Source: The Nation Thailand

Top six economies in Southeast Asia – Vietnam, the Philippines, Indonesia, Malaysia, Thailand, and Singapore (SEA-6) – are projected to grow at an average annual rate of 5.1%, outperforming China.Released on 1 August 2024 by the Angsana Council, Bain & Company, and DBS Bank.

A key factor driving this surge is a significant increase in FDI. For the first time in a decade, Southeast Asia attracted more FDI than China in 2023. Southeast Asia’s FDI amounted to US$206 billion while China received $43 billion. This represents a 37% growth in FDI for Southeast Asia between 2018 and 2022, compared to China’s 10%.

“Southeast Asia is experiencing a transformative shift,” said Charles Ormiston, Advisory Partner at Bain & Company and Chair of the Angsana Council. “Strong domestic growth coupled with the region’s strategic location has made it an increasingly attractive destination for global investors.”

While Southeast Asia has historically lagged behind economic powerhouses like China and India, it is now positioned for a period of rapid growth. The report highlights several factors contributing to this transformation:

• Strong domestic investment: Businesses are increasingly investing in Southeast Asia, fuelling economic expansion.
• Diversified economy: The region is expanding beyond traditional industries, with growth in sectors like technology, manufacturing, and services.
• Favourable demographics: Countries like the Philippines are benefiting from a young and growing population.

Vietnam is leading the region’s growth, followed closely by the Philippines and Indonesia. Vietnam and the Philippines are expected to exceed 6% growth, with Indonesia close behind at 5.7%. Malaysia follows at 4.5%, while Thailand and Singapore are projected to grow at 2.8% and 2.5%, respectively.

Taimur Baig, DBS Bank Managing Director and chief economist, expressed optimism about the region’s prospects. 

“The world is changing, and Southeast Asia is well-positioned to capitalise on these shifts. With the right policies and investments, the region can achieve even greater heights,” he said.

Southeast Asia — Transition From Resurgence To Growth 

The Philippines is set for robust growth at 6.1%, driven by a government committed to development, especially in infrastructure and renewable energy projects. Unlike Singapore and Thailand, the Philippines stands to gain from its favourable demographics. Indonesia’s economy is predicted to expand by 5.7%, with room for even higher growth. This potential stems from its rich natural resources, growing population, and vibrant startup scene.

To fully capitalise on these advantages, Indonesia needs to broaden its economic base beyond raw materials and foster a more open, competitive business environment. Malaysia’s projected 4.5% growth rate is underpinned by its renewed focus on attracting foreign investment, particularly in established sectors like semiconductors. The country is also well-positioned to benefit from spillover effects from Singapore, notably in the expanding data centre industry. 

In fact, Malaysia could potentially more than double Singapore’s current data centre capacity, challenging the city-state’s regional dominance in this sector. While Thailand’s growth forecast is more modest compared to its regional counterparts, the country still holds considerable promise.

Its economic strengths include a recovering tourism industry, a well-established position as a regional automotive manufacturing hub with solid infrastructure, and the presence of conglomerates with a strong regional focus, the report said.

Looking ahead, to accelerate growth, the experts pointed out that SEA-6 needed to adopt strategies to redirect resources, make bold policy changes and take risks in some issues such as infrastructure development, education, and environmental sustainability to fully realise its potential.

The report also identifies five key opportunities to accelerate growth in Southeast Asia. These include investing in emerging growth sectors, encouraging technology-enabled disruptors, strengthening capital markets and increasing investment, accelerating the green transition, and supporting multilateral initiatives.

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The post Southeast Asia Set To Overtake China In Growth And FDI appeared first on Asia Pacific Metalworking Equipment News | Manufacturing | Automation | Quality Control.

Foreign companies are moving their manufacturing facilities out of China to establish production hubs in other countries as trade tensions continue to brew between China and the US. Malaysia, the world’s sixth largest exporter of semiconductors in the world, has greatly benefited from this strategy known as China Plus One, where companies diversify their business outside of China.

