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

specialized computer processors. 16 Due to high labor costs, manufacturing activity has
gradually dwindled in Singapore since the 1980s. 17 Malaysia has also become
increasingly involved in regional R&D functions while also maintaining an important
role in high-technology manufacturing. 18 For example, while Malaysia’s role in the HDD
industry has shrunk as manufacturing has moved to lower cost locations, it remains a
competitive location for the more skill-intensive CPU industry. Thailand currently plays a
leading role in HDD production; between 2004 and 2008, its share of global computer
storage unit exports grew from under 10 percent to over 23 percent. 19 Vietnam’s role in
the industry largely remains to be determined, but Intel, the world’s largest producer of
CPUs, will open a new assembly and test facility in 2010—its largest anywhere—near
Ho Chi Minh City, an investment totaling about $1 billion. 20 The value of the products
that Intel plans to export from this facility substantially exceeds that of Vietnam’s total
computer components exports in 2008, so it is likely that Intel’s CPUs will dominate
Vietnam’s computer components exports for at least the next several years. 21 The
competitive factors behind these production patterns are examined in greater detail later
in this chapter.
Currently, China is regarded as presenting the greatest challenge to ASEAN’s regional
competitiveness in the computer components industry. Between 2004 and 2008, China’s
share of global exports of computer components grew from 27 to 35 percent, while the
ASEAN region’s share remained flat at 20–21 percent. 22 As China has come to dominate
final assembly of computers over the past 10 years, it has also captured an increasing
share of components production and investment.
ASEAN has responded to this challenge from China through its attempts to more fully
integrate the electronics sector in the region. The goal of the ASEAN electronics
Roadmap was to work with the private sector to “strengthen regional integration” in order
to “promote ASEAN as an integrated platform in which to do business in electronics.” 23
However, while the electronics sector is one of the more active among the priority
integration sectors in discussing how to implement Roadmap measures, there are few
examples of substantial cooperation between member countries regarding efforts to
improve integration because, as noted, ASEAN member countries still view each other as
rivals for inbound investment. Closer regional integration within ASEAN would likely
benefit the region’s overall competitiveness in the global computer components industry,
but competition between member countries for direct investment from multinationals,
such as through the use of tax breaks and other financial incentives, impedes further
integration.
16 Industry representatives, interviews by USITC staff, Singapore, March 4–5, 2010. Singapore also
specializes in producing the electronic components that are inputs into computer components, such as
integrated circuits.
17 Parsons et al., “Measures Affecting the Integration of ASEAN’s Priority Sectors (Phase 2),” June 2007,
38; Rasiah, “Expansion and Slowdown in Southeast Asian Electronics Manufacturing,” 2009, 124.
18 Parsons, 38; Rasiah, 132.
19 WITS, Integrated Data Warehouse (accessed January 5, 2010). Exports based on partner country
imports.
20 Intel Web site, http://www.intel.com/community/vietnam/index.htm (accessed April 29, 2010).
21 Industry representative, interview by USITC staff, Ho Chi Minh City, Vietnam, March 11, 2010.
22 WITS, Integrated Data Warehouse (accessed January 5, 2010). Exports based on partner country
imports.
23 Roadmap for Integration of Electronics Sector, ASEAN Framework Agreement for the Integration of
Priority Sectors, 2004.
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