Diplomathon World Symposium
ASEAN
Agenda: Strengthening the ASEAN supply chain for electronics manufacturing.
Introduction to the committee
ASEAN is a regional intergovernmental organization including ten countries in Southeast Asia,
encouraging intergovernmental cooperation. ASEAN is also promoting political, economic, security,
educational, military and socio-cultural integration between its representatives and other Asian
nations.
ASEAN often regularly communicates with other countries in the Asia-Pacific region and beyond.
ASEAN, a major Shanghai Cooperation Organization force, operates a regional network of alliances
and representatives of the dialogue and is regarded by some as a global powerhouse, a central Asia-
Pacific cooperative union and a strong and successful organization.
Introduction of the Agenda
The ASEAN (Association of Southeast Asian Nations) region is a critical hub in the global electronics
manufacturing landscape, thanks to its strategic location, cost-effective production capabilities, and
skilled labor force. This agenda focuses on enhancing the resilience, efficiency, and competitiveness
of the ASEAN supply chain for electronics manufacturing. ASEAN's prominence in this sector is
underpinned by its diverse manufacturing base, which spans several countries, each contributing
uniquely to the regional supply chain.
The electronics industry is integral to ASEAN's economic structure, contributing significantly to the
region's GDP and employment. Major ASEAN economies such as Malaysia, Thailand, and Vietnam
have developed advanced electronics manufacturing sectors that produce a wide range of products,
from semiconductors to consumer electronics. These nations have become attractive destinations
for global electronics companies due to their favourable business environments and competitive
costs.
However, recent global disruptions, such as the COVID-19 pandemic and escalating geopolitical
tensions, have exposed vulnerabilities in the region's supply chain. These challenges highlight the
need for a strategic approach to strengthen and optimise the ASEAN electronics supply chain,
ensuring that it can withstand future disruptions and remain competitive on a global scale.
History
The evolution of ASEAN’s electronics manufacturing sector began in earnest during the early 1990s.
At that time, ASEAN countries, recognizing the potential of the electronics industry, started to
attract foreign direct investment (FDI) through favourable policies and incentives. Malaysia,
Thailand, and the Philippines emerged as significant players, establishing themselves as key hubs for
electronics manufacturing.
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The establishment of the ASEAN Free Trade Area (AFTA) in 1992 was a pivotal moment, as it aimed
to reduce trade barriers and promote economic integration among member states. This agreement
facilitated the growth of the electronics sector by creating a more seamless regional market and
encouraging cross-border investments.
Throughout the late 1990s and early 2000s, ASEAN countries invested heavily in infrastructure and
technology to support the burgeoning electronics industry. High-tech parks, improved logistics
networks, and the development of specialised manufacturing zones became commonplace. These
advancements allowed ASEAN to capitalise on the global shift towards outsourcing and offshoring of
electronics production.
The 2008 global financial crisis, followed by subsequent economic uncertainties, led to challenges in
maintaining growth momentum. However, ASEAN's resilience was demonstrated through strategic
adjustments and continued investment in technology and skills development. The region’s
commitment to innovation and quality helped it recover and maintain its status as a leading
electronics manufacturing hub.
In recent years, ASEAN has faced new challenges, including rising raw material costs, supply chain
disruptions, and increased competition from other regions. These factors have necessitated a
reassessment of strategies to ensure that the region remains competitive and capable of meeting
global demand.
Current Scenario
Today, the ASEAN electronics manufacturing sector is characterised by its diversity and dynamism.
Key players in the region include multinational corporations, local manufacturers, and suppliers
involved in various stages of the electronics production process. The sector spans a wide range of
products, including semiconductors, consumer electronics, and electronic components.
The region benefits from a well-developed network of suppliers and manufacturers, creating a
robust and integrated supply chain. ASEAN countries like Vietnam, Indonesia, and the Philippines are
emerging as significant players in the electronics supply chain, complementing established hubs like
Malaysia and Thailand.
Despite its strengths, the sector faces several challenges:
1. Supply Chain Disruptions: Recent global events, including the COVID-19 pandemic and geopolitical
tensions, have exposed vulnerabilities in the ASEAN electronics supply chain. These disruptions have
led to delays, increased costs, and uncertainty in production schedules.
2. Rising Costs: The increasing prices of raw materials, energy, and labour are impacting the cost
structure of electronics manufacturing. These rising costs are affecting profit margins and
competitiveness, making it challenging for ASEAN manufacturers to maintain their market position.
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3. Technological Advancements: The rapid pace of technological advancement requires continuous
investment in new technologies and upgrading existing infrastructure. This is crucial for staying
competitive in a sector where innovation is a key driver of success.
4. Environmental and Sustainability Concerns: The electronics manufacturing sector is facing growing
pressure to adopt more sustainable practices. This includes reducing environmental impact,
improving waste management, and ensuring responsible sourcing of materials.
