Now, let's explore the key metrics and growth opportunities for each country in SEA, highlighting the potential pitfalls they need to navigate in order to claim the title of the world's next factory in 2030.
Key Metrics
The manufacturing sector in SEA is experiencing robust growth, with the number of enterprises projected to reach 471.20k in 2024. A staggering compound annual growth rate (CAGR) of 45.45% is anticipated between 2024 and 2028. .
China's Farewell, SEA's Welcome
Since 2013, Chinese manufacturing wages have doubled, reaching an average of USD 8.27 per hour. In contrast, SEA countries like Vietnam, Thailand, and Malaysia boast lower labor costs, with wages remaining below USD 3 per hour. Additionally, SEA can tap into a pool of 155 million people aged 25 to 54 with tertiary education (White collars), surpassing China's equivalent figure of 145 million.
Vietnam: High-Tech Hub
2030 Growth Opportunities:
- Electronics & Semiconductor manufacturing: By 2030, Vietnam is set to play a crucial role in the global semiconductor assembly and testing market. The "China + 1" strategy, combined with the rising significance of Southeast Asia, particularly countries like Malaysia and Vietnam, is anticipated to drive substantial growth in this sector. Projections suggest that Southeast Asia will contribute 10% to the world's semiconductor assembly and testing by 2030, with an expected decline in Taiwan's share.
- Textile manufacturing: Vietnam's textile and apparel industry aims to be a sustainable and innovative industry by 2030, with a turnover of USD 100 billion, a 10% global market share, a 40% GDP contribution, and 4 million jobs.
Weaknesses: Despite the high growth rate, Vietnam faces challenges, including a shortage of skilled labor. Foreign investments, particularly in the high-tech industry, are hindered by the lack of a qualified workforce.
Malaysia: Rolling out NIMP 2030
As of today, Manufacturing is already contributing to 37.76% of the GDP. Malaysia's New Industrial Master Plan 2030 aims to boost the GDP of the manufacturing sector by 6.5% annually.
2030 Growth Opportunities:
- Machinery & Equipment: Globally, the M&E industry is projected to be worth RM19.8 trillion by 2025, with a predicted annual growth rate of 6.4% from 2024 to 2027. The machinery & Equipment sector in Malaysia is expected to outpace global growth, targeting a 10.1% annual increase during the same period.
- Semiconductor Manufacturing Magnet: Anchored by semiconductors, the sector is set to attract approximately US$ 23 billion in investments by 2025.
Weaknesses: Malaysia faces challenges in sustaining its industrial growth, with fluctuations in production tied to reduced output in specific sectors, such as wood products and furniture. In addition, the ready availability of low-skilled foreign labor has hindered manufacturers from pursuing innovation and investing in automation and advanced technology, which could enhance productivity. Transitioning towards the production of higher-value and more intricate goods necessitates skilled and creative workers with technical expertise, capable of consistently developing goods and processes.
Singapore: Precision and Progress
2030 Growth Opportunities:
- The Industry 4.0 Adoption: Singapore is aiming for a substantial 50% growth in its manufacturing sector by 2030, driven by a strong commitment to Industry 4.0 technology and precision engineering, which contributes over 20% to the total GDP. The city-state hosts the headquarters and Research and Development (R&D) functions of numerous companies. Precision engineering is integral to Singapore's diverse manufacturing activities, supporting industries like electronics, marine, aerospace, oil & gas, and medical devices. The manufacturing expertise spans from producing the tiniest semiconductor chip to the most advanced medical devices and the largest drill bits used in oil exploration, requiring highly specialized skill sets.
Singapore can count on highly skilled workforce that attracts leading high-tech companies (ranked second on Global Talent Competitiveness Index (GTCI) for 2023.
Weaknesses: The aging population poses a risk, with projections indicating that by 2030, almost 1 in 4 Singaporeans will be over 65, potentially impacting the skilled workforce.
Thailand: Shaping the Future
2030 Growth Opportunities:
- Automotive and EV Manufacturing: 30% of all vehicles made in Thailand will be electric by 2030. Thailand is attracting global investors, especially from Japanese automotive companies to help transition the Thai economy into the automotive industry of the future. e.g., Tesla also intends to establish a new factory for producing and exporting electric vehicles in the region.
