Time to rethink export-led manufacturing model of Asean, say experts

ST Business Editor Lee Su Shyan (left) moderating a session on Remaking Asean manufacturing at the World Economic Forum on Asean 2017, on May 11, 2017.
ST Business Editor Lee Su Shyan (left) moderating a session on Remaking Asean manufacturing at the World Economic Forum on Asean 2017, on May 11, 2017. ST PHOTO: SHEFALI REKHI

With machines doing the work of people in factories and shifts in global trade sentiment, Asean's export-led manufacturing model for prosperity needs a relook, delegates at the World Economic Forum's (WEF) Asean meeting in Phnom Penh said.

Automation and emerging technological breakthroughs mean governments, enterprises and people leading small businesses need to rethink their approaches to sustain the region's production capabilities and save hundreds of thousands of jobs, they said.

The delegates were speaking at a forum last Thursday moderated by The Straits Times' business editor Lee Su Shyan. The session marked the launch of a series of dialogues in the region by Davos-based WEF on "Shaping the future of production".

This will feed into a multi-year global initiative involving more than two dozen ministers of commerce, 38 companies, 20 academic institutions and other luminaries on the issue.

The process will see businesses and policymakers and policy-shapers come together to understand the impact of the "Fourth industrial revolution" on manufacturing and detail steps to be taken to meet the challenge.

The "Fourth industrial revolution", characterised by the rise of artificial intelligence, robotics and the Internet of Things (IoT), is set to transform businesses at a pace not seen before, experts believe, risking the future of conventional jobs and requiring substantial re-skilling of workforces to cope.

The change will see robots manufacture cars and drive them, 3D machines print products, call centres being handled by virtual agents and Web robots taking on jobs such as those of a stockbroker.

The session on manufacturing was one of several sessions held on the future of Asean during the annual regional meeting attended by over 700 policymakers, businessmen and observers.

The velocity of change could jeopardise the sustainability of existing business models in Asean that have seen the fortunes of many change as the region pursued an export-led manufacturing model, experts said. Export-led growth contributes to over 60 per cent of the gross domestic product, it was pointed out at the conference.

Indonesia's Industry Minister Airlangga Hartarto said Jakarta has made transforming manufacturing an issue of mainstream debate and public policy. For small-scale enterprises, the government is supporting capacity building and ability to maximise gains from the digital world. For more established players, it is trying to plug them into regional value chains.

Through a revamp of the educational model, wherein Indonesia is emphasising more executive education on IoT and strengthening vocational education, the nation is encouraging its young to make the most of the new opportunities presented by the revolution, he said.

Mr Cham Prasidh, Cambodia's Senior Minister for Industry and Handicrafts, said Cambodia's connections with governments in Asean - among them Thailand and Indonesia - are helping them adapt to the change. The ties would help those in the high-tech sector learn from their peers in the region.

He said the impact of the "Fourth industrial revolution" would vary from sector to sector and governments needed to adapt their strategies accordingly.

Cambodia's T-shirt industry, for instance, is at the lower end of the textile market and demand was not hit by the financial crisis in Europe, unlike neighbouring nations that invested in higher-end products such as jackets. He said the demand for T-shirts would continue as substantial investment would be needed to make robots produce such goods.

Still, he felt, given that there are some 800,000 workers in Asean's automotive industry, the region could not afford to be complacent as some experts have said nearly 50 per cent to 60 per cent of their jobs might disappear unless skills are substantially upgraded.

More than 50 people from businesses and academic institutions participated in the discussion.

A version of this article appeared in the print edition of The Straits Times on May 15, 2017, with the headline 'Time to rethink export-led manufacturing model of Asean, say experts'. Subscribe