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

done there to China. The firm retains a few high-level manufacturing positions in
Singapore, however, because it has found the skill set of engineers in Singapore well
suited to its business, and it also appreciates the fact that its staff in Singapore can speak
both Chinese and English. 30
In Malaysia, as the labor force has developed the skills needed to participate in R&D and
other professional activities, labor for assembly has become scarce. 31 Assembly workers
are typically brought in from other Asian countries, some from ASEAN and some from
outside the region. Indonesia is a major source of assembly workers for Malaysian
components factories. 32 In addition to the shortage of assembly workers, one company
noted that while Malaysia has skilled engineers, there is a great deal of competition for
these workers because multiple industries in Malaysia rely on them. 33 The combination of
the need to bring assembly workers in from other countries and the shortage of skilled
engineers in Malaysia creates a potential constraint on the country’s competitiveness in
this industry.
In Vietnam, labor is cost-competitive, but there is a shortage of experienced managers
and engineers. Companies generally state that they have little difficulty recruiting new
college graduates for professional positions or securing an adequate supply of relatively
unskilled assembly workers. Vietnamese engineers reportedly are cost-competitive, as
they typically make salaries about half of those in China. 34 Electronics assembly workers
are also highly cost-competitive in Vietnam; the minimum wage for this type of work is
less than half the average manufacturing wage in prime manufacturing areas of China, 35
although foreign firms generally report paying more than the minimum wage. However,
in 2006, the overall labor productivity level in Vietnam was only 53 percent of that of
China. 36 While Vietnam’s labor productivity is rapidly increasing, it is currently
comparable with China’s only for labor-intensive activities. 37 In addition to relatively low
labor productivity in Vietnam, finding experienced professional managers and engineers
was uniformly cited as a major challenge for components producers, and firms have
responded by instituting extensive in-house training programs, bringing in experienced
professionals from other countries, or both. 38
Finally, Thailand is generally considered “competitive in labor costs, availability, and
productivity.” 39 However, there is a shortage of engineers, and companies report that a
larger pool of electronics engineers would improve the country’s competitive position. 40
30 Industry representative, interview by USITC staff, Singapore, March 4, 2010.
31 Industry representative, interview by USITC staff, Singapore, March 9, 2010.
32 Industry representative, interview by USITC staff, Singapore, March 9, 2010; Mitarai, “Issues in the
ASEAN Electric and Electronics Industry and Implications for Vietnam,” February 2005, 16.
33 Industry representative, interview by USITC staff, Bangkok, Thailand, March 16, 2010.
34 Bradsher, “As Labor Costs Soar in China, Manufacturers Look to Vietnam,” June 18, 2008.
35 Martin, “For Jabil Circuit, Vietnam is the New China,” June 8, 2008.
36 Asian Productivity Organization, APO Productivity Databook 2009, 2009, 56.
37 Irwin, Free Trade under Fire, 37.
38 Industry representatives, interviews by USITC staff, Ho Chi Minh City, Vietnam, March 11, 2010.
39 Multilateral Investment Guarantee Agency (MIGA), Benchmarking FDI Competitiveness in Asia, 2003,
11.
40 Industry representative, interview by USITC staff, Bangkok, Thailand, March 16, 2010; Mitarai,
“Issues in the ASEAN Electric and Electronics Industry and Implications for Vietnam,” February 2005, 7.
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