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The rapid growth of Indonesia’s manufacturing sector

The rapid growth of Indonesia’s manufacturing sector has attracted electronics companies across the wider Asia-Pacific region

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The rapid growth of Indonesia’s manufacturing sector – a development buoyed partly by the arrival of several big-name mobile-phone manufacturers and partly by highly supportive central government legislation – has attracted electronics companies across the wider Asia-Pacific region.

Indonesia’s manufacturing industry grew 5.04 per cent in 2015 – higher than the national economic growth rate of 4.79 per cent.

Nowhere was this more apparent than at the May Inatronics event in Jakarta, Indonesia’s only trade show dedicated to the electronics and components industries.

Overall, many exhibitors – with the majority of them first-time participants – were keen to expand their operations in the country and find local partners and distributors.

Among this year’s first-time exhibitors was AiT Semiconductor, a Taipei-based manufacturer of analogue and mixed-signal integrated circuits. “Indonesia has huge potential for us, largely on account of its rapidly expanding manufacturing sector,” said Product Marketing Director Titan Fanching. “We are keen to look at opportunities here, but first we need to find the right partner.”

Overseas Competition

Local partners are not thin on the ground. According to the Indonesian Ministry of Trade, by 2014 the country was already home to 235 electronics and home-appliance manufacturers. Within the next two years, the value of the domestic manufacturing sector is expected to exceed US$20.3 billion. This expansion, however, has not been without drawbacks, with many local businesses unhappy about the influx of overseas companies.

“Competition is very tough right now,” said Baharuddin, a Marketing Supervisor with SolderIndo, an Indonesian manufacturer of soldering products. “This is largely because so many Japanese, Taiwanese, Chinese and Korean electronics manufacturers have entered the market.

“Despite this, I believe that the sheer size of Indonesia’s manufacturing sector means that there is enough room for both the new and established electronics companies to thrive. For our part, our point of difference lies in the quality of our products, all of which are on par with the best produced by any of the Japanese companies, while our prices are still a little lower.”

Local Manufacturing

Another Indonesian exhibitor looking to find new growth opportunities in the country was DMC Teknologi Indonesia, a subsidiary of DMC, the Tokyo-based touch-screen giant. “Overseas manufacturers looking for touch-screen suppliers will find it easier to do business with us because we are local,” said Henri Hendarmin, DMC’s Marketing Manager for Indonesia. “We manufacture here. That is definitely one of our advantages.”

Touch-screens are also an integral component of smartphones, another sector that is well-represented in Indonesia. Indeed, the protectionist policies adopted by the Indonesian government have obliged many overseas handset manufacturers to establish manufacturing facilities in the country.

At present, all smartphone importers are legally required to manufacture at least 20 per cent of any imported model in Indonesia. Any company failing to comply runs the risk of having its import license revoked. Prior to the imposition of the requirement in 2013, there was no real phone manufacturing industry in Indonesia. The following year, 15 companies – including Samsung and China’s Oppo Electronics – applied to the Industry Ministry for production licenses.

Soldering on: Imported production equipment

“The Indonesian government is really quite strict when it comes to phone manufacturing,” said Michael Goh, General Manager of Evolution Marketing & Engineering, a Malaysian company specialising in supplying industrial equipment to the electronics sector.

“The rule is, if you want to sell mobile phones in Indonesia, you must manufacture in Indonesia.

“It suits us as we sell a variety of equipment to manufacturing companies, particularly in the mobile-phone sector. Our philosophy, which seems to work here, is to sell reliable, high-quality products at a relatively low price.”

Focusing on product quality was also the approach taken by Shanghai Anping Static Technology as it seeks to make inroads into the Indonesian static elimination market, an essential requirement for many high-tech manufacturing facilities. “Our products are not cheap as our quality is high,” said James Yu, the company’s General Manager. “We are not willing to compromise on product quality just to bring cheap equipment to the market.”

With little competition in Indonesia, Mr Yu is optimistic that the company’s AP&T brand will be a huge success in the country. “Once people come to realise the importance of eliminating static electricity, I am confident they will start using our products.”

Other Promising Sectors

While the majority of exhibitors at Inatronics were focused on the opportunities offered by Indonesia’s growing phone-manufacturing sector, there were a number of businesses, such as Singapore’s Semiconductor Technologies (SemiTEq), for instance, that targeted Indonesia’s medical, oil and gas sectors.

“While we offer a range of measurement tools for the semiconductor and solar sector, we believe our Molecular-Beam Epitaxy [MBE] systems, manufactured in the US by SemiTEq, are the best fit for the Indonesian market,” said SemiTEq Director Umasangar Pillai.

