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Japan may move production base to ASEAN

As Japan realises the extent of the natural disaster, decision-makers are increasingly likely to consider shifting their production bases out of the country, and their potential relocation destinations should be member countries of ASEAN, such as Indonesia where labour wages remain low, and Thailand.

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Japanese car wreckage

Thailand’s Industrial Economics Office (IEO) and the Board of Investment (BoI) share the common view that in the long run more Japanese parent companies will shift their production bases to Southeast Asian countries, including Thailand, following the recent massive earthquake, according to IEO Director-General Suttinee Poopaka.

She said the parent firms in many Japanese industries still produce high-technology parts in their home country.

As Japan realises the extent of the natural disaster, decision-makers are increasingly likely to consider shifting their production bases out of the country, and their potential relocation destinations should be member countries of ASEAN, such as Indonesia where labour wages remain low, and Thailand.

Ms Suttinee said the IEO conducted a telephone survey during March 16-18 on the impacts of the natural calamity on Japan’s production base industry and found that the disaster affected industry only slightly.

via Japan shifting production base to ASEAN in wake of earthquake.

he disaster in Japan is expected to affect economies in Southeast Asia, but economists say the damage is likely to be limited. They say the region may even see increased investments from Japan as companies seek to diversify away from areas at higher risk from natural disasters.

Japan supplies Southeast Asia factories with components and parts put into cars, electronics, and other products for export, including back to Japan.

That supply chain was disrupted when the earthquake and tsunami hit Japan’s northeast, damaging a nuclear plant and forcing many factories to stop production.

The disaster in Japan is expected to affect economies in Southeast Asia, but economists say the damage is likely to be limited. They say the region may even see increased investments from Japan as companies seek to diversify away from areas at higher risk from natural disasters.

Many Southeast Asian countries export to Japan. The Japanese market accounts for about 20 percent of Indonesia’s exports and 17 percent of what the Philippines sends abroad, down to smaller amounts from countries including Cambodia, Laos, and Singapore.

 

1 Comment

1 Comment

  1. AML

    August 11, 2011 at 9:03 pm

    No matter what kind of business you are doing, always have a good contingency plan, it is crucial when your major manufacture planet is hit by nature disaster. The supply chain should be well managed, and also be able to move from one to another without interruption of the business.

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