Focus on it | Good news!The Southeast Asian supply chain, which has been interrupted for several months, is recovering. How long will it last?

   The Southeast Asian supply chain problem, which once made the world a headache, is now recovering. Flexible flat cable, d sub 15 and phoenix contact pluggable terminal blocks should be noted.

Since early October, Vietnam has significantly eased quarantine restrictions to promote a gradual return to factory operations.Malaysia, also because of the new epidemic prevention policy, has now restarted most factories, especially in factories with high vaccination rates, which are basically operating normally.

With the rate of COVID-19 vaccination and epidemic policies, many Southeast Asian factories, after months of stagnation, are accelerating the resumption of work in efforts to restore a broken supply chain.

Southeast Asian factories are resumed work

Most companies that have factories or partnerships in Vietnam said full production by the end of November would not be difficult to return to the pre-pandemic levels of the pandemic.

The Vietnamese government said in early November that production had resumed at about 200 Nike foundry plants across Vietnam.In mid-July, nearly 80 percent of the country's Nike shoe OEM were forced to stop production under the Vietnamese government's epidemic control policy, while nearly half of its shoes were made in Vietnam.Both Intel and Samsung said they plan to fully resume production at its Ho Chi Minh City, Vietnam, by the end of November.

According to the report of the Vietnam Ministry of Planning and Investment, with the implementation of the policy of coexistence with the epidemic, enterprises in Vietnam gradually recovered in October, the number of enterprise resumption and production increased by 29.8% month on month, and more than 75% of employees returned to work, easing the pressure of enterprise labor shortage.

Meanwhile, Vietnam's exports rose 6.4% in October from the previous month.Notably, after months of a trade deficit, Vietnam eventually resumed its trade surplus that month.

Plants producing auto parts in Vietnam are also restoring capacity, giving relief to global manufacturers eager for parts to arrive.

Japan Guhe Electric, which makes the car wiring harness in Vietnam, said it could soon restore 100% of its capacity, and the company employed about 8,000 employees at its factory in Ho Chi Minh City alone.

Vietnam's recovery alone is not enough for the auto industry's supply chain, because the key town of auto chips is in Malaysia, but Malaysia is also on the way to restore supply.

"The main plant in Ibao has basically returned to normal, but operates at only 80% due to manpower shortage," said John Chia (John Chia, chairman of Unisem (M), Malaysia's second largest semiconductor packaging and testing company.

Due to the outbreak, Malaysia has been shut down nationwide since June, and Yonisen's factory in Ibao was closed for 13 days under government instructions in September.The shutdown of Henisen and other Malaysian car semiconductor companies has caused a shortage of auto chips in the international market, leaving many large car companies forced to cut production.

Malaysia's manufacturing purchasing managers' index (PMI) index reached 52.2% in October, up from 48.1% in September and its highest point since April, mainly because factories resumed work after the government's closure.
Supply chains are gradually recovering

Apple CEO Tim Cook said that while the outbreak in Southeast Asia has affected Apple's supply in the latest quarter, that has improved since October.

In Malaysia, Indonesia and the Philippines, the number of new confirmed cases in a single day has dropped sharply.Driven by this, business travel in the region is also recovering, further promoting the recovery of the supply chain.

Long lines were placed in front of the Singapore Airlines Service Center.Many people flocked into the New Airlines website to check flights and ticket prices.AirAsia said its use of its mobile apps has increased by more than 140 percent since the Malaysian government lifted its cross-state travel ban.

But there are huge differences in vaccination rates among Southeast Asian countries, and the outbreak could differentiate, such as Vietnam, Indonesia and the Philippines at only about a quarter of the population.Countries like Malaysia, Singapore and Cambodia share more than 70 percent.

At the same time, the labor shortage and workers' return to work problems are still troubling many enterprises.Manford (Peter Mumford), head of Southeast Asia and South Asia operations at Eurasia Group (Eurasia Group), said labor shortages could delay a full economic recovery for several months.Many enterprises in the regions said that although there is no lack of orders, they still dare to sign too many contracts, mainly worried about the lack of labor.
A list of economic recovery in ASEAN countries

Vietnam: Better participation in the global supply chain

Against the background of the COVID-19 outbreak disrupting global and regional supply chains and rising trade protectionism, the signing of the Regional Comprehensive Economic Partnership (RCEP) has become an important milestone in the process of Vietnam's economic integration, and has brought many short-term and long-term benefits.

