Latest ASEAN news

Cambodia: Berlin eyeing local mangoes

Cambodia is slated to export fresh and dried mangoes to the European market, Germany above all, as Berlin investigates the possibility of export.

On November 24, officials from the German embassy and the Deutsche Gesellschaft fur Internationale Zusammenarbeit GmbH (GIZ) visited Kirirom Food Production Co Ltd (KFP) and other growers, in search of potential suppliers of fresh and dried mangoes to respond to the robust European demand for the fruit.

KFP sales manager Meas Holy told The Post on November 25 that ambassador Christian Berger and the delegation discussed providing support for the firm’s processing plant and facilitating the purchase of mangoes for export to Germany and other European countries.

Although no specific estimates for the volume of mangoes considered for import were given, the officials did say they would support and enhance cooperation between EU buyers and local firms geared towards exports, he said.

“Now they’ve come to see if we are capable of supplying them. My company doesn’t source enough fresh mangoes to export, we plan to remedy that in about two years, but on the other hand, we do have enough dried mango to ship,” Holy said, claiming that KFP products fit the bill in terms of quality.

He believes that the German and other EU markets are wide-ranging and boast strong demand for fresh and dried mangoes, and are ripe for Cambodia to expand its market presence.

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Author: Nov Sivutha

Source: The Phnom Penh Post

Publication date: 28 November 2021

ASEAN launches free trade negotiations with Canada

BANDAR SERI BEGAWAN – ASEAN has begun free trade talks with Canada, which could lead to an agreement that would add US$39.4 billion to the ASEAN economy. 

After a virtual meeting co-chaired by Brunei and Canada on Wednesday, ministers issued a joint statement highlighting the potential for a free trade agreement to help diversify supply chains, increase trade and investment, and reinforce Canada and ASEAN’s shared commitment to open markets and rules-based trade.
 The ministers also tasked officials with developing a work plan to take forward the negotiations as soon as possible. It would be the first ASEAN FTA with North America, giving Southeast Asian nations access to a market of 38 million people.

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For peace, security, prosperity and development

Association of Southeast Asian Nations (ASEAN) member states and China gathered at the ASEAN-China Special Summit to Commemorate the 30th anniversary of ASEAN-China Dialogue Relations yesterday.

His Majesty Sultan Haji Hassanal Bolkiah, Sultan and Yang Di-Pertuan of Brunei Darussalam and Chinese President Xi Jinping co-chaired the summit.

ASEAN member states and China agree to advance ASEAN-China cooperation in all fields which contributes to the building of an open, inclusive and sustainable region that enjoys peace, security, prosperity and sustainable development, jointly announce the establishment of an ASEAN-China Comprehensive Strategic Partnership that is meaningful, substantive and mutually beneficial and task our officials to follow up on its implementation.

They also agree to reaffirm the importance of maintaining ASEAN Centrality in the evolving regional architecture, and support for ASEAN integration and community-building, and ASEAN’s efforts to realise the ASEAN Community Vision 2025; as well as advance cooperation in the relevant areas identified in the ASEAN Outlook on the Indo-Pacific (AOIP) to develop enhanced strategic trust and win-win cooperation among countries in the region, as guided by the purposes and principles of the Treaty of Amity and Cooperation in Southeast Asia (TAC), including exploring mutually beneficial cooperation with the Belt and Road Initiative.

ASEAN member states and China agree to enhance ASEAN-China cooperation in the post-pandemic era for mutual benefits and long-term sustainable development, including through support for the ASEAN Comprehensive Recovery Framework (ACRF).

In addition, they reached a decision to advance comprehensive collaboration and enhance mutual trust, deepen political and security cooperation including through ASEAN-led dialogue platforms and mechanisms to maintain peace and stability in the region; promote comprehensive and active economic relations in trade and investment as well as development, and strengthen regional supply chains; foster diversified social, cultural and people-to-people cooperation in all fields; and promote regional and international cooperation.

