Buoyant Automation Market Seen for Southeast Asia

The increasing sophistication of manufacturing in Southeast Asia, coupled with some innovative financing by automation suppliers, add up to growing automation markets.

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The growth of the economy in Southeast Asia over the first half of 2005 included a rise in consumer spending. Many economic forecasts predict a continuous upward curve over the next five years. This is welcome news for the automation industry, which has lately emerged from a slowdown to record an increase in production figures.

Southeast Asia covers an area of about 4,100,000 square kilometers, or 1,583,000 square miles, consisting of the following countries: Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam. During the two years prior to 2005, the automation industry in this region suffered a slump in production due to a depression caused by outside influences, such as the Iraq war and the outbreak of SARS, or Severe Acute Respiratory Syndrome. This year, most economists expect the manufacturing sector to chalk up double-digit growth, contributing around a third of the official growth forecast for gross domestic product of 5.5 percent to 7.5 percent. This indicates the stability of the automation market in Southeast Asia, specifically Singapore, as it has clearly illustrated its ability to cope with business through turbulent and depressed times.

The major reason for the stability in the Singapore market is its continued commitment to taking the long view in the face of regional and global pressures on the economy. By maintaining a pro-market policy, Singapore has enabled the world to see that it is a dependable and stable base from which to operate.

Singapore's manufacturing industry has come a long way in the past 40 years. In the 1960s, it was producing products such as bee hoon (a thin rice noodle) and mosquito coils. Today, it exports Viagra, surgical operating microscopes and DVD recorders. The positive figures from various industry segments, for instance, the biomedical segment in Singapore, which recorded a 90 percent surge in production in 2004, imply that certain segments are really booming.

Lee Boon Yang, minister for Information and Communications, Singapore, stated, "Singapore needs to position itself as a nerve center for coordinating regional supply chains that offer the whole spectrum of manufacturing services, so as to remain relevant in the new high tech manufacturing landscape."

Savvy suppliers

Despite the robust outlook in some segments, however, the Process Automation Systems (PAS) market for Southeast Asia, which reached almost $220 million in 2000, is forecast by the analyst firm IDC to grow only to $279 million by the end of 2005, because of the region's economic and political turmoil. But some savvy PAS suppliers see these difficulties as an opportunity to make long-term market investments.

Because many of the region's banks are incapable of providing large loans to manufacturers, enterprising PAS suppliers are taking advantage of this troubled economic climate to quietly expand their business. They are offering flexible commercial terms or are arranging for low-cost financing for manufacturers that seek to procure equipment on a deferred payment basis. Although users are compelled to pay more for the equipment over the long term because of accumulated interest, improved production quality and higher productivity compensate for the total costs.

Regional manufacturers are aware of the need to integrate automation and enterprise systems as a prelude to adopting an e-manufacturing strategy. The region is witnessing fairly high-level information technology (IT) penetration in the manufacturing sector. There is also a need to develop appropriate automation strategies that leverage the power of automation in conjunction with IT to achieve maximum efficiency. Most Asian users understand the need to improve manufacturing cycle time to face the ever-increasing competitive pressures.

About the author

Uday Lal Pai, udaylalpai@gmail.com, is a freelance writer and editorial consultant based in India.

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