South East Asia
South East Asian manufacturers’ promising start to 2023 continued into the second quarter as the region received a boost from China’s reopening while increased activity levels from Europe shows the previously predicted economic downturn is softening as cost pressures ease.
In the second quarter, factories in South East Asia have seen a surge in production and purchasing owing to a rise in new orders, as indicated by the manufacturing purchasing managers’ indexes. This is despite facing the challenge of high energy costs caused by extreme temperatures in many parts of Asia, thereby stretching power grids. Governments in the region will attempt to cut power rates to ease the strain on consumers and businesses.
China’s commitment to invest a record RM 170 billion in Malaysia (around US$ 38 billion) represents the single most significant investment pledge to date between Malaysia and China and has the potential to create new jobs, increase foreign direct investment and upgrade the country’s infrastructure.
To be committed over the next five years, the RM 170 billion has the potential to help Malaysia become a regional player in innovation, infrastructure and tourism. China’s investment will also allow Malaysia to reduce its reliance on traditional sectors while encouraging the development of new areas of the economy.
South East Asia has quickly become an important player in the critical automotive and IT global supply chain. With its strategic location, skilled workforce and efficient infrastructure, the region is poised to continue its growth towards becoming a central figure in the electric vehicle supply chain by leveraging its large nickel reserves to attract investment.
Nickel is crucial in manufacturing stainless steel, electronic devices and electric-powered vehicles. According to data from the US Geological Survey, Indonesia has the world’s largest nickel reserves at 21 million tonnes, accounting for nearly one-quarter of the global total; it is estimated that Indonesia could supply up to 65% of the world’s refined nickel within two years. Meanwhile, the Philippines has the fourth-largest reserves on 4.8 million tonnes.