Date of Release: 23 November 2021

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Location, business ecosystem in Brunei ‘promising’ as investment destination

Brunei Darussalam’s strategic location as well as efforts to create a positive and favourable ecosystem for companies makes the country a promising ‘top business and investment destination’, said Director General of the Islamic Centre for Development of Trade (ICDT) Latifa El Bouabdellaoui during the ICDT Doing Business Webinar yesterday.

She said the Sultanate’s share of trade with Organisation of Islamic Cooperation (OIC), which accounts for 19.84 per cent of its foreign trade in 2020, is a positive indicator for OIC businesses wishing to explore partnerships with the country.

The ICDT Doing Business Webinars series serves as a platform for OIC member countries to present business opportunities and the investment climate in their countries, said the director general.

It also serves to showcase the experiences and success stories of the private sector in their local markets, she said.

She said the ICDT attaches great importance in organising activities that highlights the potential of OIC member countries, to position them among the first destinations for foreign direct investment. During the webinar, Minister at the Prime Minister’s Office and Minister of Finance and Economy II Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah shared a few policy frameworks which nurture strong economic fundamentals in realising Brunei Vision 2035 and the country’s economic diversification efforts.

Date of Release: 18 November 2021

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More needs to be done to ensure sustainable global economy

The global economy remains fragile and more needs to be done for a sustainable recovery, His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah ibni Al-Marhum Sultan Haji Omar ‘Ali Saifuddien Sa’adul Khairi Waddien, Sultan and Yang Di-Pertuan of Brunei Darussalam said yesterday during the 28th Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting held virtually from Istana Nurul Iman.

The APEC meeting – chaired by New Zealand Prime Minister cum APEC for 2021 Chairperson Jacinda Ardern – among others, focussed on recovering from COVID-19 to build prosperity for all citizens and future generations.

Noting that APEC agreed on a common vision last year to be achieved by 2040, Brunei Darussalam welcomes the Aotearoa Plan of Action to guide APEC’s future work. In this regard, His Majesty in a titah shared three points.

“Firstly, APEC needs to revitalise trade and enhance economic activities. Efforts should focus on keeping markets open, strengthening global value chains and ensuring free, open and transparent multi-lateral trading system anchored by the World Trade Organization (WTO). It is necessary to continue to create a conducive environment for businesses, especially micro, small and medium enterprises (MSMEs), to recover and grow.

“Brunei Darussalam also recognises the importance of technology as tools for creating new economic opportunities. On this note, APEC cooperation has to harness the power of technology and digitalisation to transform industries, promote innovation, and enhance infrastructures.”

Date of Release: 13 November 2021

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Digital transformation at the forefront of ASEAN recovery

The digitalisation in the transportation sector in Brunei Darussalam including application for the renewal of vehicle licence and driving licence and online registration of domestic runners, is among the initiatives aimed at facilitating and safeguarding the interests and well-being of the business sector, especially new micro small medium enterprises (MSMEs) that have entered the market amid the second wave of the COVID-19 pandemic.

This was stated by Minister of Transport and Infocommunications Dato Seri Setia Awang Abdul Mutalib bin Pehin Orang Kaya Seri Setia Dato Paduka Haji Mohd Yusof during the 27th ASEAN Transport Ministers (ATM) Meeting and Associated Dialogue Partner Meetings held from November 11-12.

The minister also reiterated on the importance of road safety in realising a more resilient cargo transportation. In line with the Brunei Darussalam Road Safety Declaration 2020, Brunei Darussalam launched the Brunei Darussalam Road Safety Strategic Plan 2025 which contains a comprehensive list of strategies and initiatives, among which are: designing effective data collection and access; and use relevant technologies that enable to address road safety issues.

Dato Seri Setia Awang Abdul Mutalib said digital transformation should be at the forefront of ASEAN recovery, in line with the revised schedule of actions under the Kuala Lumpur Transport Strategic Plan 2016-2025 adopted by the 26th ATM Meeting in 2020.

The two-day meeting was officiated by Prime Minister of Cambodia Hun Sen, who touched on the Masterplan on ASEAN Connectivity 2025 which serves as a key plan to ensure economic growth with minimal development gaps and seamless connectivity among the ASEAN member states and globally.

