Manufacturing Industry in ASEAN:

Overview & Trends

24TH MAY, 2012

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Assessing Manufacturing Excellence

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Our Global Footprint 40+ Offices

Scanning the Globe for Opportunities and Innovation

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Manufacturing

Trends

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The shape of

manufacturing is

changing

Future Manufacturing

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Factory of the Future

Current Plant Material Handling conveyer

Mixing Plant

Processing Plant

Heating Plant

Batching & Blending Plant

Cleaning Plant

Packaging Shop

Waste Water Processing Plant

Separation Plant

Quality Plant

Chilling Plant

Drying Chamber

Material Handling conveyer

Mixing & Processing Plant

Heating Plant

Batching & Blending Plant

Cleaning Plant

Packaging Shop

Future Plant

Waste Water Processing Plant

Separation Plant

Quality Plant

Chilling Plant

Drying Chamber

Work Simulation

10% decrease in production time; 30%

savings in project cost; 20% reduction in

manual labour; Reduced CO2 emissions

Remote Support and Diagnosis

of Production Equipment, Virtual

Reality based maintenance and

Planning

LV and MV drives coupled

with energy efficient

products

Premium

efficiency class

motors, pumps

and compressors;

all requiring low

voltage drives

Factory of the future will Lower Production Costs and shorten Innovation and Production

Cycles

SMART Factory 2020

FUTURE TECHNOLOGIES

• Current Sensing

• Cloud Computing

• Digital Factory

• Mobile Applications

• OELD Displays

• Reduced Complexity

• Software as a Service

• Software configurable hardware

• Sustainability

• Virtualization

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Future Manufacturing

• Green

• Sustainable

• Environmentally responsible

• Environmentally conscious

• Environmentally benign

• Clean

Operate

Green

Invest

Green

Produce

Green

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ASEAN

Outlook

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ASEAN: a 2 trillion economy

Vietnam

(123bil)

Others

(89bil)

Thailand

(346bil)

Indonesia

(846bil)

Philippines

(213bil)

Malaysia

(279bil)

Singapore

(260bil)

Gross Domestic Product of SEA Countries, 2011

(in US$)

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ASEAN: Growth Zone

GD

P, U

S$

2011-2015

Indonesia 6.6

Malaysia 5.5

Philippines 4.6

Singapore 4.7

Thailand 5.2

Viet Nam 7.1

Average 6.0

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Indonesia – set to break out

2011-2015

Economic

Development

Acceleration

Master plan or

MP3EI:

USD 400 Bln

Investment in

Infrastructure,

Industry clusters,

SEZ’s and FTZ’s.

Financed by the

Government,

private sector,

FDI and PPP

2015 2011 2025 2045

Source: IMF, World Bank, GOI, Frost & Sullivan

GDP USD $706 Bln

GDP p.c. USD $3,015

17th largest economy

GDP USD $1200 Bln

GDP p.c. USD $4,800

14th largest economy

GDP USD $4700 Bln

GDP p.c. USD $16,000

10th largest economy

GDP USD $16.6 Trillion

GDP p.c. USD $46,000

7th largest economy

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ASEAN: Manufacturing driven

Manufacturing, value added (% of GDP)

0%

20%

40%

60%

80%

100%

Manufacturing

Other Sectors

25% 36% 26% 22% 21% 20%

Source: World Bank, 2010

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ASEAN: Major Industries

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• Transport Equipment &

Machinery.

• Petrochemicals.

• Textile & Apparel

• Food

• Electrical & Electronics.

• Petrochemicals.

• Food.

• Basic Metal Products.

• Electronics.

• Textile & Apparels.

• Tobacco.

• Food.

Malaysia

Indonesia

Philippines

• Automobile.

• Electronics.

• Petrochemicals.

• Transport Equipment.

• Electronics.

• Biomedical.

• Petrochemicals.

• Precision Engineering.

• Textiles & Apparels.

• Food.

• Electrical Products.

Thailand

Singapore

Vietnam

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ASEAN: Manufacturing Drivers

Domestic Demand

China + 1

Manufacturing Edge

Infrastructure Investment

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CHALLENGES

Opportunities

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Minimum Wage Policy

Exchange Rate

Political Risk

Capability Development

Productivity Innovation

Natural Disasters

ASEAN Manufacturing: Challenges

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ASEAN Manufacturing: Challenges

Deloitte, 2010 survey

• Labour cost is not the main issue, it’s

the quality of people that matters

• Productivity and value add is the key

• Government investment in

manufacturing and innovation

© 2011 World Economic Forum | www.weforum.org/gcr

GCI 2010-2011

Country/Economy Rank Score Rank Change

Singapore 2 5.63 3 1

Malaysia 21 5.08 26 5

China 26 4.90 27 1

Thailand 39 4.52 38 -1

Indonesia 46 4.38 44 -2

India 56 4.30 51 -5

Vietnam 65 4.24 59 -6

Philippines 75 4.08 85 10

Cambodia 97 3.85 109 12

GCI 2011-2012

The Global Competitiveness Index 2011-2012 rankings

Enhancing Competitiveness

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ASEAN Manufacturing: Challenges

Enhancing Competitiveness

The pressure for Higher Productivity

will never cease.

• IT will be the main contributor to

Productivity

• Investment in New Technology

• Lean Manufacturing, Six Sigma

• Emphasis on research and

Innovation

• Competition

GDP share

of ICT sector

ICT investment

share

ICT share

in productivity

growth

18 % 29 %

5.8 % 6.3 %

42 % 80 % US

EU

Source: IMF 2004

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ASEAN Manufacturing: Opportunities

Emerging Sectors

Biomedical Sector

• S$ 26b for Singapore

• 10% of GDP

• Fastest growth rate

among all sectors

• High value add and

profit

Solar Power

• >2b investment in

Malaysia

• Global companies –

Bosch, Panasonic,

Sunpower

• Spur other investment

in Renewable Energy

Smart Grid

• $400 million market in

ASEAN

• Investments led by

Thailand and

Singapore

• Huge growth potential

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ASEAN Manufacturing: Opportunities

Common Effective

Preferential Tariffs

Scheme (CEPT)

Elimination of Tariffs &

Non Tariffs Barriers

By 2018

Successfully reduced

tariffs imposed on

products traded under the

CEPT Inclusion List, to a

range of 0% to 5%.

ASEAN Free

Trade Area (AFTA)

Products Under CEPT

Scheme:

All manufactured

products, including

capital goods.

Processed agricultural

products (agricultural

products are excluded).

Forms a competitive

ASEAN region.

Greater trade between firms.

Efficient division of labor.

Impact of AFTA

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LAST

Word

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The Modern Myth of Manufacturing

There is no long term future for Manufacturing. It will

eventually go away to low-wage economies

… IS a Myth

ASEAN as a Manufacturing Powerhouse

Governments and businesses have to stay focused on

productivity and innovation for the >20% share

… CAN be achieved

ASEAN needs to integrate as one The strength of ASEAN manufacturing lies in providing

a unified production base and market

… TO realize its potential

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