Manufacturers Heading to Southeast Asia

ASEAN Economic Community (AEC) is comprised of  Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Manufacturers Heading to Southeast Asia

Companies such as Foxconn, Samsung, and Toyota are setting up operations in ASEAN countries. 

Southeast Asia is looking very attractive to manufacturers who had made China their base of operations in Asia. From increasing labor costs, to quality issues as well as other concerns, manufacturers such as giant Foxconn to Samsung have announced they will be moving to other countries in Southeast Asia.

Arno Maierbrugger of Gulf Times reports on recent developments.

Technology giant Foxconn, Apple's contract manufacturer and also assembler for Sony, Nokia and other big brands, has signed a letter of intent to invest $1billioni in new manufacturing plants in Indonesia to diversify its production away from China, where it presently employs some 1 million people.

Samsung Electronics has also said it will expand its operations to Indonesia and soon start building a factory there to the detriment of its Chinese assemblers. The South Korean electronics giant was recently granted a license to invest $1billion into a new smartphone and tablet manufacturing base in Vietnam, a country which has also seen substantial investment in manufacturing from Mitsubishi in the recent past.

Toyota has been stepping up production in its plant in the Philippines and has said it will boost its presence in Indonesia with investments totaling $1.3bn until 2017. A new Toyota engine plant was opened in West Java earlier this year. India’s car maker Tata Motors has also decided to make Indonesia its manufacturing and distribution base for the region and move away from China.

Camera maker Nikon opened a factory in Laos last year.

Another major reason that manufacturers are making sure that they have a presence in the area is to be able to serve the ASEAN Economic Community (AEC), which comes into effect in 2015 and will consists of 600 million people from Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

TAGS: The Economy
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