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ASEAN economic rebound to catch up with the rest of Asia as domestic demand returns

SOUTH-EAST Asia is set to catch up with the rest of the region in the economic recovery from the Covid-19 pandemic, as the vaccination-enabled resumption of domestic demand fuels the rebound from a low base, new forecasts have suggested.

Morgan Stanley on Sunday (Nov 14) raised its Asean gross domestic product (GDP) projection to 5.6 per cent in 2022, up from 5.4 per cent before, with the South-east Asian bloc outpacing the overall Asia forecast of 5.4 per cent. The Philippines is tipped to lead the pack at 7.5 per cent, with strong growth also pencilled for Malaysia (5.8 per cent) and Indonesia (5.6 per cent).

While external-oriented markets such as North Asian economies and Singapore fared better in the early part of the pandemic, South-east Asia is now closing the gap, the bank's analysts said.

Though their report noted that domestic-facing economies were hit worse by virus containment measures, it added that vaccination and reopening "will help unlock domestic demand growth and enable the laggard economies in Asean to catch up to their North Asia counterparts".

"These economies have earlier trailed behind on Covid management and vaccination rates and would now see bigger growth deltas unlocked on the domestic demand front as vaccination rates," the report said, although it flagged "a less conducive political environment" in Malaysia and Thailand.

Granted, Thailand's smaller-than-expected third-quarter economic contraction of 0.3 per cent has lifted the GDP outlook for 2022.

"Barring another severe outbreak, we expect a solid sequential rebound in private consumption and activity in the fourth quarter, with the recovery to gain traction over 2022," wrote Oxford Economics lead economist Sian Fenner, while adding that the recovery in 2022 should be "supported by global demand and accommodative macro policies".

But Thailand's reliance on the tourism sector remains a concern for watchers, with Maybank Kim Eng economists warning that "GDP in 2022 will still be around 0.8 per cent below 2019 levels, as tourist arrivals are unlikely to return to pre-pandemic levels ... for another 2 to 3 years".

As such, the Morgan Stanley report suggested that "Indonesia, the Philippines and Singapore are better placed" for growth, and added that Indonesia and the Philippines "have some of the most domestic demand-oriented economies" under coverage.

The house noted in a separate report that Asia's productivity dynamics are expected to improve significantly in a virtuous cycle that will be driven by export strength and spill over into capacity utilisation, capital expenditure, jobs growth, domestic demand, and fiscal and monetary policy.

"Over the next 2 years, we expect external demand conditions to remain strong - the right kind of fuel for Asia's growth engine," the analysts concluded.

Source: The Business Times

Date: 15 November 2021


Microsoft launches greentech program for startups in SEA

Microsoft has partnered with Creitive, a Singapore-based digital transformation agency, to launch a greentech program for business-to-business startups in Southeast Asia that are in the seed to series A stages.

The Microsoft Singapore GreenTech Challenge facilitates collaboration between businesses that can provide deployable sustainability solutions, which includes startups, small and medium-sized enterprises, non-governmental organizations, and corporates.

The program will provide startups with free access to tech, coaching, and support, helping them find opportunities and to avoid common pitfalls.

Shortlisted applicants will pitch their solutions to a panel of judges that include Avanade, a cloud solutions provider; EcoLabs, a greentech firm that targets the energy sector; Finlab, a startup accelerator; and NCS, a digital services provider that focuses on consulting, tech, and cybersecurity, among others.

Meanwhile, winners of the challenge will receive prizes from Microsoft that are worth up to S$350,000 (US$258,927). They will also stand a chance to deploy and scale their solutions in collaboration with corporate partners.

The launch of the new program comes as Southeast Asia stands to lose up to US$200 billion in gross domestic product by 2030 because of climate shocks and a delay in timely action.

Investors are also cheering green investments in tech startups in the region as they associate sustainability with improved tangible financial returns. However, the region has some way to go before achieving net-zero carbon emissions by 2030.