The RCEP agreement has brought many opportunities for Vietnam.The RCEP members are the largest supply of raw materials, machinery and equipment accessories in Vietnam, as well as the main market for Vietnamese products.RCEP covers the world's largest production chain, so a smooth and rapid docking with RCEP economies will help Vietnam have greater opportunities to participate in the global supply chain and increase Vietnam's role in the supply chain.Trade tensions between China and the United States and COVID-19 outbreaks have also prompted Vietnam to connect with China and other markets in the production chain, creating good opportunities for Vietnam to attract foreign investment.
Singapore: RCEP boosts trade and investment confidence

Singapore as the first member of ASEAN countries to complete the official approval process of RCEP, the RCEP will expand its existing free trade agreement network, expand economic space, promote the growth of trade and investment flow, enhance the competitiveness in the regional and international markets, and further consolidate the international financial center and transportation hub status to play an important role.

According to the annual economic outlook released by the ASEAN + 3 (China, Japan, South Korea) Office in the first quarter of this year, Singapore's global value chain participation rate has reached 60%, reflecting the close link between its economy and international trade.Singapore's annual trade is close to four times GDP.After the implementation of RCEP, it will help Singapore to deepen foreign cooperation, further attract foreign investment, expand its participation in the global value chain, optimize the industrial chain, boost enterprise trade and investment confidence, facilitate business expansion and increase import and export volume, expand and strengthen international trade and increase its contribution to the economy.
Thailand: Retail industry is showing a signal of recovery

Total retail sales in Thailand will resume positive growth in the fourth quarter of 2021, due to an improvement in the COVID-19 outbreak in China than in the third quarter, according to Thai China Daily reported.The domestic COVID-19 epidemic and vaccination began to show positive signals, prompting the government to gradually relax lockdown on various economic activities in the fourth quarter of 2021, including the plans to allow foreign tourists from quarantine and considering unsealed the entertainment industry, reflecting the opportunity of economic recovery.The unsealed will help build consumer confidence and create a spending atmosphere, and the Kaitai Research Center initially expects total retail sales to increase 1.4% in the fourth quarter of 2021 from a 1.2% year-on-year contraction in the same period last year.
Philippines: The recovery in foreign investment has exceeded expectations

The central bank showed that the net inflow of foreign direct investment (FDI) of $6.37 billion from January to August 2021 was $6.37 billion, up 40% from $4.56 billion a year earlier, the Philippine Star reported.Among them, foreign companies injected $4.51 billion into their Philippine subsidiaries through net debt investment, up nearly 72% year-on-year, and income reinvestment increased 11% year-on-year to $776 million.The main investment comes from Singapore, Japan, the United States and other places, flowing to manufacturing, finance, insurance, electricity, energy and real estate fields.The net inflow of FDI was $812 million in August, up 20% year on year.The impact of the new round of COVID-19 at the beginning of the year, the central bank lowered the target of attracting foreign direct investment to $7 billion for the whole year, and the recovery of foreign investment has exceeded expectations.
Indonesia: Trade surplus has hit a record high

Indonesia's trade surplus hit a record high in October, at $5.73 billion (previously $4.74 billion in August 2021).At the same time, Indonesia's exports also reached a record high of $22.03 billion, with mineral exports reaching $4.53 billion, the biggest month-on-month increase of 20%.China remained Indonesia's most exports that month, accounting for about 28% of total exports in the month.
Malaysia: More than 90% of the economic sector has been reopened

According to Malaysian Finance Minister Donggzaflu, in the third quarter of 2021, net foreign direct investment increased by RM 12.8 billion, with net foreign inflows exceeding RM 30 billion in the first nine months of this year, Nanyang Business Daily reported.Malaysia said its gross domestic product (GDP) rose 3% in the first nine months of the year and shrank 6.4% last year.He noted that Malaysia has been on track of recovery, and that more than 90 percent of the economy has reopened and has resumed most of its social activity.The Treasury expects the country's economy to grow from 3% to 4% in 2021, and from 5.5% to 6.5% next year.

Post time: Nov-23-2021