- Chemical Manufacturing & Bioplastics: Thailand's thriving plastics sector contributes a significant US$ 36.9 billion to the national economy, producing 11.8 million tonnes of diverse plastic goods and byproducts. Emphasizing sustainable growth, the Thai government supports entrepreneurs investing in research and development (R&D) and exporting bioplastics globally. Positioned as a leading producer of bioplastic raw materials, Thailand has advanced technology and expertise across the supply chain. Its strategic location in Southeast Asia provides market access, and supportive government policies position Thailand to emerge as a global bioplastics hub.
- Food manufacturing: Thailand is gearing up to be a major player in Asia's food industry as the global population approaches 10 billion by 2050. With an eye on increasing food demand, the country plans to oversee the entire food production process, from agriculture to global export. The government is investing in the future food industry, focusing on research and development of high-protein plant-based foods and innovative, alternative options to meet anticipated global trends.
Weaknesses: Although Thailand's industrial sector is thriving, the challenge lies in renewing an aging workforce, together with sustaining a qualified workforce to support the ambitious vision, particularly in engineering, robotics, and digital literacy.
Indonesia: Labor-Rich Industrial Hub
2030 Growth Opportunities:
Indonesia’s manufacturing sector contributes to more than 20% of its GDP, a significantly high level by global standards.
- Automotive Manufacturing: Indonesia is the world's second-largest producer of motor vehicles, positioning itself as a promising industrial hub for the production of electric vehicle batteries. The automotive sector is a crucial contributor to the country's GDP, accounting for over 10%. Since the 1970s, several Japanese brands, including Mitsubishi, Honda, and Toyota, have established plants through local joint ventures. The sector is anticipated to grow significantly, reaching an estimated market value of $79 billion by 2030, driven by exports and by the expansion of the country’s middle-class consumption.
- The energy and renewable market : Indonesia is poised for growth in its renewable energy sector, currently contributing 12% to national consumption and projected to reach 23% by 2025. As a major greenhouse gas emitter, the country aims to increase the share of renewable energy in power generation to 44% by 2030, requiring a total investment of $97.3 billion. Notably, $66.9 billion is allocated for 400 projects, with a stipulation that they commence by 2030 at the latest.
Weaknesses: The low-cost labor advantage comes with the risk of a lack of skilled workers, requiring efforts in recruitment, education and training.
Philippines: The Food processing boom
2030 Growth Opportunities:
- The Food Processing sector: Today, more than 9,000 food processing plants operate across the Philippines, generating an impressive US$ 2 billion worth of goods. The Philippines Food is estimated at 16.12 billion USD in 2024 and is expected to reach 31.47 billion USD by 2029, growing at a CAGR of 14.32%. Opportunities lie in coconut processing, processed tropical fruits, carrageenan, cassava processing, natural health supplements, and fishery products.
In the coming years, the integration of robotics and automation systems in food processing is set to skyrocket. Driven by a desire to boost production speed and minimize contamination risks, food processors are embracing the potential of technology to elevate their operations.
Weaknesses: Supply chain disruptions, port congestion, and material shortages pose threats to the sustained growth of the industrial sector. According to Deloitte, approximately 2.69 million manufacturing jobs are going to be open due to retirements and another 1.96 million jobs will be created due to natural growth within the next 10 years. However, only 2.2 M of these jobs are likely to be filled.
Solving talent shortage to achieve prosperity
Southeast Asian (SEA) organizations are expecting a shortage of skilled workers as they work towards producing the next generation of engineers. The region is ambitious, with investments aimed at reaching its full potential. To overcome this challenge, companies need to focus on:
- Retraining workers into competitive roles to increase productivity.
- Hiring highly skilled workers in strategic sectors.
- Addressing the challenges posed by an aging population.
- Preparing the upcoming generation to ensure a steady supply of qualified talents in the market.
In line with the commitment to addressing talent shortages, the startup Huneety is on a mission to make HR technologies accessible and affordable for manufacturing and industrial organizations in Southeast Asia. Huneety offers a talent matching platform that allows recruiting companies, including SMEs and MNCs, to connect instantly with qualified candidates. These candidates undergo pre-qualification through the company's proprietary skills assessments, covering both soft and hard skills, and are prioritized using AI matching algorithms.
About Huneety
Huneety is a regional HRtech startup headquartered in Bangkok, founded by two French entrepreneurs: Simon Carvi, Co-Founder & CEO, and Vianney d’Hostel, Co-Founder & COO. The name "Huneety" is a fusion of "H" for Humans and the word "Unity." Established in late 2021 due to the acute talent shortage in Southeast Asia, Huneety's mission is to assist organizations in overcoming skills and talent shortages by offering data-driven HR technology solutions.