Southeast Asia Moves up the Global Production Value Chain

By Kawal Preet, President Asia Pacific, Middle East, and Africa, FedEx Express

For decades, export manufacturing has played a critical role in powering socioeconomic development across Southeast Asia. The region has continued to show remarkable and sustained growth in recent years despite numerous headwinds. This is creating robust demand for logistics to support the needs of the region’s increasingly diversified economies.

Rise of SEA in the global value chain

Southeast Asia is fast becoming the world’s 5th largest economy. ASEAN has a range of well-established manufacturing clusters, including electronics in Malaysia and Vietnam, automobiles and packaged foods in Thailand, machinery and petrochemicals in Indonesia, apparel and processed foods in the Philippines, and semiconductors, biopharmaceuticals, and aerospace components in Singapore.

The emerging economies of Southeast Asia have long been destinations for manufacturers seeking abundant cost-effective labor, while Singapore has served as a hub for high-value R&D-intensive industries and trade-supporting services such as finance and logistics.

But now the region’s manufacturing sector is even more globally competitive creating opportunities to move up the value chain. Singapore, Malaysia, and Vietnam are among the countries that have made advanced manufacturing a priority harnessing Industry 4.0 technology and systems. 

Southeast Asia holds expansive potential and plays a key role in bolstering interconnectivity for intra-Asia and Asia-Europe trade. Major trade deals like the ASEAN Free Trade Agreement (AFTA), Regional Comprehensive Economic Partnership (RCEP) and the EU – Vietnam Free Trade Agreement (EVFTA), have already been improving access to trade in Asia as well as intercontinental trade.

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