The Association of Southeast Asian Nations (ASEAN) is positioned to progressively play a dominant role in the global supply chain as corporations continually shift their supply chains to the region. The rise of ASEAN's significance in the global supply chain may be attributed to the region's flourishing connectivity networks and alluring labour market, which serve as attractive aspects for global businesses.
Karmjit Singh, Chairman of The Chartered Institute of Logistics and Transport (CILT) in Singapore and advisor to PLG, emphasised the importance of the strategic geographical location of ASEAN as well as the value of ASEAN as a production and logistics hub at the 2023 BCIM International Channels Cooperation Forum.
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Asia, as a continent, is responsible for more than half of the world's global trade. With the implementation of the Regional Comprehensive Economic Partnership (RCEP) trade agreement, future global trade flows are expected to gravitate towards Asia. Despite the ramifications of ongoing global events, China continues to retain its role as a critical production centre.
The geographical location of the ASEAN bloc plays a vital role in these supply chain shifts. The close proximity of ASEAN countries to each other and to China enables quick and seamless movement of goods. For example, Vietnam can transport goods to China within 24 hours and vice versa. This ease of movement, enhanced by the ongoing development of transportation infrastructure from the Belt and Road Initiative, boosts ASEAN's connectivity - a crucial element for efficient supply chains.
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Significant projects that contribute to this connectivity include the Laos-China Railway, the Jakarta-Bandung High-speed Railway in Indonesia and the China-Thailand Railway. These initiatives signify a concerted effort to increase ASEAN's connectivity and fluidity of goods movement across the region.wh
Furthermore, ASEAN boasts an impressive number of Free Trade Agreements (FTAs), including the colossal RCEP. This extensive trade agreement allows for 90% of goods to be transported with zero tariffs, making ASEAN an appealing destination for businesses seeking efficient supply chain solutions.
In addition to this, the ASEAN Economic Community seeks to create a single market and production base, which further enhances the attractiveness of the region. It facilitates a more streamlined and standardised system for trade, enforcing regulations and strategies that create a valuable proposition for global companies looking to tap into fast-growing markets.
In essence, these multifaceted factors are increasingly positioning ASEAN as an ideal production and logistics hub in the global economic landscape. As the region continues to capitalise on its strategic geographical location and economic advantages, it is set to reinforce its position within the world's supply chains.
