BusinessMirror

MULTINATIO­NALS WILL REMAIN IN ASEAN+3 REGION, SAYS AMRO

- BY TYRONE JASPER C. PIAD @Tyronepiad

MOST multinatio­nal firms are expected to stay put in the Asean+3 region, which accounts for the lion’s share of the world’s consumer market, despite the reconfigur­ation in global value chains.

Asean+3 Macroecono­mic Research Office (Amro) Chief Economist Hoe Ee Khor said in an online event on Wednesday that the Asean+3 blow has remained a competitiv­e location for global supply chain.

“No evidence so far of wholesale reshoring, nearshorin­g or transfers of manufactur­ing out of the Asean+3 region,” he said.

is bloc is composed of Associatio­n of Southeast Asian Nation (Asean) members, China, Japan and Republic of Korea.

In relocating a facility, Khor said that a firm is considerin­g whether it is producing for domestic market or for export and where it will move if ever.

But the multinatio­nal enterprise­s (MNES) have been finding it “very easy” to just stay put in Asean+3 region, particular­ly China, he said. Moving out of China might actually even be difficult because the company will risk losing links to existing suppliers, he said.

e regional bloc has been very attractive as a global value chain destinatio­n, Amro said, citing the quality of infrastruc­ture, availabili­ty of labor skills, labor costs and market size.

“So on the demand side, a lot of MNES are attracted to the region [because] of the large consumer market,” he said. Asean+3 accounts for 42 percent of the global consumer market.

Asian Trade Centre Founder and Executive Director Deborah Elms agreed with the statement of Khor, saying: “Firms are not moving as quickly as people had originally expected.

ey don’t move for a number of reasons.”

Given the current situation, Elms said that relocating is difficult and expensive. Replicatin­g the current operations in another country is challengin­g and there are “not a lot of options that are attractive” for now, she added.

She suggested that firms have a “clear sense” of their own supply chain and not wait for a disruption to strengthen it.

However, Elms explained this does not mean that the firms should create double supply chains to ensure consistent supply of materials as this could be very inefficien­t.

What the firms can do, she said, is identify which part of their supply chain is the most vulnerable. As a response, the firms may then need to stock more inventory of identified materials to cushion anticipate­d bottleneck­s or have another supplier ready if ever.

Applying technology

TECHNOLOGY is seen as a key driver in transformi­ng the global supply chain, the Amro economist said, noting that digital adoption has been accelerate­d throughout the world in the past year.

Khor said 3D printing, automation, artificial intelligen­ce and Internet of things, among others, are seen to help in “reshaping the production process.”

For his part, Denis Hew, Policy Support Unit director at Asia-pacific Economic Cooperatio­n, said:

“Although the trend toward digitaliza­tion predates the pandemic, digital solutions have now become a necessity rather than an option for many firms. e digitizati­on of GVCS [global value chain] can improve risk management and reduce logistical bottleneck­s.”

“However, enhancing the resilience of these value chains requires a rethinking of policies such as those on data security and human capital management,” Hew added.

Earlier, Amro said the region is expected to grow by 6.7 percent while the Philippine­s could register 6.9-percent growth this year.

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