Introduction
The Asia Pacific Foundation of Canada’s Investment Monitor report, 2025 Year in Review: Uncertainty Negatively Impacting Two-way Canada-Asia Investment Flows, finds that overall foreign direct investment (FDI) flows between Canada and the Indo-Pacific region declined in 2025 for the second consecutive year, reaching their lowest level in two decades. The decline is consistent with Canada’s FDI flows with all countries tracked by Statistics Canada, with total FDI flows decreasing by 24% from C$219B in 2024 to C$166B in 2025.
This decline comes amid heightened global economic uncertainty arising from several factors. The UN Conference on Trade and Development’s 2025 Investment Trends Monitor report aptly notes that “geopolitical tensions, trade policy volatility, rising costs of capital and intensifying technological competition” weighed heavily on cross-border investment last year, with a 6% increase in global FDI limited to developed economies and driven by Europe and flows through well-established global financial centres.
“Trade policy volatility” highlighted by UNCTAD’s report refers in part to the far-reaching effects of the Trump administration’s various rounds of disruptive, unilateral trade policy initiatives since its return to office in January 2025. The first round of these targeted Canada and Mexico in February 2025, setting the tone for a year in which global FDI flows significantly underperformed the potential that would have been expected in a scenario of policy stability.
Against this backdrop, two-way FDI flows between Canada and the Indo-Pacific declined by 35%, from around C$27.3B in 2024 to around C$17.8B in 2025, driven by a decrease in Indo-Pacific investment in Canada. Despite this overall decline in two-way FDI, Canada’s investment in the region increased by 7% in 2025, from just under C$8B in 2024 to around C$8.6B, the first increase in Canadian FDI to the region in four years, driven largely by a number of significant greenfield investments in the technology, industrial goods, and services sectors.
Canada continued to maintain strong investment ties with key Indo-Pacific investment partners – Australia, South Korea, India, Singapore, and China. While Canada’s two-way FDI with South Korea, India, and Singapore increased in 2025, we saw declines in two-way investment with Australia and China, driven by a decline in Chinese FDI in Canada’s mining and technology industries and a decline in Canadian FDI in Australia’s consumer goods and mining industries. Indian and Australian states ranked among the largest destinations for Canadian investors, alongside South Korea’s Gyeonggi province, Malaysia’s Penang state, and the municipalities of Auckland in New Zealand and Shanghai in China. Canadian investors also deepened their presence across ASEAN-member economies, pointing to greater geographic diversification at a time when global investment and supply chains are increasingly shifting toward Southeast Asia.
The data suggests that a strategic repositioning by Canadian firms and institutional investors in the Indo-Pacific is underway, not only through geographic diversification to Southeast Asia but also with a growing emphasis on digital infrastructure, transportation and logistics, financial assets, and other sectors tied to the region’s long-term growth. And with nearly three-quarters of new Canadian investment in the region going to India, South Korea, and Australia, recent momentum in Canada’s broader geopolitical partnerships with these three democracies can be expected to develop further in 2026 (notwithstanding the disappointment felt in South Korea about Canada’s choice of German-Norwegian submarines over the Korean offering).
APF Canada’s Investment Monitor Report that follows provides an in-depth analysis of investment trends by tracking firm-level investments at the national and sub-national level and across sectors and industries. In addition to identifying broader investment trends, the report highlights specific investment deals to provide insights into the dynamics currently shaping Canada-Asia Investment.
– Jeff Nankivell, President and CEO, and Anastasia Ufimtseva, Senior Program Manager, International Trade & Investment, Asia Pacific Foundation of Canada
Key Takeaways
National Trends: Overall investment trending downward; but Canada’s investment in the Indo-Pacific trending upward
- Two-way foreign direct investment (FDI) flows between Canada and the Indo-Pacific declined by 35%, from around C$27.3B in 2024 to around C$17.8B in 2025, reaching their lowest level in the last two decades. The decline in investment was driven by a 52% drop in inward FDI, which fell to C$9.2B.
- Despite an overall decline in two-way FDI between Canada and the Indo-Pacific, Canada’s investment in the region increased by 7% in 2025, from just under C$8B in 2024 to around C$8.6B, the first increase in Canadian FDI to the region in four years.
- Mergers and acquisitions (M&A) accounted for 66% (or C$11.8B) of two-way investment flows in 2025, while greenfield investments accounted for the remaining 34% (C$6B).
- Canada's five largest investment partners — Australia, South Korea, India, Singapore, and China — accounted for 83% (C$14.7B) of two-way investment flows. Australia was the largest investor from the region, accounting for 42% of the region’s investment in Canada, while India was the leading destination for Canadian investors in the region, accounting for 26% of Canada’s Indo-Pacific FDI.
Industrial Trends: Canadian mining draws Indo-Pacific investors; Canadian investors are lured by region’s technology
- Three industries — mining and chemicals, finance, and industrial goods and services —attracted 92% (around C$8.5B) of the Indo-Pacific’s FDI in Canada in 2025.
- Canada’s FDI in the Indo-Pacific was concentrated in the technology, industrial goods and services, and financial industries. These three sectors claimed 70% (just under C$6B) of Canadian investment in the region in 2025.
Subnational Trends: Ontario, British Columbia, and Quebec get the lion’s share of Canada’s Indo-Pacific investment
- Indo-Pacific investment was concentrated in a handful of Canadian provinces, with Ontario, British Columbia, and Quebec accounting for 94% (C$8.6B) of inward FDI. However, all three attracted less Indo-Pacific investment in 2025 than in the previous year.
- Canadian investment in the Indo-Pacific was concentrated in just a handful of Indian and Australian states. Other sub-national jurisdictions — for example, South Korea’s Gyeonggi province and Malaysia’s Penang state, as well as the municipalities of Auckland, New Zealand, and Shanghai, China — also ranked among the top 10 destinations for Canadian investors.
Investment Outlook 2026
- The broader geopolitical realignment underway, along with the closure of the Strait of Hormuz, has increased investor uncertainty. Despite policy measures adopted by governments to boost FDI, the broader trends impacting investment in 2025 could contribute to a continued decline in global and Canada-Indo-Pacific FDI in 2026.