Southeast-Asian "common market" to eclipse China

via Khmer NZ

Posted: Tuesday, August 24, 2010

China's position as the world's manufacturing power house could be eclipsed by a "common market" of Southeast Asian nations by 2015, experts predict.

A new Wall Street Journal report paints a rosy picture for manufacturing output in Southeast Asia, a region of nearly 600 million people.

According to the report, the average factory worker in Vietnam made about $136 a month in 2009, in Indonesia, $129 a month, both of which are well below the $413 a month earned in China.

"Leaders in the region are pressing ahead with plans to stitch together the patchwork of nations into a common market and production platform by 2015," the report claims. "If fully realised, the project will include fewer restrictions on the movement of skilled labour from country to country and streamlined customs procedures."

A number of infrastructure projects - some funded by the Asian Development Bank - are producing trade conduits, with improved highway connections across Cambodia, Thailand, Vietnam and Laos, according to the WSJ.

"China sort of pushed everyone aside for 15 years" as investors flocked there for cheap labour, Frederic Neumann, senior Asia economist for HSBC in Hong Kong told the newspaper.

But he added that that China's move up the value chain comes with increasing costs and so "opens up room again for other countries to jump in at the lower end of the scale."

The Wall Street Journal noted that around 20% of large US and European firms surveyed recently by Credit Suisse said it would be easy to move the sourcing of goods from China to other countries. However around 90% said moving out of China would be very costly.

Picture by: Emile Bremmer