5. Geopolitical Risks: Trade tensions and geopolitical conflicts can disrupt supply chains and affect
the stability of the electronics manufacturing sector in the region. ASEAN must navigate these risks
to maintain a stable and efficient supply chain.
Work Done by ASEAN
The ASEAN Committee on Economic and Trade Cooperation has undertaken several initiatives to
strengthen the electronics supply chain. Key actions include:
1. Regional Collaboration Initiatives: The committee has worked to promote cooperation among
ASEAN member states to enhance supply chain integration. This includes developing regional trade
agreements and frameworks to facilitate smoother cross-border trade and investment. Initiatives
like the ASEAN Economic Community (AEC) aim to reduce trade barriers and encourage economic
integration within the region.
2. Infrastructure Development Projects: The committee has supported the development of critical
infrastructure, such as logistics hubs and high-tech manufacturing facilities. Investments in
infrastructure are essential for improving efficiency and connectivity within the region, enabling a
more streamlined supply chain.
3. Skills Development Programs: Recognizing the importance of a skilled workforce, the committee
has implemented training and capacity-building programs. These programs are designed to address
the skills gap in the electronics manufacturing sector and support the adoption of advanced
technologies.
4. Research and Development Support: The committee has encouraged investment in research and
development (R&D) to foster innovation and technological advancement. R&D support is crucial for
maintaining competitiveness and driving growth in the electronics sector.
5. Policy Advocacy: The committee engages with member states to advocate for policies that
enhance the competitiveness and resilience of the electronics supply chain. This includes promoting
regulatory reforms, trade facilitation measures, and sustainability initiatives.
Problems Faced
1. Supply Chain Disruptions: The COVID-19 pandemic and geopolitical tensions have revealed
significant vulnerabilities in the ASEAN electronics supply chain. Disruptions in global supply chains
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have led to delays in production, increased costs, and uncertainty. For instance, shortages of
semiconductor chips have affected various sectors, from automotive to consumer electronics.
2. Rising Costs: The electronics manufacturing sector is facing increasing costs for raw materials,
energy, and labour. These rising costs are squeezing profit margins and making it more challenging
for ASEAN manufacturers to remain competitive. For example, the cost of rare earth materials,
crucial for electronics production, has surged, impacting overall production expenses.
3. Technological Challenges: The rapid advancement of technology requires continuous investment
in new equipment and upgrading existing facilities. Manufacturers must keep pace with innovations
such as 5G, artificial intelligence, and the Internet of Things (IoT) to stay competitive. This
technological race necessitates substantial capital investment and expertise.
4. Environmental and Sustainability Concerns: The electronics industry faces mounting pressure to
adopt sustainable practices. Issues such as e-waste management, energy consumption, and
responsible sourcing of materials are becoming increasingly important. Companies are expected to
reduce their environmental footprint and adhere to stricter regulations on sustainability.
5. Geopolitical Risks: Geopolitical conflicts and trade tensions can disrupt supply chains and impact
the stability of the electronics sector. For example, the ongoing U.S.-China trade dispute has had
ripple effects across global supply chains, including those in ASEAN. These risks highlight the need
for strategies to mitigate potential disruptions and ensure supply chain resilience.
Country Stances
1. China: As a major player in the global electronics supply chain, China’s policies and actions have
significant implications for ASEAN. China is focused on enhancing its technological capabilities and
expanding its market presence. The Belt and Road Initiative (BRI) and investments in high-tech
sectors like semiconductors are part of China’s strategy to strengthen its position in the global
supply chain. ASEAN countries must navigate their relationship with China while addressing issues
such as intellectual property rights and trade imbalances.
2. United States: The U.S. is a key market for ASEAN electronics exports and influences global trade
policies. The U.S. has shown interest in strengthening supply chain resilience and promoting
technological innovation. Recent initiatives, such as the CHIPS and Science Act, aim to bolster
domestic semiconductor production and reduce dependency on foreign sources. ASEAN’s electronics
sector must align with U.S. policies on technology and trade to maintain access to this crucial
market.
3. Russia: While not a primary player in ASEAN’s electronics manufacturing, Russia’s stance on trade
and technology policies can impact regional dynamics. Russia’s emphasis on developing its
technological capabilities and its interactions with other major stakeholders can influence global
supply chain patterns. ASEAN must consider Russia’s position in the broader geopolitical context and
its potential impact on regional trade and technology policies.
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4. United Kingdom: The UK, as a major global economy, affects international trade and investment
flows. Brexit has altered the UK’s trade relationships with ASEAN countries, impacting electronics
exports and investments. The UK’s policies on trade agreements and technology regulations
influence ASEAN’s position in the global supply chain. ASEAN must adapt to changes in the UK’s
trade policies and explore opportunities for collaboration in areas such as technology and
sustainability.
