The chairman of the ASEAN Business Advisory Council, Arsjad Rasjid, says the region should be the ‘supply chain of the world’.
Kuala Lumpur, Malaysia – Southeast Asia is the “new China” and should be the center of the global supply chain, the head of an influential regional business body has said.
In an interview, Arsjad Rasjid, chairman of the ASEAN Business Advisory Council (ASEAN-BAC), said the 10-member Association of Southeast Asian Nations (ASEAN) should be “the world’s supply chain.”
“ASEAN should be the supply chain of the world, the new China is ASEAN,” Arsjad said in an interview with Al Jazeera last week.
Arsjad, who also heads the Indonesia Chamber of Commerce and Industry, said the bloc is on track to take China’s place “as soon as tomorrow” because of the region’s rich resources of nickel and other key minerals.
“ASEAN countries also have food and agriculture,” said Arsjad, who was in Kuala Lumpur to meet with government officials and business leaders.
The comments come as China and Chinese companies, particularly critical sectors such as advanced chips, face increasing restrictions imposed by the West amid heated geopolitical rivalry between Washington and Beijing. The tensions have prompted industry giants such as Apple, Google and Samsung to seek new manufacturing bases outside of China, particularly in Vietnam.
ASEAN-BAC, the private sector arm of ASEAN, is mandated to facilitate economic cooperation and integration in the region. Indonesia is chairing ASEAN this year.
Indonesia has the world’s largest nickel reserves at 21 million tons, accounting for nearly a quarter of the global total, according to data from the US Geological Survey. The Philippines has the fourth largest reserves, with 4.8 million metric tons. Nickel is an essential element in the production of stainless steel, electronic equipment and electric vehicles.
“Indonesia contributes 40 percent of the nickel [output] to the world. If you add the Philippines, it becomes 50-60 percent,” said Arsjad.
Indonesia, along with Thailand and Vietnam, is aiming to become a key player in the electric vehicle supply chain by leveraging its large nickel reserves to attract investment.
Arsjad said that although Southeast Asia is rivaling China’s position at the heart of global supply chains, firms in the region are keen to complement and work together with China.
“We are always open to China. We tell China to invest here [in ASEAN] … not only buy the raw materials. Create added value [production] here,” he said
“It’s time for us to create our own stream… our ecosystem, add more small and medium enterprises… and create jobs.”
Yose Rizal Damuri, executive director of the Jakarta-based Center for Strategic and International Studies, said ASEAN has the resources to be at the heart of the global supply chain.
“But each of them must understand that individually, they cannot do much. There has to be a regional supply chain that they have to build first,” said Damuri.
“They must cooperate and allow the development of several stages of production [fellow] ASEAN countries”, added Damuri.
Fithra Faisal, an economist at the University of Indonesia, said China’s transition to high-end manufacturing has created an opportunity for Southeast Asian countries with lower labor costs.
“China is now leaving behind the middle and low stage of production. Most ASEAN countries will fill the void. We see the Chinese manufacturing phase as more complementary to its ASEAN counterparts,” Fithra told Al Jazeera.
China leads the world in 37 of 44 critical technologies, with Western democracies lagging behind in the race for scientific and research advances, according to a report published by the Australian Strategic Policy Institute earlier this month.
Fithra said the spillover from advanced Chinese manufacturing could help ASEAN countries establish their own manufacturing networks.
“It will be a much more significant production line and network in the world in the next 20 or 30 years,” Fithra said.
ASEAN-BAC’s Arsjad said the region also needs policies that encourage financial institutions to treat farmers as entrepreneurs, who remain a pillar of the ASEAN economy and have helped ensure food security amid the Russia-Ukraine war.
“This helps reduce what bankers see as risks and helps farmers access capital,” Arsjad said.
