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| July and August 2014
Manufacturing Hubs
Across Southeast Asia
– By
and Kezia Hardingham, Dezan Shira & Associates
Manufacturing across the Association of Southeast Asian Nations
(ASEAN)—the ten-nation bloc including Singapore, Malaysia, Thailand,
Vietnam, and Indonesia—is by no means a monolithic sector. From
free-market champions like Singapore to planned economies such as
Vietnam; fromhotbeds of political turbulence likeThailand to bastions of
stability suchas Indonesia; the region features adiversearrayof economic
structures,operationalexpenses,andstatesofinfrastructuredevelopment.
In a broad perspective, ASEAN manufacturers can be divided into those
thathaveinvestedinmid-andhigh-techmanufacturingandthosewhich
for the time being are concentrated in low- or no-tech assembly. Not
surprisingly,theformertendtofeaturehigherminimumwagesandhighly-
skilled workforces, as exemplified by Singapore, whose manufacturing
wages arewell above those of its regional neighbors.
Conversely, the latter type of manufacturing nation describes states
such as Vietnam and Indonesia, where strides are currently being made
in education and infrastructure investment as a means of avoiding the
specter of low-valueaddedmanufacturing. Bothcountries face their own
respective challenges however; in Vietnam, this consists of mitigating
the influence of state-owned enterprises on the economy and shoring
up its now-fragmented manufacturing sector, while in Indonesia, a
comprehensive upgrade of national infrastructure is well overdue.
Thailand and Malaysia, meanwhile, represent the middle of the pack,
striking a fine balance between mid- and high-tech manufacturing
capabilities and competitive labor environments. Both countries have
done remarkablywell to situate themselves in this “Goldilocks zone,” with
Malaysia slightly preferable if only for its lack of the environmental and
political risk occasionally threateningThailand.
These differences will mean far less, however, following the full
implementation of the ASEAN Economic Community (AEC) in 2015,
scheduled to transform the entire region into a single market and
productionbasewithfree-flowingskilledlaborbetweenmembernations.
The latter is an often underestimated factor for unlockingmanufacturing
potential in the region, allowing theexpertiseof Singaporean laborers, for
example, to combine with the“demographic dividend”of Indonesia—in
otherwords,thebestofbothworldsforforeigninvestmentopportunities.
Today's Leading
Manufacturers
in
ASEAN
and key industries
Emerging
Manufacturing
Nations and key industries
Singapore
Malaysia
Thailand
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Electronics
MedicalProducts
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il
Vietnam
Indonesia
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I
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Electronics
Chemicals
Machinery
Agribusiness
Machinery
Electronics
Chemicals
Automobiles
Apparel
Machinery
Electronics
Agribusiness
Philippines
ili i
Electronics
Food
Apparel
Apparel