5. France: France’s position on global trade and technology regulations has broader implications for
ASEAN’s electronics sector. France’s focus on sustainability and innovation impacts international
standards and practices. The French government’s policies on environmental regulations and
technology investments influence global supply chains, including those in ASEAN. ASEAN countries
must navigate these influences while promoting their interests in the global electronics market.
Possible Solutions
1. Enhancing Regional Integration: Strengthening regional trade agreements and collaboration
among
ASEAN member states can improve supply chain efficiency. Initiatives such as the Regional
Comprehensive Economic Partnership (RCEP) aim to create a more integrated regional market,
reducing trade barriers and facilitating cross-border investment. By enhancing regional integration,
ASEAN can create a more cohesive and efficient electronics supply chain.
2. Investing in Infrastructure: Increased investment in infrastructure, including logistics,
transportation, and manufacturing facilities, is crucial for enhancing supply chain efficiency.
Developing high-tech parks, improving transportation networks, and expanding logistics hubs can
streamline operations and reduce costs. For example, the development of smart logistics hubs can
enhance connectivity and efficiency within the region.
3. Promoting Technological Upgradation: Encouraging investment in advanced technologies and
innovation is essential for maintaining competitiveness. ASEAN should support research and
development (R&D) initiatives, foster partnerships with technology firms, and promote the adoption
of emerging technologies. Investing in areas such as automation, artificial intelligence, and 5G can
help ASEAN stay ahead in the global electronics market.
4. Supporting Sustainable Practices: Implementing policies and incentives to promote sustainable
practices is important for addressing environmental concerns. ASEAN can encourage the adoption of
green technologies, improve waste management practices, and set standards for responsible
sourcing of materials. For instance, implementing circular economy principles can reduce e-waste
and enhance resource efficiency.
5. Diversifying Supply Sources: Developing alternative supply sources and reducing dependency on
single markets can mitigate risks associated with global disruptions. ASEAN countries should explore
new trade partnerships, invest in supply chain diversification, and enhance regional production
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capabilities. Building resilient supply chains through diversification can help ASEAN manage risks and
maintain stability.
Questions a Resolution Must Answer
1. What specific measures can be taken to enhance regional cooperation and integration within the
ASEAN electronics supply chain?
2. How can ASEAN member states address the rising costs of raw materials and labour to maintain
competitiveness in electronics manufacturing?
3. What strategies can be implemented to promote investment in advanced technologies and
infrastructure development?
4. How can the region address environmental and sustainability concerns associated with electronics
manufacturing?
5. What steps can be taken to mitigate the impact of geopolitical risks and global disruptions on the
ASEAN electronics supply chain?
Moderated Caucus Topics
1. Regional Trade Agreements and Their Impact on Electronics Manufacturing: Discuss the role of
regional trade agreements, such as the ASEAN Economic Community (AEC) and RCEP, in improving
supply chain efficiency and reducing trade barriers. Explore how these agreements facilitate cross-
border trade and investment in the electronics sector.
2. Infrastructure Development for Enhanced Supply Chain Efficiency: Explore strategies for investing
in and improving logistics, transportation, and manufacturing infrastructure. Discuss the benefits of
developing high-tech parks and smart logistics hubs to enhance connectivity and streamline
operations.
3. Technological Advancements and Their Implications: Analyse the impact of technological
innovations, such as automation and artificial intelligence, on the electronics supply chain. Discuss
ways to foster innovation and investment in emerging technologies to maintain competitiveness.
4. Sustainability and Environmental Impact: Address the challenges of implementing sustainable
practices in electronics manufacturing. Discuss potential solutions for reducing e-waste, improving
waste management, and promoting responsible sourcing of materials.
5. Mitigating Geopolitical Risks: Examine the effects of geopolitical tensions and trade conflicts on
the electronics supply chain. Propose strategies to reduce risks, enhance resilience, and ensure
stability in the face of global disruptions.
Bibliography and Reference Links
1. ASEAN Secretariat: [ASEAN Economic Community](https://asean.org/asean-economic-
community/ )
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2. World Trade Organization (WTO): [Global Trade and Supply Chain Disruptions]
(https://www.wto.org/english/res_e/reser_e/ersd202001_e.htm )
3. International Trade Centre (ITC): [ASEAN Electronics Industry Overview]
(https://www.intracen.org/itc/market-info-tools/market-analysis/asean-electronics/)
4. McKinsey & Company: [The Future of Electronics Manufacturing in ASEAN]
(https://www.mckinsey.com/business-functions/operations/our-insights/the-future-of-electronics-
manufacturing-in-asean )
5. Asian Development Bank (ADB): [Investing in ASEAN Infrastructure]
(https://www.adb.org/documents/investing-asean-infrastructure )
