MARKET DEVELOPMENT
ASEAN Can Offer MNCs Full Value Chain, Says Study
ASEAN Can Offer MNCs Full Value Chain, Says Study
08/06/2015 (Bernama) - ASEAN can offer multi-national companies (MNCs) the full value chain due to the diverse range of industrial specialisations in the region, which makes it even more attractive for investors.
This is according to a study entitled, "The ASEAN Community: Capturing the Zeitgeist of Rising Asia", by the Amsterdam-based multinational professional services firm, TMF Group.
The study was undertaken to explore how international businesses can best harness the potential of the growing region.
It revealed that Singapore and Malaysia specialise in electronic products, Thailand is the leading manufacturer of fast moving consumer goods and processed foods, while Vietnam and Cambodia focus on garments.
It also highlighted that Indonesia, Brunei and the Philippines, are the main producers and exporters of natural resources such as palm oil, rubber, sugar cane, rice, cocoa, timber, petroleum, natural gas, coal and tin.
TMF Group's Head of Asia Pacific Paolo Tavolato in a statement said the formation of an ASEAN Economic Community (AEC) should provide the region an unique opportunity to replace China in providing MNCs the total value chain for their business.
"As China's population ages and the workforce becomes more expensive, AEC is the best alternative, and through the vertical and horizontal integration of Southeast Asia economies, it would stimulate intra-regional investment, trade and business connections benefiting both foreign and local firms," he added.
According to TMF Group, a crucial step to this new era for the region is the removal of non-tariff barriers (NTBs).
"The removal of NTBs is the hardest to implement as most are populist measures designed to protect strategic national industries.
"Challenges remain in the elimination of NTBs such as a single channel for imports, price control measures, natural resource subsidies, and preferential treatment of state-owned enterprises.
"Although the withdrawal of NTBs might inflict short-term pain it would eventually be beneficial as competition will push these industries to move up the value chain and increase productivity," said Tavolato
A study by Institute of Southeast Asian showed that the total removal of tariffs and NTBs in ASEAN could reduce the cost of doing business in the region as well as increase Gross Domestic Product (GDP) value by five per cent.
The establishment of the AEC is expected to generate between US$280 billion to US$615 billion (equivalent to five per cent to 12 per cent of projected ASEAN GDP) in annual economic value by 2030.
This is according to a study entitled, "The ASEAN Community: Capturing the Zeitgeist of Rising Asia", by the Amsterdam-based multinational professional services firm, TMF Group.
The study was undertaken to explore how international businesses can best harness the potential of the growing region.
It revealed that Singapore and Malaysia specialise in electronic products, Thailand is the leading manufacturer of fast moving consumer goods and processed foods, while Vietnam and Cambodia focus on garments.
It also highlighted that Indonesia, Brunei and the Philippines, are the main producers and exporters of natural resources such as palm oil, rubber, sugar cane, rice, cocoa, timber, petroleum, natural gas, coal and tin.
TMF Group's Head of Asia Pacific Paolo Tavolato in a statement said the formation of an ASEAN Economic Community (AEC) should provide the region an unique opportunity to replace China in providing MNCs the total value chain for their business.
"As China's population ages and the workforce becomes more expensive, AEC is the best alternative, and through the vertical and horizontal integration of Southeast Asia economies, it would stimulate intra-regional investment, trade and business connections benefiting both foreign and local firms," he added.
According to TMF Group, a crucial step to this new era for the region is the removal of non-tariff barriers (NTBs).
"The removal of NTBs is the hardest to implement as most are populist measures designed to protect strategic national industries.
"Challenges remain in the elimination of NTBs such as a single channel for imports, price control measures, natural resource subsidies, and preferential treatment of state-owned enterprises.
"Although the withdrawal of NTBs might inflict short-term pain it would eventually be beneficial as competition will push these industries to move up the value chain and increase productivity," said Tavolato
A study by Institute of Southeast Asian showed that the total removal of tariffs and NTBs in ASEAN could reduce the cost of doing business in the region as well as increase Gross Domestic Product (GDP) value by five per cent.
The establishment of the AEC is expected to generate between US$280 billion to US$615 billion (equivalent to five per cent to 12 per cent of projected ASEAN GDP) in annual economic value by 2030.