Do Foreign Direct Investment and Innovation Influence ICT Goods Imports in ASEAN 6?

Current technological developments have changed people’s lifestyles to become more modern. Technological developments encourage faster digitization in the world. When a country cannot meet its own domestic demand for digital products that involve advanced technology, it tends to rely on importing high-technology products, specifically those in the field of Information and Communication Technology (ICT). The aim of this study is to see how FDI and innovation influence the ICT goods imports in ASEAN 6. The analytical method used in this study is the Generalized Method of Moment panel data analysis of ASEAN’s 6 countries, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, for 21 years from 2000 to 2020. Based on the results of the System GMM regression estimation, it was found that FDI had a positive and significant impact on ICT goods imports in most of the models. In comparison, innovation has a negative but not significant impact on ICT goods imports. Foreign investment has the potential to encourage imports of ICT products. In the short term, ICT goods imports are a necessity due to the absence of substitute products that have the same specifications and quality as imported products. In some cases, innovations may be in their infancy or not mature enough to significantly influence import patterns. Therefore, the government needs to consider long-term programs related to the development of industries capable of producing ICT goods. After the domestic industry has the capacity to produce ICT products, in the next stage, the government can consider policies on local content requirements to suppress imports, especially ICT goods.