Download Manufacturing in Southeast Asia

Manufacturing
in Southeast
Asia
Manufacturing is booming in Southeast Asia.
While no one market is perfect, the region is
attractive to manufacturers because it offers a
diverse demographic base and favourable
business conditions – improving productivity,
increasing affluence, a growing focus on
education and training, and an increasingly
integrated free trade area and economic
community. Here’s an overview of manufacturing
conditions in the region.
Thailand
Philippines
Malaysia
Singapore
Indonesia
Indonesia
Key sectors
Automotive, Electronics, Footwear,
Paper Products, Textiles
Southeast Asia’s biggest economy expanded by
5.6 percent in 2013 and inflation is expected to
ease in 2015.
Indonesia possesses the lowest manufacturing
costs of the 25 top export economies,
beating those of China and India.
Large labour pool
Lack of skilled workers
Low operating costs
Loose regulatory environment
Recent investments
Taiwan manufacturing giant Foxconn is building
factories worth $1 billion.
General Motors opened a $150 million plant
that has a production capacity of 40,000
vehicles annually.
Malaysia
Key sectors
Electronics, Food & Beverage,
Rubber & Plastics, Textiles,
Wood Products
Malaysia’s manufacturing industry is
integral to the country’s economy,
constituting approximately 25 percent of GDP.
This is led by electrical and electronic products,
which constitute 32 percent of exports.
Southeast Asia’s third-largest economy had
manufacturing sales valued at approximately
$69 billion in the first-quarter of 2014.
Stable political climate
Small pool of workers
Well-developed infrastructure
High labour costs
Recent investments
Confectionary company Hershey is
building a $250 million plant – its largest
Asian investment.
Rail car giant China South Locomotive
and Rolling Stock is scheduled to open a
$131 million manufacturing and maintenance
centre in 2014.
Singapore
Key sectors
Aerospace, Chemicals, Electronics,
Pharmaceuticals, Machinery &
Equipment
Manufacturing is a key pillar of the city-state’s
economy, contributing 20-25 percent of GDP
each year with output of $232.3 billion in 2013.
Focused on high-tech manufacturing,
the Government launched a $400 million
Future-of-Manufacturing initiative in 2013
which looks at robotics and 3D printing.
Highly-skilled workforce
High labour cost
Extensive trade
agreement network
Land constraint
Political stability
Recent investments
Biopharmaceutical company AbbVie set
up a $320 million biologics facility in 2013.
Pratt & Whitney is building a 180,000
square-foot facility manufacturing engines
that power Boeing and Airbus aircrafts.
Thailand
Key sectors
Automotive, Hard Disk Drive,
Rubber, Textiles
It’s the second-largest maker of light pick-up
trucks and hard disk drives. Strong utility and
transportation infrastructures are attractive lures,
especially for global automakers.
Electronics companies are establishing
themselves there and its economy is predicted
to grow by 7.5 percent in 2014.
Strong transportation
Low innovation
Utility infrastructure
Political unrest
Business-friendly climate
Recent investments
Ford recently opened a $450 million plant
to build eight all-new global vehicles for the
regional market.
General Motors has a $1.4 billion manufacturing
facility which produced its one millionth vehicle
in 2014.
Philippines
Key sectors
Communication Equipment,
Chemicals, Food & Beverage,
Petroleum, Textiles
The Philippines invested $45.6 million last
year in rejuvenating the manufacturing sector.
Factory production traditionally accounts for
20-23 percent of the country’s economic
output and factory output grew 12.3 percent
in 2013.
Strong entrepreneurial
and innovation environment
Prone to
natural disasters
Increasing access to
finance and markets
Unstable power supply
Improving productivity
and efficiency
Recent investments
Electrical-products company Eaton Corporation
is building a facility that will make uninterruptible
power-supply products and eventually employ
1,500 people.
US semiconductor maker ON Semiconductor is
spending $40 million over the next two years to
expand its three factories there.
Sources:
*Dollar figures in USD
Review of manufacturing costs in top 25 export economies by Harold L Sirkin,
Justin Rose and Michael Zinser, The Management Blog, BloombergBusinessweek,
April 25, 2014.
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http://green.autoblog.com, www.industryweek.com, http://corporate.ford.com,
www.bloomberg.com