2. And also an overview on the growth forecast in the U.S. economy as well as its manufacturing sector and subsectors.
ASEAN-6 MANUFACTURING DEVELOPMENT
1. Indonesia - The industry is focused on basic metals manufacturing and mineral-based production, which accounted for 42 percent of the country’s manufacturing FDI from 2009 to 2013. Other leading manufacturing sectors include automotive, fabricated metal products, plastics, and rubber. Indonesia revised its Negative Investment List (Daftar Negatif Investasi) to increase foreign and domestic direct investments in specific sectors such as pharmaceutical manufacturing and tighten restrictions on certain sectors such as energy and mineral resources.
2. Singapore - The food, beverage, and tobacco industries account for a large portion of its total manufacturing FDI, from the takeover few large local firms by foreign companies. Singapore is also a global chemicals hub—an integrated facility on Jurong Island hosts some of the world’s leading energy and chemical companies. In 2013, the Economic Development Board, Singapore’s lead government investment agency, set aside SGD 500 million over the succeeding five years for a Future of Manufacturing Plan to build capabilities and promote new technologies, and support the government’s transition to an economic model led by research and development and innovation.
3. Vietnam - Reduced inflation, stronger external accounts, and a stable foreign exchange market have improved its macroeconomic landscape. The government has undertaken several economic-restructuring efforts, including the privatization of state-owned enterprises and relaxed restrictions on regulations to encourage foreign investment. With these developments and abundant natural resources the country has been attracting strong levels of FDI for petroleum refining and chemicals. The government has also invested in industrial zones and export processing zones in an effort to lure additional FDI. The Ministry of Industry and Trade announced a master plan for Vietnam’s industrial development to 2025, with a focus on electronics and telecommunications; industrial processing and manufacturing; and new energy sources.
4. Thailand - The country is the manufacturing hub for motor vehicles and components in the ASEAN region, and the automotive industry accounted for 42 percent of Thailand’s FDI from 2009 to 2013 with greenfield investment in tire manufacturing generated most of the FDI in Thailand’s rubber and plastics industry. Its long history of automotive manufacturing coupled with strong government support has created a relatively low-cost but skilled workforce in the sector with a robust cluster of local suppliers and supporting vehicle component industries.
5. Philippines - the country has lower levels of manufacturing due to its slow transition from agriculture to manufacturing. The availability of natural resources such as copper, gold, and nickel have lured foreign companies in mining and metals processing, representing 20 percent of manufacturing FDI from 2009 to 2013. The semiconductor and electronics industry also accounts for the majority of the country’s exports, led by large foreign investors while other companies have also invested in unprocessed and processed tobacco, given the Philippines’ strong agriculture base. The Philippines has immense growth potential, boasting a deep pool of skilled labor and a sizeable local market. In an effort to attract more FDI, the government’s 2014 Investment Priorities Plan targets priority sub-sectors including four-wheel motor vehicles assembly; engineered products; chemicals; copper wire rods; paper pulp, and tool and die.
US's INDUSTRIAL OUTLOOK
1. Table below shows a prediction for growth in U.S. GDP and key components of GDP through 2020. GDP Growth is expected to remain sluggish throughout the forecast period with only 2% in 2017.
2. The forecast reflects poor productivity performance in the U.S. and key parts of the world and further aggravated by stubborn global economic weakness, and a high dollar as the U.S. remains a strong economic player among its trading partners in spite of muted performance.
3. Annual growth of equipment expenditures is expected to average 3.8% for the forecast period performing weakly for an indicator often achieving double-digit growth rates.
4. Table below shows the outlook for manufacturing subsectors. Strong performers are expected to be food, petroleum, chemicals, rubber and plastics, and nonmetallic mineral products. Moderate but steady consumer spending is likely supportive of positive performance in this group of subsectors.
5. Manufacturing is the most globally connected among all the U.S. sectors. After a weak first half of 2016, U.S. economic growth started to accelerate with strength coming from the consumer and improved export demand.
7. Figures below show the lineup of industry forecasts for 2017 and 2020. While food, rubber and plastics, and chemicals are among the strong performers during 2017, aerospace products and parts are predicted to be the dominant growth subsector during 2020 which is inline with expectation of sustained strength in the air travel industry.
Industry Forecasts for 2017
Industry Forecasts for 2020
MALAYSIA MANUFACTURING DEVELOPMENT
1. Investment in transport equipment mainly aerospace, automotive, and shipbuilding machinery and equipment and electrical machinery has been a primary engine of growth for the country, representing 40 percent of manufacturing FDI from 2009 to 2013.
2. Malaysia is becoming a hub for aerospace manufacturing, with foreign investor companies such as Honeywell, JMI Aerospace, and Spirit AeroSystems establishing plants.
3. Malaysian Investment Development Authority (MIDA) identified key manufacturing sectors in high tech, capital, and knowledge-driven industries such as aerospace, biotechnology and advanced materials, and intermediate goods manufacturing.
TRENDS TO MONITOR
1. Shifts in global interest rates as markets price in possible changes in central bank policies, the rate and status of Chinese economy's protracted slowdown and whether U.S. growth is accelerating into 2017.
2. The adoption of industry 4.0 by countries' manufacturing sector in areas notably Big Data and Analytics, Automation, Simulation, Horizontal and Vertical System Integration, Cybersecurity, Cloud Computing, Additive Manufacturing, and Additive Manufacturing.
3. We will discuss other factors to monitor in the next post with topics on competitiveness index, indicators and the attractiveness and consideration for various sectors
(Source: Mckinsey, mapi.net)
