ASEAN aiming for tech-led innovation to foster growth

ASEAN countries are becoming a rising hub destination for global manufacturers thanks to well-established trade networks, a growing middle class, a thirst for tech expansion, and a young and educated workforce.

As a region, ASEAN has experienced years of consistent high growth. Its markets now draw more foreign direct investment and are wealthier than before – and by 2030, the region’s economy is expected to double from $3.1 trillion in 2019 to $6.6 trillion over the next few years, according to United Overseas Bank Ltd.

1507p10 asean aiming for tech led innovation to foster growth
1507p10 asean aiming for tech led innovation to foster growth

From a demographic perspective, the region’s credentials are equally impressive. ASEAN is currently home to over 660 million people – equivalent to a little under half the population of China – of whom 450 million are of working age. By 2030 these numbers will likely swell to 725 million and 488 million respectively. It is this demographic windfall, combined with economic expansion, that will power the region forward in the decade ahead.

Talking with VIR, CEO of Malaysian-based Elquator Henrik Pryter said the ongoing pandemic has raised vulnerabilities and is quickening shifts in key exchange hallways. On the other hand, worldwide supply chains are being broadened. This presents openings for both inbound and outbound activities for ASEAN.

Pryter’s company aims to expand to countries such as the United Kingdom and Denmark to meet the surging demand. If successful, the moves would further demonstrate the product capacity of ASEAN groups.

China remains the leader in global manufacturing, with every fluctuation in its manufacturing output and cost levels making headlines around the world. But foreign investors are increasingly turning their gaze southward to the 10 dynamic markets comprising ASEAN, with manufacturing one of the bloc’s key economic growth drivers. Already, the region is a global manufacturing hub and was estimated to have grown at a compound annual growth rate of 6.6 per cent in the last four years.

Many big names are already based here, including Bosch, Ford, ABB, Ericsson, GE, Samsung, LG, ExxonMobil, Coca-Cola, and Pepsico, and many more.

Foreign investors have a growing awareness of ASEAN’s value as a base of operations mostly focused on chemicals, food and beverages, metals, and motor vehicles, but other sectors such as renewables and water treatment are fast becoming new trends.

Horst Harbers, CEO and founder at OptiCat R2V Pte., Ltd. – which is collaborating with Swedish water purification innovators Drupp – told VIR, “My aim is to use renewable energy here in Southeast Asia to further promote the modular water from air technology to many businesses looking for a sustainable solution, including food and beverages and personal care manufactures.”

 

In recent report from Cushman & Wakefield (C&W), it was noted that the current China-US trade war and the ongoing pandemic may be catalyst for change but they are not the underlying drivers for the growth of ASEAN manufacturing.

“The manufacturing shift towards Southeast Asia has been a long time in the making. As minimum wages in China grew, more orders for labour-intensive products, such as clothes, toys, and shoes shifted to less expensive locations in India, Bangladesh, Myanmar, and Vietnam,” the report said. “However, despite government initiatives to attract manufacturers by Southeast Asian countries, China retains a clear infrastructure advantage with the ability to efficiently move goods via road, rail, or sea transport.”

In Southeast Asia, on the other hand, Ho Chi Minh City, Hanoi, and Manila enjoy a cost differential over all Chinese markets – offering cheaper land and labour. In fact, Vietnam has jumped a few notches in C&W’s global ranking of the most cost competitive manufacturing hubs to number two after China.

Beyond this, Jakarta and Bangkok act as alternative locations for higher order manufacturing due to higher costs in rent and labour respectively, according to the report.

“ASEAN has been playing on cost efficiencies. It is time to transform that into technology-led innovation because that’s the way they will participate in global value chains and also grow across industries,” said a representative of Standard Chartered at last week’s ASEAN Business Forum.

