‘Malaysia must boost production tech, capacity’
KUALA LUMPUR: Southeast Asia, particular Malaysia, should focus on improving production technology and capacity as well as regional integration to benefit from the shifting of supply chains due to changes in global trade, says HSBC Bank Malaysia
Bhd.
HSBC country head of commercial banking Andrew Sill said changes in global trade were causing businesses to revisit supply chain investment and capacity strategies.
Many businesses had been expected to shift to and invest in Asean due to the region’s expanding economies and consumer markets.
“But we have yet to see the wide-scale shifts to Southeast Asia, South Asia or other parts of the world.
“Rather than a wide-scale shift to Asean due to the (United States-China) trade tensions, multinationals are diverging their supply chain strategies with a mix of localisation, offshoring and reshoring activities emerging,” he said in a statement yesterday.
“Businesses from China, Europe and the United States want to see Southeast Asia, including Malaysia, position itself as a viable alternative for lower-end production.
“For example, leveraging China’s Belt and Road initiative that is accelerating the region’s production capacity.”
However, Sill said in order to convert its supply chain potential, Southeast Asia needed to build more credibility among international firms, particularly in handling and delivering production orders.
He said while trade relations between Malaysia and the world’s major economies, including China, had generally been positive and steadily growing, there was a lot of ground still to cover within Asean’s backyard to 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 among international firms, which are re-examining their options,” said Sill.