Malaysia has a 50-year edge in the sector given that Intel established its first international manufacturing plant in the northern state of Penang. Intel is also building another factory in Penang that will be the US States chip giant firm’s overseas facility for advanced 3D chip packaging. Malaysia is on a particularly attractive spot given that many semiconductor and electric vehicle companies relocating to Southeast Asia to bypass trade restrictions and strengthen their supply chains.

The country has an existing ecosystem in Penang and the neighbouring Kulim in Kedah. This provides an option for technology companies seeking to date-risk amidst intense rivalries between the US and China over cutting-edge technologies.

Tech Investment Surge

Malaysian Prime Minister Anwar Ibrahim has been actively seeking high-tech investments by travelling overseas to build relationships with potential investors. In March 2024 on SME Future Day 2024, he extended an invitation to German businesses and companies across Europe to invest in Malaysia, emphasising the country’s strategic location for accessing the Chinese market.

Foreign direct investment in Malaysia’s tech sector has been steadily increasing since 2021, with major companies like Intel, Infineon Technologies, AT&S, and Nvidia making significant investments there. However, as Malaysia aims to move up the value chain, it faces challenges such as stiff competition from neighbouring countries like Indonesia and Vietnam, as well as constraints in local supply chains.

Former Deputy Minister of International Trade and Industry, Ong Kian Ming, highlighted the challenge of getting the right kind of human resources and skilled labour to become part of the higher value-added manufacturing or services ecosystem.

“We’ve seen examples of how some Chinese companies who have come into Malaysia in the past, they do not fully integrate with the local supply chain,” he stressed.

This means is local SMEs (small- and medium-size enterprises) in Malaysia and other companies are not able to benefit from the FDI coming into Malaysia, he pointed. The Malaysian government is not only looking to attract foreign investments but also to engage domestic companies and investors, particularly government-linked investment firms.

Minister of Investment, Trade, and Industry, Tengku Zafrul Abdul Aziz, announced plans to develop a strategic semiconductor plan to enhance competitiveness in the industry, which includes updating laws and incentive packages to support local businesses. This will spell brand new opportunities for the metalworking sector, from metalcutting, machining, metrology right up to sheet metalworking. 

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The post More Factories Relocate From China To Malaysia Over Restrictions appeared first on Asia Pacific Metalworking Equipment News | Manufacturing | Automation | Quality Control.

Source: Tempo.co

Indonesia will be having more textile factories, Tempo.co noted, thanks to investments from Singapore and China, Coordinating Ministry for Maritime Affairs and Investment disclosed. The investments are expected to boost the country’s economy.

“The investors are from Indonesia, Singapore, and China,” the ministry’s Deputy for Investment and Mining Coordination, Septian Hario Seto, told Tempo on Thursday, 27 June 2024.

While declining to mention specific names, Seto said that a total of 12 companies are currently involved in the plan.  He added the factories will likely be located in West Java and Central Java, including Subang, Brebes, Karawang, Klaten, Solo, and Sukoharjo in Indonesia.

Construction of the new textile factories is projected to generate tens of thousands of new jobs, or even up to 41,000, Seto stressed. During a MINDialogue discussion broadcast on CNBC TV’s YouTube channel on 20 June 2024, Coordinating Minister for Maritime Affairs and Fisheries, Luhut Binsar Pandjaitan, highlighted the interest of Chinese textile companies in investing in Indonesia and providing dormitories for its 108,000 employees. He said that Kertajati was the proposed location.

Luhut also instructed Minister of Agrarian Affairs and Spatial Planning Agus Harimurti Yudhoyono to expedite the land affairs. Apart from Kertajati, he said a textile factory will also be built in Sukoharjo, Central Java.

“If we want to have 6.5% or 7% economic growth, we have to ask for export-oriented investment,” he said.

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The post Indonesia To Receive 12 Companies’ Investments From Singapore And China For Textiles appeared first on Asia Pacific Metalworking Equipment News | Manufacturing | Automation | Quality Control.