A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management

Research report (M.Sc.) - Asian Institute of Technology, 2005

In 2002, China and ASEAN signed the << Framework agreement on comprehensive economic cooperation between ASEAN and P.R.China>> and decided to materialize China-ASEAN free trade area (CAFTA) in 2010. Yunnan, a southwest province of China, which located between East Asia and Southeast Asia Subcontinent, borders on 3 ASEAN member countries-- Vietnam, Laos and Myanmar, is now an area of strategic importance for China to carry out its frontier opening-up policy. Yunnan's economy will shift its position from the end to the front of the reform and opening-up. This study attempted to identify the current situation of bilateral investment between ASEAN and Yunnan and the prospects to enlarge the investment cooperation. At first, the study examined the overall status of FDI in ASEAN and Yunnan. Then the study went to identify their bilateral investment relationship. It is found that ASEAN is an important investment source for Yunnan, but Yunnan only accounts for a small share of ASEAN's investment in China. The amount of Yunnan's outward FDI is small due to its less development but most of them went to Vietnam, Laos and Myanmar. Then, through an assessment of FDI relevant problems of Yunnan province, some bottlenecks which might constrain Yunnan's further FDI attraction are founded. Moreover, the potential and prospects of enlarging mutual investment of Yunnan and ASEAN are identified. This study indicates that there is promising prospects for further investment cooperation between Yunnan and ASEAN. Yunnan will become a lively zone in economic opening-up and establish closer and closer ties with ASEAN in economy