EXECUTIVE SUMMARY
As part of its efforts to diversify trade and investment, the Canadian government is increasingly prioritizing Southeast Asia as a key focus of its Indo-Pacific engagement. The region’s economic dynamism, strategic location, and expanding middle class and consumer base align with Ottawa’s objective of reducing dependence on traditional markets and broadening Canada’s long-term economic presence across the Indo-Pacific.
During his visit to the region in October 2025, Canadian Prime Minister Mark Carney emphasized that Canada would require roughly half a trillion dollars in new foreign direct investment, particularly in sectors that align with the interests and strengths of investors and businesses in the region. These priority sectors include energy and natural resources (notably LNG, critical minerals, and clean energy), advanced manufacturing, artificial intelligence and digital infrastructure, agri-food and agri-tech, and selected defence‑adjacent technologies such as cyber and space.
Yet, despite Ottawa’s renewed strategic emphasis on Southeast Asia, the Association of Southeast Asian Nations (ASEAN) remains a highly competitive and complex trade and investment environment — one where deepening engagement will not be straightforward. Canada and the region share a longstanding but evolving investment relationship, shaped by shifting economic dynamics, sectoral priorities, and regional competition.
Understanding how these dynamics have evolved — and where new opportunities may lie — is critical to advancing Canada’s diversification goals in Southeast Asia.
KEY TAKEAWAYS
In a reversal, Canada now receives more capital from the ASEAN region than it invests there
Over the past two decades, ASEAN has shifted from being primarily a destination for Canadian capital — once driven largely by Canadian investment in Southeast Asia’s natural resource sectors — to a growing source of investment in Canada. Between 2020 and 2024, ASEAN inward investment accounted for over 80% of two-way Canada–ASEAN investment. Canada now receives more investment from ASEAN economies than it invests there — the reverse of its overall global investment pattern, in which Canada remains a net capital exporter.
A decline in Canada’s outward investment to ASEAN
Canadian outward foreign direct investment (FDI) into ASEAN has fallen sharply since the early 2010s and now represents a shrinking share of Canada’s Indo-Pacific investment. Much of this earlier investment was driven by one-off large projects or resource-based ventures that were not sustained. Today, outward FDI to ASEAN accounts for roughly 5% of Canada’s total Indo-Pacific FDI, while inward FDI from ASEAN represents about 21% of Canada’s total FDI from the Indo-Pacific.
Inward investment is highly concentrated by country and sector
Four countries — Malaysia (52%), Singapore (22%), Indonesia (17%), and Thailand (9%) — account for nearly all of ASEAN FDI into Canada. Investment by these countries, previously concentrated in energy, is now directed toward the real estate, forestry, and agriculture sectors. Since 2018, non-energy investment in Canada has surged to C$18B, up from just C$2B over the 2003‑18 period, while energy investment has dropped, totalling just over C$1B since 2019.
The decline in inward investment in 2024 masks strong long-term growth
While two-way FDI collapsed in 2024 due to the absence of large transactions, multi-year trends show that ASEAN investment in Canada has grown dramatically, rising nearly 100-fold since the mid-2000s. ASEAN countries have become an increasingly important source of FDI for Canada; FDI into Canada has grown from less than C$200M between 2005 and 2009 to close to C$19B between 2020 and 2024.
Outward investment is more diversified
Nearly all Canadian FDI to the ASEAN region since 2003 has gone to six economies: Singapore (22%), Vietnam (22%), the Philippines (21%), Indonesia (12%), Thailand (12%), and Malaysia (10%). Investment is now directed mainly toward the financial sector and industrial goods and services, whereas earlier flows were concentrated in mining, chemicals, and energy.
Malaysia and Singapore are Canada’s most important investment partners among ASEAN countries
Malaysia (C$27B, 30%) and Singapore (C$19B, 25%) account for more than half of the total two-way investment between Canada and the ASEAN region. While Malaysia dominates as a source of FDI into Canada, mainly through large investments in the energy sector from Petronas, Singapore is the primary destination for Canadian capital in the region, with 40% of investment going into the finance sector.