De-risking Cross-Border Investments
Strategies and frameworks to mitigate regulatory, political, and market risks in international capital flowsâensuring stability and returns in volatile markets.
Executive Summary
Increased regulation and de-risking practices are significantly impeding cross-border financing in emerging markets. Governments globally are expanding investment controlsâwith the US implementing new restrictions on outbound investment and the EU announcing similar rulesâcreating complex compliance landscapes for multinational enterprises. Four strategic priorities stand out for strengthening cross-border investment: infrastructure and supply chains through blended finance and local-currency lending; digitalization and skills development; capital access for SMEs via risk-sharing facilities; and policy harmonization. Success requires coordinated action among businesses, governments, and development financeâno single actor can mitigate systemic risks alone.
The De-risking Landscape
The term "de-risking" originally referred to correspondent banking withdrawal from higher-risk jurisdictions. Today it has expanded to encompass broader regulatory and strategic responses to geopolitical fragmentation. Compliance-driven de-risking disproportionately affects emerging market financial institutions, restricting access to global payment networks and capital flows.
Multinational enterprises now operate in a world of growing scrutiny. Outbound investment screening, sector-specific restrictions, and mandatory disclosure requirements are reshaping how capital crosses borders. The challenge for investors is not merely complianceâit is constructing resilient allocation frameworks that preserve returns while navigating an increasingly fragmented regulatory environment.
In Southeast Asia specifically, the shift is pronounced. Jurisdictions once viewed as straightforward for capital deployment now require layered diligence: political risk assessments, local content requirements, environmental and social governance (ESG) alignment, and often opaque approval processes. The payoffâaccess to high-growth markets, demographic tailwinds, and infrastructure demandâremains compelling, but the path has narrowed.
Key Risk Dimensions
Four Strategic Priorities for Cross-Border Investment
Four strategic priorities provide a practical lens for institutional allocators seeking to strengthen deployment in emerging markets. These align with how capital is increasingly mobilized in practice.
Infrastructure and Supply Chains
Blended finance, standardized guarantees, and local-currency lending
De-risking structures can mobilize significant capital in investment-grade countries. For lower-income nations, blended finance alone faces limitationsâsophisticated instruments exist, but adequate private financing remains elusive without coordinated anchoring from development finance institutions. The key is structuring deals that offer first-loss protection or guarantees to attract institutional capital while preserving development impact.
Digitalization and Skills Development
Expanding digital public infrastructure to boost productivity
Digital public infrastructure reduces transaction costs, improves transparency, and enables real-time monitoringâall of which lower perceived risk for cross-border investors. Skills development ensures local capacity to absorb and sustain investments. In Vietnam, Resolution 57 targets a 30% digital economy share of GDP by 2030, creating a clear demand signal for digital infrastructure and GovTech deployment.
Capital Access for SMEs
Risk-sharing facilities and resilience-linked credit programs
SMEs drive employment and growth in emerging markets but face the largest financing gaps. Risk-sharing facilities and first-loss tranches can attract institutional capital by aligning incentives and diluting concentration risk. Local banks often lack capacity for complex structuring; cross-border investors who can provide technical assistance alongside capital gain both deal flow and political goodwill.
Policy Harmonization
Reducing regulatory friction and creating predictable frameworks
Inconsistent regulations across jurisdictions increase compliance costs and deter long-term commitment. Harmonized frameworksâwhether through bilateral treaties, regional compacts, or multilateral standardsâcreate the predictability investors require. Vietnam's 2025 Law on Investment, effective March 2026, exemplifies this shift: fewer conditional business lines, green channel mechanisms for designated zones, and shortened IRC issuance from 15 to 10 working days.
Correspondent Banking and Cross-Border Flows
De-risking in correspondent banking has led to account closures and reduced services in emerging market financial sectors. Banks cite anti-money laundering (AML) and counter-terrorism financing (CTF) compliance costs as primary drivers, alongside reputational and regulatory pressure from home-country supervisors.
For investors, the implication is clear: engagement with multilateral and development finance institutionsâthrough co-investment, guarantee structures, or policy dialogueâcan materially reduce transaction risk and improve deal flow in constrained markets. Co-investment anchors deals and signals credibility. Guarantee structures (first-loss, partial risk, credit enhancement) bridge the gap between risk appetite and opportunity. Policy dialogue aligns regulatory reform with investor requirements, reducing execution friction over time.
Operating in a World of Investment Controls
Enterprises can navigate the new reality through a structured approach. Key actions include: mapping exposure across jurisdictions, establishing early-warning systems for regulatory changes, diversifying supply chains and capital sources, and engaging proactively with policymakers in target markets. The goal is not to avoid risk entirelyâthat would mean avoiding opportunityâbut to price it accurately and structure around it.
Corvus Strategic Positioning
Corvus Strategic Holdings applies these frameworks in practice. Our boots-on-the-ground presence in Vietnam and Southeast Asia enables early insight into regulatory developments, while our relationships with provincial authorities and SOE co-development structures provide proprietary access to de-risked deployment opportunities. We combine institutional-grade structuring with local execution capabilityâprecisely the blend required in an era of fragmented capital flows and heightened investment controls.
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