The question is fundamental to the region's viability and sparked debate at the World Economic Forum (WEF) Asian meet in Phnom Penh last month.
Asean accounts for about 5 per cent of global manufacturing in value-added terms. It is the seventh-largest producer globally in the auto industry, employing about 800,000 workers.
Yet the region is not immune to the effects of 3D printing, robotics and automation. A recent International Labour Organisation survey indicated that Vietnam, Cambodia and Indonesia - all Asean members - have the highest number of workers at risk from automation. There are estimates that over 50 per cent of jobs in the region could be automated.
To address the concerns of governments and businesses on how new technologies will affect the manufacturing industries and their distribution channels, the WEF has embarked on a multi-year "Future of Production" initiative that aims to assess the readiness of countries to respond to the changes thrown up by the Fourth Industrial Revolution, as the WEF terms it.
Some of the areas that could determine if countries and Asean as a whole can rise to the challenge include:
TECHNOLOGY AND INNOVATION
McKinsey Global Institute's research says technology could potentially create between US$25 billion and US$45 billion (S$34 billion and S$62 billion) of annual economic impact within the Asean region by 2030.
As costs rise in China, multinationals and manufacturers will look for new production sites. China's labour costs have risen to around US$28 a day for the average factory worker, compared with around US$7 a day in Vietnam and US$9 a day in Indonesia. This represents an opening for Asean member states to establish themselves as bigger hubs of manufacturing, says McKinsey's managing partner of South-east Asia, Mr Oliver Tonby.
To take advantage of these opportunities, Asean needs to focus on developing innovation hubs and equip workers with the right skills so as to transform itself from a low-cost base to an attractive destination for new manufacturing investments.
Indonesian Industry Minister Airlangga Hartarto, who is working closely with the WEF on the Future of Production initiative, said Jakarta has made transforming the manufacturing sector a priority of government policy. Among certain sectors, like automotive, Industry 4.0 or the Fourth Industrial Revolution can help make assembly lines more productive. Instead of producing one type of car, a line can produce different cars with different colours, lamps and designs, Mr Hartarto added.
In other words, with the aid of automation and robotics, for example, existing processes and machinery can be revamped to improve productivity.
But technology is not just for the multinationals. Even agriculture and small farmers stand to benefit.
McKinsey's Mr Tonby said: "Access to live information from sensors and analytics allows people to obtain insights and make more informed decisions. For a farmer, this means understanding how much water or nutrients the different parts of the plantation need, based on readings and weather data."
SKILLS AND EDUCATION
But a big concern is that workers in Asean will not be able to reap the full potential of these technologies due to a skills gap. While today's young are thoroughly at home with mobile phones, they lack the requisite technical skills for work that adds value, such as the development of smartphone apps.
The WEF notes the lack of three types of talent - workers with the skills to analyse big data, managers or analysts who know what data to request and how to look at the data that is generated, and IT personnel who can implement the changes.
The lack of technical skills among the younger population is something that Indonesia's Mr Hartarto said his government is aiming to address: "Through a revamp of the educational model, wherein Indonesia is emphasising more executive education on the Internet of Things and strengthening vocational education, the nation is encouraging its young to make the most of the new opportunities presented by the revolution."
The private sector can also play a role in terms of educating the workforce, according to Mr Cham Prasidh, Cambodia's Senior Minister for Industry and Handicrafts.
Five years ago, Japanese company Minebea set up a facility in the Phnom Penh Special Economic Zone, Cambodia. Last December, it opened its third factory, with total employment standing at about 20,000.
Employees were sent for training in Thailand and Malaysia, where manufacturing is more advanced. Workers in Cambodia will now make precision parts for smartphones, for example, a higher value-added process compared to the assembly work they used to do, and these parts will be exported to China, Japan, the United States and Europe.
While many continue to associate Cambodia with low-cost garment manufacturing, Mr Prasidh said the experience with Minebea shows there is room for advanced technology in the country, "as long as we can create the environment for (the workers) to be trained and educated". He added that mobility of talent in Asean is an important issue, and that "we should open borders for skilled workers to move from one country to another".
In addition to the role of the private sector, Mr Prasidh said more training can also be achieved through research centres or centres of excellence.
A more integrated Asean will help. Indeed, greater integration could produce productivity benefits worth up to 20 per cent of the cost base in many sectors.
This could come from the harmonisation of technical regulations, reducing the time taken to go from factory to shelf and preserve working capital, a McKinsey Global Institute analysis has estimated.
More moves on this front could come next year. National University of Singapore president Tan Chorh Chuan said: "At the broader level, with Singapore assuming the Asean chairmanship next year, there is the opportunity to accelerate economic integration as the freer movement of goods, products and services across the region will facilitate our participation in regional production networks."
Indonesia's Mr Hartarto said harmonisation of standards could benefit the electronics and automotive sectors.
In the case of global packaged foods giant Unilever, harmonising regulations for registration and product approval is important. This means that products registered in one market can be sold across Asean without the need to register them again. Such harmonisation will lead to consistent standards, which in turn will reduce costs, improve logistics, increase speed to market and eventually give consumers access to more product choices at competitive prices, said the president of Unilever South-east Asia and Australasia, Mr Pier Luigi Sigismondi.
Many experts reckon Singapore can play a key role in this regional production network.
According to Deloitte's 2016 Global Manufacturing Competitiveness Index, Singapore - with its high-tech focus - is set to emerge within the top 15 in the next competitiveness ranking in 2020. Other economies in Asia that are expected to make the cut include the traditional manufacturing powerhouses of China, South Korea and Taiwan, as well as lower-cost manufacturing locations such as Indonesia and Malaysia.
Singapore is part of what Ms Ng Jiak See, leader of Deloitte South-east Asia's industrial products and services sector, calls an "emerging Asia-Pacific cluster of strength".
Certainly Singapore can be a hub for advanced manufacturing.
McKinsey's Mr Tonby said Singapore could be where testing of new technology and pilot projects take place for regionally-important sectors such as semiconductors, oil and gas, electric power and mining.
Singapore has already invested in state-of-the-art facilities and research and development capabilities, ranging from manufacturing data analytics and virtual process modelling to digital solutions for complex manufacturing processes.
Robotics is being embraced at Unilever here. "We are running a pilot with around 10 cobots working side by side with our people, which has shown significant improvement on our productivity versus humans or robots working in isolation," said Mr Sigismondi.
The programme is handled by the engineering and manufacturing excellence group based in Singapore and there are now trials of these cobots at its factories in Indonesia, Thailand, the Philippines and Australia.
These cobots are performing a range of tasks, including packing products and assisting the movement of materials.
In another example of how advanced manufacturing is being used to boost productivity, Unilever has tied up with an additive manufacturing company based in Singapore for faster prototyping of equipment parts and to improve manufacturing efficiency. The technology is being used on packaging machines for its tea brand Lipton. This means a shorter time period from initial design to actual testing, which leads to large improvements in machine output.
As a region, Asean has many factors in its favour. With a population of more than 600 million and nominal GDP in excess of US$2 trillion, integration among its 10 member countries offers immense potential, said Mr Mauricio Zuazua, a partner with consulting firm AT Kearney. But the disparity between the 10 countries in terms of skills and level of economic development and resources as well as the challenge of coordinating their different interests makes the goal of realising Asean's true potential a tall order.
The challenge is how to turn diversity into a strength through economic integration.
We have been experiencing some problems with subscriber log-ins and apologise for the inconvenience caused. Until we resolve the issues, subscribers need not log in to access ST Digital articles. But a log-in is still required for our PDFs.