Source: TechInAsia

Date: 15 November 2021


ASEAN fintech funding hits record high of US$3.5b for 9M 2021: Report

FUNDING for financial technology (fintech) startups in Asean more than trebled to hit a record US$3.5 billion in the 9-month period in 2021 compared to full-year 2020, according to a report.

A report by UOB, PwC Singapore and the Singapore Fintech Association (SFA), titled FinTech in ASEAN 2021, released on Wednesday (Nov 10) showed that 167 deals, including 13 mega-rounds, or funding rounds of over US$100 million, accounted for US$2 billion or 57.1 per cent of total funding.

"The revival of investments in Asean's fintech industry has seen funding break through US$3.5 billion this year. Looking beyond this strong rebound, the opportunity to forge strong win-win-win partnerships between incumbent banks, fintech firms and ecosystem platform players and expanding across the region will remain instrumental in propelling the sustainable growth of ASEAN's fintech firms," said Janet Young, head of group channels and digitalisation, UOB.

Late-stage fintech companies, or Series C funding and beyond, garnered the most investor interest, securing 10 of 13 mega-rounds in 2021 so far. This signals a more cautious and risk-averse approach by investors to back mature firms that seem to stand a higher chance of emerging stronger post-Covid 19.

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Date: 10 November 2021

Source: The Business Times (Singapore)

Remaining open an imperative for Asean's growth post-Covid

ASEAN's role in global sustainable growth is and will be "significant" in the coming years but the region needs to focus on its commitment to open trade and investment, sustainability and continual upgrade through digitalisation.

Indeed, there is "cause for optimism" despite the ever-present risk of new and more infectious variants as Covid-19 has provided the unique opportunity to reset the global economy and society on a pathway towards inclusive and sustainable growth, said Jose Vinals, group chairman at Standard Chartered.

"Companies in Asean that start aligning their products and services with evolving consumer preferences will reap the opportunities that sustainable investment can bring," said Vinals in his speech at the Standard Chartered Asean Business Forum 2021.

He cited the bank's Opportunity2030: The Standard Chartered SDG Investment Map which revealed, for the first time, the scale of the almost US$10 trillion private-sector investment opportunity in contributing to just three of the United Nation's sustainability development goals (SDGs), namely SDG 6: Clean Water and Sanitaion; SDG 7: Affordable and Clean Energy; and SDG 9: Industry, Innovation and Infrastructure.

Specifically, the combined potential private-sector investment opportunity in Indonesia by 2030 is an estimated US$280 billion, he noted.

"With 100 million people across Asean expected to migrate from rural areas to cities between 2015 and 2030, demand for sustainable infrastructure, real estate and more sustainable sources of energy will dramatically increase."

The other large area of focus is digitalisation which, said Vinals, drives more than just innovation now. "It is about how we can have business continuity, sustainability, and inclusivity," he said.

A key growth pillar

With Asean projected to have a digital economy of at least US$300 billion by 2025 - showed estimates in the annual South-east Asia e-Conomy report by Google, Temasek and Bain & Co - this is expected to be a key growth area for the region.

Already, sectors that embrace the digital economy are winning.

In response to a question from the audience on how companies can invest in the face of an uneven recovery post-Covid, Benjamin Hung, chief executive officer, Asia, Standard Chartered, noted that in this "K-shaped" recovery, sectors such as e-commerce, communal transportation, food delivery and grocery delivery are winning. "Anything that moves fast to become more digitalised, more accessible and more inclusive will be the winners," he said.

Oliver Tonby, senior partner and core leader at McKinsey's digital capability centre, echoed this point of view.

"If you look at the percent of digital revenue that is captured by the top 10 per cent of companies, in the telecommunications and media industry it is 95 per cent; in the banking industry it is 85 per cent; and in the retail industry, it is 93 per cent," said Tonby.

"So you're seeing a huge drive towards 'winner takes a lot, if not all'. And we've seen it accelerate in the last couple of years. The companies that were ahead on digital transformations before Covid set in are pulling further ahead much faster."

