ASEAN to improve production technology and capacity

ASEAN to improve production technology and capacity

KUALA LUMPUR: Southeast Asia, particularly Malaysia, should focus on improving production technology and capacity, as well as regional integration in order to benefit from the shifting of supply chains due to changes in global trade, says HSBC Bank Malaysia Bhd.

Country Head of Commercial Banking Andrew Sill said the changes in global trade were causing businesses to revisit their supply chain investment and capacity strategies, and speculations were rife that they would shift to ASEAN due to the region’s growing economies and consumer markets.

“But we have yet to see this convert into wide-scale shifts to Southeast Asia, South Asia or other parts of the world.

“Rather than see a wide-scale shift to ASEAN due to trade tensions, multinationals are diverging in their supply chain strategies with a mixture of localisation, offshoring and re-shoring activities emerging,” he said in a statement today.

“Businesses from China, Europe and the US want to see Southeast Asia and Malaysia further position itself as a viable alternative for lower-end production. For example, leveraging on initiatives like the Belt and Roda that are accelerating the region’s production capacity,” he added. 

However, Sill said to convert its much-touted supply chain potential, Southeast Asia needs to build more visibility and credibility amongst international firms, particularly in their ability to handle and deliver production orders.

He said that while trade relations between Malaysia and the world’s major economies like China have generally been positive and steadily growing, there was a lot of ground still to cover within ASEAN’s backyard to further improve the intra-regional flow of trade and investment.

“Agility and responsiveness to these challenges by ASEAN governments and corporates will determine whether the region’s supply chain potential can be realised amongst international firms who are re-examining their options,” he said.