Whether expanding into ASEAN or reconfiguring their current regional footprint, foreign investors need to carefully analyse both their medium- and long-term implications for two reasons, according to a report from McKinsey & Company. “Firstly, companies face extended time horizons for realising returns on capital-intensive investments. Secondly, the process for plant location requires significant time, resources, and organisational focus. Having to repeat this process unexpectedly, due to significant shifts in demand, for example, could have a material impact on a company’s supply chain, business strategy, and bottom line,” the report said.

Natalie Black - UK Trade Commissioner for Asia-Pacific

1507p10 asean aiming for tech led innovation to foster growth

The United Kingdom has launched the first Digital Trade Network, starting in the Asia-Pacific. This will increase UK digital tech expertise on the ground in ASEAN, allowing us to strengthen our partnerships for the digital economy and unlock the benefits that responsible tech can deliver.

The UK government will further deepen its digital partnership with ASEAN through a pilot which will explore how micro, small, and medium-sized tech enterprises can deliver digital solutions to some of the more challenging business issues faced in the region. The UK will also continue to work closely with the ASEAN Business Advisory Council to develop a private sector regional digital trade connectivity roadmap, complementing the ASEAN Single Window programme which can lead to more facilitative trade within the bloc and beyond.

Michele D’Ercole - President, ICHAM Vietnam

1507p10 asean aiming for tech led innovation to foster growth

Italian companies and the skills found within mechanical segments can work as a vital resource for ASEAN nations inside the setting of modification of supply chains.

Numerous conversations focus on making smart cities, e-governments, and networks as well as organising security. Smart cities and Industry 4.0 definitely help Vietnam along with other countries, as here in Italy, our government has also designed Industry 4.0 policy initiatives. They are an assignment given to a city that uses green vitality, clean vitality, and a framework for the long haul, upgrading the quality and execution of urban life to decrease utilisation, wastage, and costs.

They also incorporate numerous perspectives which are not continuously simple for ASEAN nations that encounter fast and solid urbanisation. We are willing to share our experience with ASEAN nations, including Vietnam, on how to utilise smart cities and reach sustainable development. VIR

Nguyen Thu

Should Vietnam pursue hi-tech or ecological agriculture?

Should Vietnam pursue hi-tech or ecological agriculture?

In an agricultural ecosystem, the impact caused by humans, such as a decline in biodiversity, which affects food chains and food networks, has created more risks.

Enterprises in industrial parks urged to use hi-tech equipment

Enterprises in industrial parks urged to use hi-tech equipment

 Enterprises in export processing zones (EPZs) and industrial parks (IPs) should use high technologies to better manage manufacturing processes and improve product quality.  

 
 

Other News

.
Vietnam to increase imports of coal and gas
Vietnam to increase imports of coal and gas
BUSINESSicon  14/10/2020 

The latest data from the ministry sent to the National Assembly shows that Viet Nam is transitioning from an energy exporter to a net importer.

Coastal developers prepare for good upcoming times
Coastal developers prepare for good upcoming times
BUSINESSicon  14/10/2020 

In anticipation for the world eventually opening back up for travellers, developers are exploring the high potential of Vietnam’s world-renowned coastal urban areas.

Tra fish swimming back to local market
Tra fish swimming back to local market
BUSINESSicon  14/10/2020 

Turning away from the uphill battle in exports due to COVID-19, tra fish producers have set an eye on the domestic market.

Investors find VN ports, logistics attractive
Investors find VN ports, logistics attractive
BUSINESSicon  13/10/2020 

With its annual growth of 12-14 per cent, the logistics sector, especially seaports, is becoming attractive to both domestic and foreign investors,...

Vietnam continues reform as part of EVFTA deal
Vietnam continues reform as part of EVFTA deal
BUSINESSicon  13/10/2020 

Viet Nam is continuing its institutional reform commitments made in the historic EVFTA in an aim to boost exports of agricultural products and...

VN to set new regulations for overseas investment
VN to set new regulations for overseas investment
BUSINESSicon  13/10/2020 

Individuals will no longer be allowed to invest in real estate abroad if a new draft decree issued by the Ministry of Planning and Investment is approved.