Tonby and Hung were part of a panel of speakers touching on the importance of catalysing Asean connectivity and how companies need to pivot from survival to growth mode in a digitally entrenched manner.

In a world where Covid-19 has catalysed the acceleration of digital evolution and innovation cycles are faster, the rise of e-commerce is not so much due to consumer behaviour change but to companies adopting to the digital reality at a much higher pace than before, said Lazada's group chief strategy officer, Magnus Ekbom.

As these 2 worlds meet each other - the digitally savvy consumer and the company that is adapting to digital platforms - the distinction between e-commerce and commerce may soon disappear.

"Within the next 3-5 years, the term 'e-commerce is going to disappear and there's only going to be 'commerce'," said Ekbom.

And it is companies that successfully translate everything that their existing offline footprint offers - such as customer touch points - into data points that will be the winners, he said.

Commitment to open trade

In his opening comments, Standard Chartered's Vinals noted that a commitment to open trade and investment both within Asean and with its key partners has enabled the region to engage in more cross-border business.

"While impacted by the pandemic, trade and investment within the bloc continued to be very resilient last year," he noted.

Notably, foreign direct investment (FDI) inflows into Asean reached its highest level in 2019 at US$182 billion, making Asean the largest recipient of FDI in the developing world, said the Asean Secretariat's Asean Investment Report 2020-2021. Due to Covid-19, FDI declined to US$137 billion in 2020. But as a proportion of global FDI figures, Asean bucked the trend, with its share of global FDI rising from 11.9 per cent in 2019 to 13.7 per cent in 2020.

Meanwhile, intra-Asean total trade in goods increased by a compound annual growth rate (CAGR) of 4.3 per cent between 2015 and 2019, from US$535.4 billion to US$632.6 billion.

In 2020, due to Covid-19 disruptions, total intra-Asean trade in goods stood at about US$565.9 billion, with CAGR for the period 2015-2020 at 1.4 per cent.

"I think it's very common nowadays - especially last year, when borders were shutting and export controls and bans were popping up all over - to take an of inward-looking, isolationist view of the world," said Gabriel Lim, Permanent Secretary of the Singapore Ministry of Trade and Industry.

But Singapore has been consistent in making the case for connectedness and integration, he said.

In a report on intra-Asean corridor opportunity, part of Standard Chartered's Borderless Business series, the authors noted that Asean will play a bigger role in the global production value chain in view of its heightened connectivity with 5 major trading partners - China, Japan, New Zealand, Australia, and South Korea.

Further, 83 per cent of the respondents surveyed for the report indicated they plan to increase their company's investments in Asean over the next 3- 5 years by at least 25 per cent, once the Regional Comprehensive Economic Partnership is ratified.

"One issue that Singapore has always believed in is that free-trade agreements are not just an economic marriage but in many ways, also a strategic marriage," said MTI's Lim.

"When you have many countries committing to work together to grow together (and) to prosper together, there is a shared interest in one another's success, in their stability and their prosperity," he said.

Singapore is particularly keen to be an advocate for free trade and integration, a catalyst for new trade agreements, and a champion for inclusive growth.

It is clear that South-east Asia, along with the rest of the world, has to think of how to restore growth trajectories in a different way, he said, both by taking advantage of new growth areas such as the digital economy and ensuring that any recovery is enduring and sustainable.

Already, conversations are taking place in terms of frameworks for cross-border data flows, personal data and protection frameworks. Last year for instance, Singapore signed digital economy partnership agreements with Australia, New Zealand and Chile, among others.

Looking beyond digital ecosystems, harmonisation of frameworks and policies can extend to other areas including Covid policies, vaccination, and travel arrangements, said Standard Chartered's Hung.

"Given how disrupted our supply chain has been, I think there's a lot of work that can be done to smoothen out all these wrinkles, whether through trade pacts or cooperation, (or) through really trying to develop a better framework around or intra-Asean, both as an export originator as well as a destination market," he said.

