AEC – manufacturers have to move to advanced technologies

In the last 25 years, ASEAN countries have become established as a preeminent destination for global manufacturers seeking a well-resourced, cost effective manufacturing base for garments and textiles, electronics and a huge variety of branded goods that stock the shelves of retailers in Europe and North America.

Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam received a total foreign direct investment of US$ 111.3 billion. As a result of continuing high levels of investment, the contribution from industry and manufacturing to economies throughout the Region continues to grow. In Indonesia, the sector’s contribution to GDP has reached 47 percent,  40.2  percent in Malaysia and 31.1 percent in the Philippines, and Singapore’s services dominated economy industry still accounts for 26 percent of its GDP (CIA World Factbook).

There is a developing strategy among many ASEAN states to move from low cost manufacturing and become providers of value-added products in many sectors, involving ship and drilling rigs, automotive, mineral smelting and refining, biomedical and biochemistry, petrochemicals, healthcare, agro-biotechnology, and many more.

As the Region’s economies change to concentrate on higher value added production, foreign investors are also looking at opportunities likely to follow ASEAN economic integration. Transnational corporations are boosting the FDI spending because of this integration and the good economic prospects in ASEAN.

The promise of a harmonized customs system between ASEAN countries offers opportunities for the integration of supply chains and unhindered movement of goods between member states. This has positive implications for a range of industries such as garments, footwear, textiles, electronics, and the automotive and food sectors. Integration is also proving a powerful magnet for foreign investment, as mentioned above.

In anticipation of this move towards technology requirements, we have launched the EU-Philippines Business Network (EPBN) that will implement a project that involves all European business organizations in the Philippines. The objective is to match European and Philippine SMEs in partnerships that will allow stronger market positions in this country and at the same time provide the basis to successfully benefit from the market opportunities the AEC offers.

As manufacturing operations in ASEAN countries steadily orientate toward more advanced activities, a growing challenge will be to maintain the Region’s competitive edge and attractiveness as an investment destination. Achieving economic integration and establishing greater connectivity are likely to be elements in achieving this. In the end, it is about building a more integrated ASEAN Region, free from poverty and conflict, prosperous and confident, and well equipped to shape its destiny. 

schumacher@eccp.com.

 

 

 

 

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