THE South East Asian economic area has experienced remarkable economic development in the past 50 years since foundation of the ASEAN state union. International machinery exports in this region currently total EUR 85 billion per year, nearly 200% higher than just 10 years ago.
Countries such as Vietnam, Indonesia and Malaysia are now among the world’s most dynamic economies and are becoming more attractive as sales markets and investment locations.
Thanks to growing exports, mechanical engineering companies from Germany have benefited from the upswing in the ASEAN region - Brunei, Indonesia, Cambodia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam - in the past 10 years, according to the German manufacturing representative body, VDMA.
From 2007 to 2016, the value of German machinery exports increased from EUR 3.4 to EUR 5.0 billion. A positive rise in exports of nearly 12% to EUR 1.2 billion compared to previous year’s levels was achieved in the first quarter of 2017.
“The companies have by no means exhausted their sales potential,” explains VDMA chief economist Dr Ralph Wiechers.
He explains that the demand for machinery in South East Asia has grown faster than the machinery exports from Germany. In 2006, the ASEAN states purchased 9.2% of their machinery imports from Germany. In 2016, it was only 5.7%.
Japan and the USA, former market leaders in this region, suffered even stronger losses: Japan decreased from 28.7% to currently 16.8%, and the USA from 13.4% to 7.1%.
The German, US and Japanese sales have been replaced by imports from China, which is now the largest supplier of machinery in this region by far at 25.4%. South Korea with 7.1% and Singapore with 10.1% have also increased their deliveries in recent years.
“The ASEAN states pose a challenge to German companies because each country has to be treated and approached as a single market,” says Ralph Wiechers.
“Due to the increasing prosperity and growing population in these countries, the German mechanical engineering companies are well advised to place more focus on this region,” he concludes.
The ASEAN state union was founded in August 1967, encompassing five countries - Indonesia, Malaysia, Philippines, Singapore and Thailand. At the time, mechanical engineering companies from Germany exported goods worth 249 million deutsche mark to this region. At that time, the total share of exports of the German mechanical engineering totalled 1.3% and in 2016 it was 3.2%.