Source: The Business Times
Date: 16 November 2021

ASEAN export outlook remains firm; good numbers in Sept for Malaysia, Thailand

ECONOMISTS are modestly upbeat about Asean's export outlook as global reopening continues, amid Malaysia and Thailand posting better-than-expected trade figures for September.

Though Asia's year-on-year export growth may have already peaked amid waning base effects, the easing in Covid-19 restrictions in South-east Asia should boost sequential growth in manufacturing exports in Q4, said Oxford Economics lead Asia economist Sian Fenner in an Oct 28 note.

In Malaysia, Thailand and Vietnam, year-on-year export growth improved as eased restrictions are triggering a pick-up in manufacturing activity. "This is likely to have also contributed to solid gains in Singapore's re-exports in September," she added.

Thailand's trade figures released this week showed exports growing by a stronger-than-expected 17.1 per cent year on year. Citi economist Nalin Chutchotitham sees this as reflecting oil price effects, greater global reopening and the easing of Covid-related factory disruptions.

Thailand's export outlook remains "fairly healthy", she said, noting a September survey indicating expectations that future foreign orders are improving.

But this may not move the needle on the current account balance, as the slow pickup in tourism has not adequately improved the balance of trade for services. She expects a current account deficit of 1.5 per cent of gross domestic product (GDP) in 2021, followed by a surplus of 0.5 per cent in 2022.


Barclays economists Shreya Sodhani and Brian Tan said September's figures were in line with their expectation for exports to return to first-half strength after Covid-related factory disruptions resolve.

They expect a current account surplus of 0.7 per cent of GDP in 2022, "with the goods-trade surplus likely remaining robust and tourist arrivals picking up".

Maybank Kim Eng analysts Lee Ju Ye and Chua Hak Bin note, however, that rising global oil prices will weigh on Thailand's current account deficit, as it is a net importer.

Malaysia's gross exports grew by a better-than-expected 24.7 per cent in September, resulting in a record trade surplus of RM26.1 billion (S$8.48 billion), even as imports grew 26.5 per cent year on year.

UOB economists Julia Goh and Loke Siew Ting said: "As most countries have further re-opened their economies and global demand continues to recover, Malaysia's trade sector will likely sustain its decent growth momentum in the near term.

"The seventh straight month of robust imports of intermediate goods implies strong export orders ahead of year-end festive demand."

Other positive factors are the resumption of all economic sectors' resumption of full operations capacity starting this month, and the approval granted to bring in 32,000 foreign workers, which should boost firms' capability to meet export orders, they said.

Barclays' Tan sees Malaysia's goods exports as remaining robust, "supported by still-elevated global tech demand and commodity prices".


Source: The Business Times (Singapore)


Why should ASEAN manufacturers take the lead in IT modernisation?

The writer is vice president, South Asia Pacific, at Nutanix, an American cloud computing company that sells software, cloud services, and software-defined storage.

Did you know that more than 80 percent of the world’s hard drives are manufactured in Asean? That is an impressive figure even for the region, which is the fifth-largest economy in the world.

Manufacturing is often perceived as a traditional industry heavily reliant on equipment and processes. Beyond the big machineries, conveyer belts and assembly lines, manufacturing is in fact very diverse and has long helped shape the economic growth in this region. The Boston Consulting Group also estimates that Asean manufacturing output can impressively grow by an additional US$400 billion to US$600 billion a year by 2030 from 2020 levels. 

However, Asean manufacturers may risk falling behind as they face disruption from newer technologies, and more recently, pressure from a pandemic that has changed the world economy. Manufacturing and the supply chains that support it are under intense stress today and companies will have to look to digitalise through modern information technology (IT) to adapt to newfound changes.

What’s Driving Modernisation in Manufacturing?

What sets manufacturing apart from other industries is that the drive for modernisation is not led by the workforce needing to adapt to remote or hybrid work environments. It is also not about reducing costs. Instead, many manufacturers are re-examining their IT models because of the impact of the pandemic and the cascading effects on our world at-large.

According to Nutanix’s Third Annual Enterprise Cloud Index (ECI), three out of four (75 percent) manufacturing respondents claim COVID-19 has caused IT to be viewed more strategically in their organisations, and also sharply increased their cloud investments. 

