This paper aims to test the validity of pollution haven hypothesis in a group of five Southeast Asian countries by examining the effect of foreign direct investment and other factors on CO2 emission. Fixed effect model with instrumental variables are used in a data set for 1996-2013 period, which then points out that foreign direct investment and energy consumption contributes to pollution in Southeast Asian countries: Cambodia, Vietnam, Thailand, Philippines and Malaysia. Trade and urbanization are found to be insignificant in explaining CO2 emission.
