KUALA LUMPUR: The wide range of industrial specialisation in Asean offers multinational companies (MNCs) a full value chain for their businesses, a study finds.

The study by Amsterdam-based professional services firm, TMF Group, showed that Singapore and Malaysia specialised in electronic products, Thailand is the leading manufacturer of fast moving consumer goods and processed foods, while Vietnam and Cambodia focus on garments.

It also highlighted that Indonesia, Brunei and the Philippines, are the main producers and exporters of natural resources such as palm oil, rubber, sugar cane, rice, cocoa, timber, petroleum, natural gas, coal and tin.

TMF Group’s head of Asia-Pacific, Paolo Tavolato, said in a statement that the Asean Economic Community (AEC) should provide the region with an opportunity to replace China in providing MNCs the total value chain for their business.

“As China’s population ages and the workforce becomes more expensive, AEC is the best alternative, and through the vertical and horizontal integration of South-East Asia economies, it would stimulate intra-regional investment, trade and business connections benefiting both foreign and local firms,” he added.

According to TMF Group, a crucial step to this new era for the region is the removal of non-tariff barriers (NTBs).

“The removal of NTBs is the hardest to implement as most are populist measures designed to protect strategic national industries.

“Challenges remain in the elimination of NTBs such as a single channel for imports, price control measures, natural resource subsidies and preferential treatment of state-owned enterprises.

“Although the withdrawal of NTBs might inflict short-term pain it would eventually be beneficial, as competition will push these industries to move up the value chain and increase productivity,” said Tavolato

A study by Institute of Southeast Asian showed that the total removal of tariffs and NTBs in Asean could reduce the cost of doing business in the region as well as increase gross domestic product (GDP) value by 5%.

AEC is expected to generate between US$280bil (RM1.06 trillion) to US$615bil (or 5% to 12% of projected Asean GDP) in annual economic value by 2030.- Bernama