Tax cut welcome but not enough: businesses
Tax cut welcome but not enough: businesses
BUSINESSicon  13/10/2020 

The Government's 30% corporate income tax cut was a step in the right direction but it could have been more inclusive by offering support to small businesses that were in desperate need of cash due to the difficulties caused by the COVID-19 pandemic.

Vietnam expects to welcome more investors next year
Vietnam expects to welcome more investors next year
BUSINESSicon  13/10/2020 

Vietnam is still regarded by investors as an attractive destination thanks to its stable politics and macro economy, favourable geographical location, and advantages in land and human resources.

Long Thanh Airport project awaits disbursement of funds
Long Thanh Airport project awaits disbursement of funds
FEATUREicon  13/10/2020 

The government’s report to the National Assembly on the implementation of the Long Thanh International Airport project on October 9 shows that little has been done over the last five years.

HCM City tightens licensing of condotels, resort villas
HCM City tightens licensing of condotels, resort villas
BUSINESSicon  14/10/2020 

Local authorities have been asked to carefully consider the granting of new licenses to projects with condotels, following many problems that have been discovered.

Experts unhappy with cement exports, but industry says unavoidable
Experts unhappy with cement exports, but industry says unavoidable
BUSINESSicon  12/10/2020 

In the first eight months of the year, cement companies exported more than 23.5 million tonnes of cement and clinker, an increase of 13.7 per cent year-on-year.

Half of local businesses use IFRS
Half of local businesses use IFRS
BUSINESSicon  12/10/2020 

More than half of companies in Vietnam have been adopting international financial reporting standards to meet investors’ expectations and improve their corporate governance, a survey showed.

Party Resolution boosts marine economy and defence
Party Resolution boosts marine economy and defence
BUSINESSicon  12/10/2020 

The sustainable development of the marine economy in association with the consolidation of defence and security is among the important sections of a resolution from the Communist Party of Vietnam

Japanese enterprises want to expand supply chains in Vietnam
Japanese enterprises want to expand supply chains in Vietnam
BUSINESSicon  12/10/2020 

About 15 out of 30 Japanese firms with overseas production bases say they want to expand and diversify their supply sources in Vietnam, according to a survey by the Japan External Trade Organization (JETRO).

The last quarter’s momentum
The last quarter’s momentum
BUSINESSicon  11/10/2020 

If the Covid-19 pandemic will continue to be well put under control as it is now, Vietnam’s GDP growth in the fourth quarter is likely to be higher than the first three quarters.

Positive outlook ahead for economic growth in 2020
Positive outlook ahead for economic growth in 2020
BUSINESSicon  11/10/2020 

There remains plenty of room to accelerate economic growth moving into the fourth quarter of the year, with domestic consumption and investment set to be the key drivers for Vietnam’s growth during the remainder of the year, according to insiders.

Vietnam to develop livestock sector
Vietnam to develop livestock sector
BUSINESSicon  11/10/2020 

PM Nguyen Xuan Phuc has approved a plan to develop the livestock sector for the 2021-2030 period with a view to 2045.

72% of EU businesses plan to expand in Viet Nam
72% of EU businesses plan to expand in Viet Nam
BUSINESSicon  11/10/2020 

A majority of European businesses in Viet Nam expect to increase their operations in the country, the sixth Business Sentiment Survey of the EU-ASEAN Business Council released on Thursday shows.

VN eyes boosting processed meat industry
VN eyes boosting processed meat industry
BUSINESSicon  11/10/2020 

The husbandry industry is hoped to become a modern economic sector industrialised in all stages from production, processing, preservation and...

Vietnam vows to develop eco-friendly chemical industry
Vietnam vows to develop eco-friendly chemical industry
BUSINESSicon  10/10/2020 

Nguyen Van Thanh, director general of the Vietnam Chemical Agency, speaks about some of the strengths and weaknesses in the 2007 Law on Chemicals.

 
 
 
Leave your comment on an article

OR QUICK LOGIN