Manufacturers rush to revamp SE Asian bases: Nikkei
Manufacturers rush to revamp SE Asian bases: Nikkei
BANGKOK (Nikkei): Japanese, U.S. and European manufacturers
are scrambling to reorganize their production bases in Southeast
Asia ahead of a gradual trade liberalization under the planned
ASEAN Free Trade Area, the Nihon Keizai Shimbun reports in its
Saturday morning edition.
Members of the Association of Southeast Asian Nations aim to
lower tariffs in most parts of the region to 5 percent or less in
2002 and zero by 2010, enabling firms to concentrate production
in one nation and export the output to other countries. But at
the same time, overlapping production facilities will become a
burden for companies, and many are rushing to consolidate them.
U.S., European and South Korean businesses are also setting up
new plants and expanding existing ones. Competition is expected
to grow in the region, which boasts a total population in excess
of 500 million, the second most promising market after China.
The Matsushita Electric Industrial Co. group has calculated
the profitability of its 40 or so plants in the region after
tariffs are cut, deciding to concentrate production of electronic
parts for the information technology industry in Singapore and
rice cookers in Thailand.
The group now makes IT electronic parts in two nations and
rice cookers in three. It is also considering consolidating
output of televisions and home appliances.
Denso Corp., which operates factories in four Asean members,
is concentrating output of electrical parts in Malaysia and spark
plugs in Indonesia.
Honda Motor Co. will begin local production of its Stream
minivan in Indonesia and export it to other Asean nations
starting 2002.
The high tariffs imposed by Southeast Asian nations had
prompted firms to operate plants for the same products in
different countries in order to secure large market shares in
each local market.
But Asean states are now aiming to implement a free trade area
on fears that foreign investment is being sucked into China.
Companies worldwide are aggressively investing in Asean nations
to avoid becoming overinvested in China, which is likely to
accelerate the trend of manufacturing abandoning Japan.
Firms are also boosting local output in the region. South
Korean's LG Electronics Co. is expanding its air conditioner
plant in Thailand. It will boost annual output there to 200,000
units by the end of this year, up 10-fold from the previous year,
and export the goods to other Southeast Asian nations starting
next year. LG now exports air conditioners to the region from
South Korea.
U.S. firm Procter & Gamble Co. has invested around 12 billion
baht to expand its Thai plant.