In the case of Malaysia’s Infinite Power, it was the potential of Indonesia’s rail and mining sectors that brought it to Jakarta. “Indonesia’s rail and mining sectors are developing rapidly, as is its power sector,” said Senthil Subramaniam, the company’s Chief Executive. “Inevitably, we are keen to explore any and all of the opportunities on offer. We are also keen to find local distributors.”

Looking to the longer term, Raymond Foo, the Southeast Asia Representative of the Association of Connecting Electronics Industries, the global industry association for printed circuit board and electronics manufacturing service companies, said: “There is a huge market for electronics in Indonesia, as can be deduced from the many manufacturing companies, both overseas and local, that have chosen to operate here,” he said. “Otherwise, you would never get quite so many people attending events like Inatronics.”

For more market opportunities, please visit: http://research.hktdc.com/.

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COVID-19 Vaccine Roll Outs in ASEAN Live Updates by Country

Thailand is currently expecting vaccines to be delivered in mid-2021. The doses would cover 13 million people in a population of about 69 million. Thailand’s National Vaccine Institute signed a non-refundable advance market commitment contract worth 2.38 billion baht (US$79 million) with AstraZeneca to reserve the supplies

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ASEAN coronavirus Covid-19 live updates by country

Brunei

Brunei has joined the global Covax scheme and is expecting to have the COVID-19 vaccine in Q1 2021, having sourced enough supplies to cover 50% of the population. Discussions are on-going with other suppliers.   

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  • Brunei recorded one new case on May 8, bringing the total to 330 cases amid three deaths.
  • Brunei saw one new case on May 7, taking the total to 229 cases amid three deaths.
  • Brunei recorded one new case on May 4, taking the total to 228 amid three deaths.

Cambodia

Cambodia is expected to import vaccines from both China and Russia. China’s vaccines are still undergoing clinical trials while Russia has already commenced production. Australia has offered financial support to aid vaccine coverage in several southeast Asia countries including Cambodia.  

  • Cambodia recorded 538 new cases on May 8, bringing the total to 18,717 cases amid 114 deaths.
  • Cambodia recorded 558 new cases on May 7, taking the total to 18,179 cases and 114 deaths.
  • Cambodia reported 650 new cases and four deaths on May 6, bringing the tallies to 17,621 cases and 114 deaths.

Indonesia

Indonesia has commenced vaccinations with just over nine million doses being given to front line workers from last month. China’s Sinovac is in discussions with Indonesia to provide supplies, however, the Government faces difficulties with a large population of 268 million and price sensitivity at Sinovac’s estimated costs at 200,000 rupiah (US$20) a dose.

Indonesia’s Health Ministry’s Disease Control and Prevention Director-General Achmad Yurianto said that vaccinations would only be provided to citizens aged 18-59. The vaccine has also been required to pass halal certification prior to use and it is uncertain how the country can source enough vaccines to reach a sizeable part of its population.  Australia has stated it will also provide financial support to solve these issues.  

  • Indonesia recorded 6,130 new cases and 179 deaths on May 8, bringing the totals to 1,709,762 cases and 46,842 deaths.
  • Indonesia saw 6,327 new cases and 167 deaths on May 7, bringing the tallies to 1,703,632 cases and 46,663 deaths.
  • Indonesia reported 5,647 new cases and 147 deaths on May 6, bringing the totals to 1,697,305 cases and 46,496 deaths.

Laos

Laos has been trialing the Russian Sputnik V vaccine and is also in discussions with China about acquiring supplies. 

  • Laos recorded 28 new cases on May 8, bringing the total to 1,233.
  • Laos saw 28 new cases on May 7, taking the total to 1,205.
  • Laos saw 105 new cases on May 6, taking the total to 1,177.

Malaysia

Malaysia is to provide vaccines free of charge to its nationals, but foreigners will need to pay for the treatment, according to the Malaysian Minister of Health, Tan Sri Muhyiddin Yassin, who has signed a deal with Pfizer for 12.8 million doses.

These will be administered in two stages of 6.4 million people each, with the program to commence in Q1 2021. The country aims to inoculate between 80-100% of its citizens. 

  • Malaysia reported 4,519 new cases and 25 deaths on May 8, taking the tallies to 436,944 cases and 1,657 deaths.
  • Malaysia saw 4,498 new cases and 22 deaths on May 7, bringing the tallies to 432,425 cases and 1,632 deaths.
  • Malaysia recorded 3,551 new cases and 19 deaths on May 6, taking the totals to 427,927 cases and 1,610 deaths.

Myanmar

Myanmar is seeking assistance from the Gavi and Covax programs to acquire vaccines, while Australia is also providing financial relief. At present, the Government aims to treat 20 percent of the ‘most at risk’ in the country with vaccines. The Government is struggling with finances and logistics and is also under US sanctions, while cases are surging. The Government has banned the celebration of Christmas and other seasonal celebrations.   

