ASEAN: Regional Trends in Economic Integration, Export ... - USITC

competition between ASEAN countries to supply components to the global computer
supply chain. An important way in which countries become involved in export-oriented
computer components production is through direct investment from multinational
components firms, which several ASEAN countries compete heavily to attract.
Background
The following sections will describe ASEAN economic integration, export
competitiveness, and inbound investment as they relate to the competitive factors
impacting the computer components industry in the region. Among the diverse set of
computer components products, key items produced in the ASEAN region include hard
disk drives (HDDs), computer central processing units (CPUs), and assembled printed
circuit boards. Inbound investment is particularly important to regional competitiveness
in this industry, as a limited number of large multinational firms account for most of the
production of many types of components (either directly or through their suppliers and
contract manufacturers). Many countries worldwide, including several ASEAN countries,
vie for investments from these firms as a source of skilled manufacturing and R&D jobs
and integration into the highly globalized supply chain for computer products. This
dynamic is complex given that many factors—availability of skilled labor, existence of
supporting industries, political stability, ease of doing business, and financial incentive
packages offered to investors—are important aspects of a country’s ability to compete in
this industry.
Within ASEAN, there is substantial variation between member countries in terms of the
types of components they produce and the extent to which they participate in nonmanufacturing
activities, such as R&D. The three ASEAN countries most heavily
involved in the computer components industry are Malaysia, Singapore, and Thailand.
The Philippines plays a smaller role in exporting computer components, but it has been
an investment destination for firms such as Intel (until recently) 13 and Integrated
Microelectronics, Inc., and it also serves as country coordinator for the ASEAN
electronics sector Roadmap. Over the past few years, Vietnam has emerged as an
important location for the computer industry, attracting direct investment from
multinationals such as Compal Electronics, Intel, and Jabil Circuit. Vietnam’s exports of
components are small by volume at present, but given its rising importance as an
investment destination, Vietnam’s role in the computer industry, and specifically in
components production, is likely to continue to grow. Indonesia exports a relatively small
volume of computer components, although it is more heavily involved in other parts of
the electronics industry. Brunei, 14 Laos, Cambodia, and Burma do not produce computer
components. The latter three of these countries lack a large enough pool of skilled labor
for this industry at present, and their limited transportation infrastructure is also a barrier
to investment. 15
In the computer components industry, Singapore specializes in hosting regional
headquarters of multinational firms, performing R&D, investing in other ASEAN
countries, and certain skill-intensive manufacturing tasks such as that of producing
13 The Straits Times, “Intel to Close Philippines Plant,” January 23, 2009.
14 No specific information is available regarding the reasons for Brunei’s lack of components production.
However, it is likely that the country’s small population restricts the availability of qualified labor. Some
areas of concern in Brunei among electronics producers can be found in Parsons et al., “Measures Affecting
the Integration of ASEAN’s Priority Sectors (Phase 2),” June 2007, 37.
15 Industry representative, interview by USITC staff, Bangkok, Thailand, March 16, 2010; industry
representative, interview by USITC staff, Singapore, March 4, 2010.
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