The emphasis on this in Asean is evident. Indonesia’s Ministry of Industry announced the ‘Making Indonesia 4.0’ initiative that aims to revolutionise industries, especially manufacturing. The roadmap outlines collaborative actions among multiple stakeholders and the adoption of technologies such as Internet of Things and Artificial Intelligence. Meanwhile in Singapore, the Government announced a three-pronged strategy to help the nation’s manufacturing sector grow 50 percent by 2030, with a focus on technology, innovation and research and development. 

The Need for Hybrid and Multicloud Infrastructure

Additionally, Nutanix’ ECI report revealed that most manufacturing IT professionals (87 percent) believe a hybrid and multicloud infrastructure is the best IT operating model for the business. In fact, more manufacturers are running hybrid cloud than any other industry today, with about 18 percent penetration.

This shift is not short-term. Manufacturers reported plans to more than double their hybrid usage within three years and grow their deployments to about 52 percent penetration within five years. This leap toward modernisation will reshape traditional manufacturing practices and accelerate digital transformation across the industry, but the journey will require a concentrated effort from industry leaders.

In the wake of the pandemic, business leaders are tasked with reconsidering standard business procedures, particularly how they align with protecting employees through social distancing practices while still maintaining production output. This stands true till today, especially with multiple waves of infections and the new delta variant driving national lockdowns across ASEAN. 

Manufacturers believe hybrid and multicloud will help with this transition. According to the ECI, manufacturing companies adopt the model to better meet business requirements (62 percent), gain greater control of IT resource usage (60 percent), and increase speed to deliver on business needs (53 percent). Industry 4.0, the Fourth Industrial Revolution, is underway, and the transition to hybrid cloud offerings will automate current backend operations, freeing up resources to invest in other modern smart technology. 

A Long Journey Ahead for Full Transformation

Despite the strong push for transition to hybrid cloud architectures, the manufacturing industry has some ways to go. Currently, 15 percent of global manufacturers still run exclusively traditional, non-cloud-enabled datacentres.

Manufacturing has yet to turn ‘smart’ as most manufacturers are just utilising individual digital production tools. Digitalisation and modernisation in manufacturing companies in ASEAN will not really match up to the pace of other industries unless there is serious review of current production methods, and this means a relook across the process including how products are designed, assembled, and delivered.

To make a real transition to smart manufacturing, companies will need to eliminate legacy datacentre installations, and shift towards hybrid multicloud models. Doing so will offer features that can enhance all operations, from planning to the supply chain. This change also opens doors to introducing automated processes, and other technologies such as robotics, reducing unnecessary costs, increasing production yield, and allowing workers to focus on efficiency and quality rather than output. 

One company that is making good progress in digital transformation is Alliance Contract Manufacturing (ACM) in Malaysia. A manufacturer of precision parts, assembly products and mechatronics modules, ACM adopted cloud technology to host their critical business applications and gain the agility needed to embrace Industry 4.0 and pivot in the face of new opportunities. When the pandemic struck, ACM could do just this. The IT team was empowered to move at the speed of the business, reconfigured networks and made the necessary adjustments to ensure that staff could access business applications remotely and securely. With the cloud, ACM was able to minimise disruptions and continue running its business as they transitioned to the new normal. 

Similarly, Toyota Motor in Japan built a Virtual Desktop Infrastructure environment on a cloud platform. This allowed the company to run its 3D CAD Design Software remotely, delivering new ways of working for its Engineering Design Group. 

IT modernisation can realistically help manufacturers build efficiency and raise productivity as they build automation in their processes in the era of Industry 4.0. Hybrid multicloud strategies represent the digital engines that power this progress, and manufacturers that are leveraging these have also come up above their competitions.

For Asean to emerge a manufacturing powerhouse, manufacturers here will need to tap on the future of hybrid multicloud to unlock new opportunities and gain the agility needed to overcome uncertainties ahead.

Source: The Business Times (Singapore)

Date: 8 November 2021