Asia’s Emerging Manufacturing Hot Spots
By Dezan Shira & Associates
Posted: 22nd September 2014 09:49
In this edition of China Outbound, we review the key factors fueling several Asian countries’ development as ideal locations for manufacturing operations in the coming years. With growing FDI into the ASEAN bloc, the region is poised to absorb China’s exodus of low-end manufacturing, with Vietnam harnessing several competitive advantages to feature prominently among the bloc’s manufacturing destinations. India, too, finds itself with several competitive advantages to help develop its status as a manufacturing juggernaut in the region.
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China and ASEAN Tigers Surge Ahead in FDI Income
The most recent FDI data from the World Bank shows that China and the larger ASEAN nations have performed well the past 18 months in terms of generating increased foreign direct investment, with the Philippines showing a 20 percent increase in FDI contributions last year and Singapore attracting the largest investment among the ASEAN nations. The trends therefore seem to be plain – Singapore is increasingly the place to be as an investment base from which to structure a China and ASEAN investment strategy, while the Philippines continues to be an attractive investment destination in the region.
ASEAN’s Leading Manufacturing Destinations
ASEAN manufacturers can be divided into those that have invested in mid- and high-tech manufacturing and those which are concentrated in low- or no-tech assembly. In this article, we look at ASEAN’s leading manufacturing destinations, including Singapore, Malaysia and Thailand.
The Competitive Advantage of Manufacturing in Vietnam
The state of manufacturing in Vietnam today so closely parallels that of China ten or more years ago—when low-wage, low-tech, low-added value manufacturing acted as a magnet for FDI into the country—that many foreign investors with existing China operations are actively inquiring about the payoffs of moving to Vietnam. As China moves further up the value chain in manufacturing, Vietnam has been well-poised to pick up the slack.
The Indian Advantage: Asia’s Next Manufacturing Juggernaut
India features many key ingredients necessary to transform its economy into a manufacturing juggernaut: a demographic dividend, attractive domestic market, comparative advantage in shipping and labor costs, an inexpensive currency relative to the dollar and low political risk. As India’s new leadership overhaul’s the country’s antiquated labor laws and introduces anticipated manufacturing incentives to the FY2015 budget, India’s competitiveness as a manufacturing and sourcing jurisdiction is set to increase substantially in the near to medium-term.
Betting on Vietnam: The Future of Southeast Asian Manufacturing
In the past three years alone, a growing number of manufacturers have relocated their operations from China to Vietnam in an attempt to escape rising costs and an increasingly complex regulatory environment. Located in a strategic position for foreign companies with operations throughout Southeast Asia, Vietnam is also the ideal export hub for pursuing a China + 1 strategy to reach other ASEAN markets.
ASEAN-India Services and Investment FTA Inches Closer to Implementation
The ASEAN-India Free Trade Agreement in Services and Investment is one step closer to implementation following approval by Thailand’s Ministry of Commerce to accept the terms outlined in the region-wide agreement. Following implementation of the ASEAN-India FTA in Goods, which came into effect in 2010, total trade between the nations grew by more than 35 percent to US$79 billion in 2012, surpassing the initial trade target of US$70 billion.
Myanmar Implements New Special Economic Zone to Boost Trade with China
In a bid to further boost trade with China and address the increasing demand for transport and infrastructure, Myanmar is implementing a Central Economic Zone in the border town of Muse, project officials announced last week. China already has over 65 investment projects in Myanmar, supported by annual bilateral trade between the nations of US$6.6 billion.
Russia Briefing: Sanctions Affecting International Business
In March 2014, the EU and the United States introduced sanctions against certain Russian and Ukrainian persons as a reaction to Russia’s role in the Crimea crisis. These were then expanded to exports and followed by sanctions from Canada, Norway, and other countries. This current issue of Russia Briefing gives an overview of the U.S. and E.U. sanctions, discusses their potential effects, and advises on whether or not your business is affected by the sanctions.
This article was first published on China Briefing.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
For further details or to contact the firm, please email email@example.com visit www.dezshira.com.