association of Southeast Asian Nations) from 10 ASEAN member countries that are the population of this study, the State of Brunei Darussalam cannot meet the research criteria because the value of the workforce is below 1,000,000 so there are 9 countries. The samples in this study were Indonesia, Malaysia, Singapore, Vietnam, Philippines, Cambodia, Myanmar, Laos, Thailand.

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3.3 Type and Data Reseeource

This research is descriptive quantitative, using secondary data types (Minh, 2018 and Saidi et.al, 2013). Sources of data in this study were obtained from websites related to research variables, including the United Nations Conference on Trade And Development (UNCTAD.org) to obtain Foreign Direct Investment data, the World Bank (www.worldbank.org) to obtain Institutional Quality data (Quality of Regulations and Political Stability and Absence of Violence) as well as macroeconomic variables of Gross Domestic Product and Labor Force.

3.4 Definition and Operational Variables

Variable Definition Symbol Data

Sources

Equation/Scale

Foreign Direct Investement

(Dependent Variable)

Foreign Investment is an investment that involves a long-term relationship followed by long-term control by companies and residents in the international economy. FDI flows consist of capital provided by foreign investors directly to companies (either directly or through related companies)

(UNTCAD, 2007)

FDI UNCTA

D Report

FDI Net Inflow (2013-2018) each

country

Regulatory Quality (Dependent

Variable)

Regulatory Quality is a measure of the government's ability to formulate and implement policies and regulations as well as its ability to encourage private sector development.

Regulatory Quality is measured using an index rating between -2.5 to +2.5. Where the number -2.5 indicates that the country's Regulatory Quality is considered the worst and the number +2.5 indicates that

RQ World

Bnak

-2,5-+2,5

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the country's Regulatory Quality is considered the best.

(Worldbank)

Political Stability

and absence of

Violence (Independent

Variable)

Political stability and the absence of violence are indicators that measure how the government in a country can be stable and remain strong despite attempts to overthrow it from outside and within the country.

Political stability and nonviolence are measured on an interval scale of -2.5 to 2.5 where -2.5 represents the worst value for a country's political stability, and +2.5 represents the best value for a country's political stability.

(World Bank)

PS World

Bank

-2,5-+2,5

Gross Domest ic Produc (Independent

Variable)

Gross Domestic Product is the market value of all final goods and services produced in a country in a given period. Gross Domestic Product (GDP) measures a country's economic growth in one year in millions of dollars.

(Mankiw, 2013)

GDP World

Bank

Y=C+I+G+NX

Labor Force (Independent Variable)

The labor force is the total number of workers, including those who have jobs or those who do not have jobs.

LF World

Bank

Labor Force = Number of people working + Number of people not

working

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3.5 Processing and Data Analysis

This study uses panel data regression. The data will be processed using panel data technique which is a combination of time series and cross section data. The cross-section data used is data from 9 ASEAN countries with time series for the period 2013 to 2018. The panel data regression test includes the Chow test and Hausman test. Classical assumption test includes normality test, heteroscedasticity test, multicollinearity test, and autocorrelation test.

Hypothesis testing includes f test (simultaneous), t test (partial), and the coefficient of determination. And the paired sample t test is different. The regression model used in this study is as follows:

Notes:

Y = Foreign Direct Investment α = Constant

β1RQit = Regulatory Quality

β2RQit = Political Stability and Absence of Violence β3GDPit = Gross Domestic Product

β4LFit = Labor Force

εit = Residual (error term)

4. Result and Analysis

4.1 Panel Data Regression Model Test

The selection of the best model in the panel data analysis method was carried out by performing statistical tests through the Chow and Hausman tests to determine the best model in this study (CEM, FEM, REM). Based on the results of testing the best model in this study is the random effect model, because the resulting chi-square is 0.3239 where this value is greater than the significance value of 0.05.

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4.2 Findings

The results of the regression with the Random Effect model in this study are shown in the following table:

Variable Coefficient Std. Error t-Statistic Prob

Regulatory Quality 0.124796 0.239306 0.521493 0.6045

Political Stability 0.747506 0.218933 3.414321 0.0013

LGDP 0.416122 0.168056 2.476100 0.0169

LFL 0.032219 0.164553 0.195796 0.8456

C 0.100798 0.602917 0.167185 0.8679

R-Squared 0.520969

Adjusted R-Squared 0.480201

F-statistic 12.77870

Prob (F-Statistic) 0.000000 Durbin Watson Stat 1.758911

Based on the results of the regression equation above, it can be concluded as follows:

1. Regulatory Quality variable has no significant and positive effect on Foreign Investment, so H1 is rejected. These results indicate that the high and low value of the country's Regulatory Quality does not affect the foreign investment inflows received by the host country.

2. Political Stability and Anti-Violence variables have a significant and positive effect on Foreign Investment, so H1 cannot be rejected. These results indicate that the higher the value of a country's political stability, the higher the foreign investment received by the host country.

3. The variable GDP (Gross Domestic Product) has a significant and positive effect on Foreign Investment, so H1 cannot be rejected. These results indicate that any increase in the value of the Gross Domestic Product will have an impact on foreign investment received by the host country.

4. The Labor Force variable has no significant and positive effect on Foreign Investment, so H1 is rejected. These results indicate that the high or low value of a country's Labor Force does not affect foreign investment received by the host country.

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4.3 Paired Sample T-test

The test results from the different tests carried out on the Political Stability and Absence of Violence variables as well as the Gross Domestic Product variables before and after the MEA can be seen in the following table:

Table 4.1: Paired Sample T-Test Political Stability and Absence of Violence Before and After ASEAN Economic Community

Mean Std.

