Asia Pacific wins more FDI appeal as Singapore jumps

Kearney has released its 2026 Foreign Direct Investment Confidence Index, which shows Asia Pacific holds 10 of the 25 ranked markets for the first time in more than a decade.

The annual ranking is based on a survey of 507 senior executives at companies with annual revenue of at least USD $500 million. It measures which markets executives consider most likely to attract foreign direct investment over the next three years.

The United States and Canada retained the top two positions. Japan rose to third, while China, including Hong Kong, climbed to fourth.

Several other Asia Pacific markets also moved higher. Singapore rose from 15th to 8th, South Korea rose to 11th, and India rose to 22nd. Thailand and Malaysia also returned to the top 25 after absences of three and 12 years, respectively.

Regional shift

Asia Pacific's stronger showing came as companies continued to plan overseas investment despite a more uncertain global backdrop. The survey found that 88 per cent of respondents expect foreign direct investment to increase over the next three years.

The findings suggest a shift in what investors value when choosing markets. Technological and innovation factors ranked as the most important influence on investment decisions, moving ahead of traditional measures such as regulatory efficiency and domestic economic performance.

Investors cited technological innovation as the strongest or joint strongest reason to invest in 10 of the 25 ranked markets, including Japan, China, Singapore, South Korea and Taiwan.

Singapore's rise was among the most notable in the table. Kearney attributed the gain to the city-state's position as a research, development and innovation hub, supported by tax incentives, grants and partnerships.

In the survey, 34 per cent of investors cited Singapore's technological innovation as the strongest reason to invest there. Economic performance was the next most cited reason, at 30 per cent.

Kearney also highlighted the growing role of so-called middle powers in attracting investor attention. It said Singapore's gain, alongside moves by countries such as Saudi Arabia, reflected interest in markets that are not superpowers but still carry influence in international politics and tend to operate within global rules and norms.

Policy focus

Industrial policy also emerged as an important factor in investment decisions. The survey found that 84 per cent of investors globally considered industrial policy extremely or very important in determining where they invest, while 57 per cent said it had a positive effect on their company's business performance.

Investors in the Asia Pacific showed particularly strong support for state-backed economic measures. Among respondents in the region, 88 per cent viewed infrastructure-focused industrial policy favourably, and 80 per cent did so for subsidies.

The survey also found that 74 per cent of Asia Pacific investors said industrial policies targeting technology had a positive impact on their global investment plans.

Risk factors

Even as investment intentions remained firm, executives reported concern about a range of international risks. Geopolitical tensions were identified as the most likely development over the coming year by 36 per cent of respondents, followed by commodity price increases and political instability in developed markets, each cited by 30 per cent.

Those concerns are shaping how companies assess market attractiveness alongside growth and innovation prospects. The findings suggest investors are weighing government support, supply chain resilience and geopolitical positioning more carefully as they decide where to deploy capital.

Emerging markets also gained ground in the results. China retained the top spot on the Emerging Markets Index for a third consecutive year, while Thailand and Malaysia recorded some of the largest gains, and Vietnam rose three places to 16th.

"The APAC region emerges as a winner as investors recalibrate how they make decisions in a more turbulent operating environment," said Shigeru Sekinada, Region Chair, Asia Pacific, Kearney.

"The technological capability, economic growth potential, and geopolitical relevance offered by the top-ranking APAC markets make them choice FDI destinations among a business community that is both actively pursuing emerging opportunities and attentive to mounting complexities and risks," Sekinada said.

He later pointed to the effect of wider instability on business decisions. "Geopolitical instability and rising commodity prices have proven to be major factors impacting global business this year, as reflected in the current Middle East conflict. Supply chain resilience, diversification of energy sources and government policies will be crucial for markets to maintain their attractiveness in the eyes of investors in the medium term," he said.