The urgency of fiscal buffers in facing the energy transition paradox and the impact of green economic variables on foreign investment in ASEAN-10
DOI:
https://doi.org/10.54957/educoretax.v6i3.2101Keywords:
ASEAN-10, FDI, Fiscal Buffering, Green Economy, Renewable EnergyAbstract
This study aims to analyze the impact of green economy variables on Foreign Direct Investment (FDI) in 10 ASEAN member countries from 2000 to 2020. The primary issue investigated is the energy transition paradox, where sustainability policies potentially become a cost burden for foreign investors. The research methodology employs a quantitative approach using panel data regression with the Fixed Effect Method (FEM), enhanced by Clustered-Robust Standard Error to address classical assumption issues. The results indicate that Renewable Energy Consumption (REC), CO2 emissions, and Natural Resource Depletion (NRD) simultaneously have a significant effect on FDI. Partially, only the REC variable shows a significant negative impact, where every one percent increase in renewable energy consumption decreases FDI by 0.159% of GDP. In contrast, CO2 emissions and NRD do not exhibit statistically significant effects. These findings confirm the efficiency-seeking motives of investors who perceive the energy transition as an additional compliance cost due to the absence of adequate fiscal support. Consequently, a fiscal buffering strategy is required through the synchronization of tax incentives and the implementation of carbon taxes to maintain investment competitiveness amidst the global energy transition.
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