Deviation

Sig. (2- tailed) Pair 1 Before and After

AEC

-.11154 .74529 .453

Source: Based on data exercise with Eviews

Tabel 4.2: Paired Sample T-Test Gross Domestic Product Before and After ASEAN Economic Community

Mean Std.

Deviation

Sig. (2- tailed) Pair 1 Before and After

AEC

-.12737 .86550 .460

Source: Based on data exercise with Eviews

Based on the Table of Results of the Paired Sample t-test, there is no difference in the average variables of Political Stability and Absence of Violence, and Gross Domestic Product before and after the occurrence of the ASEAN Economic Community. This shows that the ASEAN Economic Community has not succeeded in increasing changes in Foreign Investment in each ASEAN country within the limits of the variables of Political Stability and Anti-Violence and Gross Domestic Product in the research observation period (2013-2018). This is because the movement in the values of the Political Stability and Anti-Violence Index and Gross Domestic Product of each country between the period before the implementation of the ASEAN Economic Community and the period after the implementation of the ASEAN Economic Community did not fluctuate. This is due to the short observation year, namely from 2013- 2018 where the cutoff occurred in 2015, so the observation year is divided into 3 years before and 3 years after the implementation of the ASEAN Economic Community agreement.

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Based on the World Bank report (2017), Macroeconomic Stability, Labor Skills, Infrastructure Conditions have significant values for investors to consider when making investments, followed by Low Taxes, Labor Input Prices, Land Access or Real Estate and Domestic Market Financing. Furthermore, in supporting economic integration, the Trade Openness variable can also be a consideration for investors where the higher the Trade Openness value of a country, the smaller the trade barriers in that country (Hoang (2012) in Fachrulloh, 2015). So that the impact of economic integration in ASEAN will be supported by the Trade Openness variable and can support the increase in Foreign Direct Investment after the implementation of the ASEAN Economic Community.

4.4 Managerial Implications

The results of the analysis in this study found that political stability and the absence of violence had a significant positive effect on foreign investment. This result means that political stability and non- violence are important factors for multinational companies to invest abroad. Good Political Stability and Non-Violence in a country shows that the government of that country remains strong despite intervention efforts by the government from internal and external parties to bring it down. These efforts

can range from demonstrations and coups to acts of terrorism or threats from other countries.

Political stability is highly dependent on the government's performance in creating a healthy political climate, including the government's responsiveness in responding to existing problems so that the situation in a country remains safe and peaceful. The variables of political stability and non-violence have a coefficient value of 0.747506.

Furthermore, it was also found that Gross Domestic Product had a significant positive effect on foreign investment. Gross Domestic Product is a general description of the market size of all final goods and services produced in a country that investors can observe before making investment decisions. Gross Domestic Product in ASEAN tends to increase from year to year.

The wide market size in ASEAN provides more opportunities to increase product sales and also profits for foreign companies, thereby attracting more FDI to ASEAN due to positive expectations of economic performance in the country. Gross Domestic Product with a high value is a signal of a prospective market size for investors, the large ASEAN market also requires efficient and effective use of resources. GDP growth also shows the economic improvement of ASEAN countries which will eventually encourage investors to invest. In this study, Gross Domestic Product has a coefficient value of 0.416122 where this variable has a significant role in influencing FDI in ASEAN from 2013-2018.

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So, the things above can be considered for investors by looking at the most influential coefficient values. In this case, political stability has the highest coefficient in attracting Foreign Direct Investment in the host country. Furthermore, for the government, the government can continue to maintain the political stability of its country, in order to create a conducive investment climate. In addition, the government is expected to pay attention to the Gross Domestic Product variable because GDP is a picture of economic welfare in the host country. Countries that have a high level of Gross Domestic Product are potential and attractive market conditions for investment. Therefore, the government of each country needs to function optimally in encouraging a competitive investment climate, especially by maintaining macroeconomic stability.

Another thing that can be noted in the results of this study is the paired sample t test which states that the AEC has no effect on Foreign Investment within the limits of Political Stability and the absence of Violence and Gross Domestic Product variables, therefore based on the Adjusted R2 value which shows the value 0.480201 Where the variables tested in this study can only explain as much as 48%. Therefore, foreign investors and regulators can pay attention to other factors described outside this study that may affect foreign investment.

5. Conclusions and Suggestions

This study aims to determine the effect of institutional quality (Quality of Regulation and Political Stability and Absence of Violence) and macroeconomic variables (Gross Domestic Product and Labor Force) on Foreign Investment in ASEAN. The research period was conducted for six years, namely 2013 – 2018, with a cutoff in 2015 when the ASEAN Economic Community was implemented. This study uses panel data measured by multiple linear regression analysis method and the results show that Political Stability and Anti- Violence and Gross Domestic Product have a significant positive effect on the entry of foreign investment. Meanwhile, the Quality of Regulations and the Macroeconomic Variables of Labor as proxied by the Labor Force have no significant effect on the entry of Foreign Investment.

Furthermore, in the Paired Sample t-test there is no difference in the average influence of the variables of Political Stability and Absence of Violence or Gross Domestic Product on Foreign Investment before and after the occurrence of the ASEAN Economic Community. This means that the ASEAN Economic Community has no significant effect on increasing foreign investment within the limits of the variables of Political Stability and Anti-Violence and Gross Domestic Product in 9 ASEAN countries.

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