  • Myanmar recorded 31 new cases on May 8, taking the total to 142,934 amid 3,210 deaths.
  • Myanmar saw 29 new cases on May 7, taking the total to 142,903 amid 3,210 deaths.
  • Myanmar recorded 16 new cases and one death on May 5, bringing the total to 142,874 amid 3,210 deaths.

Philippines

The Philippines aims to commence vaccinations from June 2021 and expects to inoculate about 25 million people (about 25 percent of its population) over the course of the year. The country has been badly affected by the virus and has the second-highest rate in Southeast Asia.

The business community has reacted, more than 30 local companies signed an agreement to purchase at least 2.6 million vaccine doses from AstraZeneca in the country’s first such deal to secure coronavirus vaccines, ten days ago. They plan to donate a large part of the doses to the government for its planned vaccination program and use the rest to inoculate their employees. 

  • The country saw 6,979 new cases and 170 deaths on May 8, taking the totals to 1,094,849 cases and 18,269 deaths.
  • The Philippines reported 7,733 new cases and 108 deaths on May 7, bringing the tallies to 1,087,885 cases and 18,099 deaths.
  • The Philippines saw 6,637 new cases and 191 deaths on May 6, bringing the totals to 1,080,172 cases and 17,991 deaths.

Singapore

Singapore has been working on producing its own ‘Lunar’ vaccine, in a joint venture between the US company Arcturus together with the Duke-NUS medical school. It is a single dose, mRNA shot, developed from genetically engineering COVID-19 genes into an otherwise harmless virus. This technique is marginally safer than other vaccines which rely on dead Covid-19 material to provoke an immune response. The vaccine is expected to be available from Q1 2021. High-risk personnel will receive the vaccine first in a process to be determined by the government.     

  • Singapore recorded 20 new cases on May 8, taking the total to 61,331 cases amid 31 deaths.
  • Singapore saw 25 new cases on May 7, taking the total to 61,311 cases amid 31 deaths.
  • Singapore saw 18 new cases on May 6, bringing the total to 61,286 cases amid 31 deaths.

Thailand

Thailand is currently expecting vaccines to be delivered in mid-2021. The doses would cover 13 million people in a population of about 69 million.

Thailand’s National Vaccine Institute signed a non-refundable advance market commitment contract worth 2.38 billion baht (US$79 million) with AstraZeneca to reserve the supplies. Discussions are also on-going with Oxford University in the UK to secure a vaccine that could be available in Q1 if trials are completed in time.   

  • Thailand reported 2,419 new cases and 19 deaths on May 8, taking the tallies to 81,274 cases and 382 deaths.
  • Thailand recorded 2,044 new cases and 27 deaths on May 7, taking the totals to 78,855 cases and 363 deaths.
  • Thailand reported 1,911 new cases and 18 deaths on May 6, taking the tallies to 76,811 cases and 336 deaths.

Vietnam

Vietnam’s National Institute of Hygiene and Epidemiology (NIHE), a division of Vietnam’s Ministry of Health, has signed an agreement with Medigen Vaccine, a Taipei, Taiwan-based vaccine company to secure the supply of 3 million to 10 million COVID-19 vaccine doses in 2021. Medigen is currently conducting Phase II studies of the vaccine, co-developed with the USA’s National Institutes of Health (NIH), in Taiwan and Vietnam with a view to a Q1 2021 rollout.  

Vietnam is also working on producing its own vaccine, with the Institute of Vaccines and Medical Biologicals (IVAC) in Nha Trang City, partnering with New York City-based Icahn School of Medicine and the global health non-profit organization PATH. Phase 1 trials are already underway in Vietnam, while Phases 2 & 3 will be conducted at the beginning of 2021. The institute plans to submit documents for approval to the health ministry as early as April next year and claims to be capable of producing 30 million doses a year, expecting that a national vaccine could be distributed to the general population in October 2021.

  • Vietnam saw 15 new cases on May 8, taking the total to 3,152 cases amid 35 deaths.
  • As of May 7, 2021, Vietnam’s Ministry of Health confirmed a total of 3,091 cases of COVID-19. However, 2,560 of the affected patients have recovered and been discharged from hospitals. Vietnam has also recorded 35 deaths due to the pandemic. The latest community transmission cases have been reported from Hanoi, Vinh Phuc, Thai Binh, Bac Ninh, and Da Nang among others. 16 local cases are linked to the National Hospital of Tropical Diseases in Hanoi’s Dong Anh district.
  • As of May 6, 2021, Vietnam’s Ministry of Health confirmed a total of 3,030 cases of COVID-19. However, 2,560 of the affected patients have recovered and been discharged from hospitals. Vietnam has also recorded 35 deaths due to the pandemic. The latest community transmission cases have been reported from Hanoi’s outskirts district of Dong Anh.

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