Indonesia, Vietnam may gain if firms seek low-cost production: Savills

17 Jul '23

1 min read

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If firms look for low-cost production centres in Asia for labour-intensive and low-margin industries, Indonesia and Vietnam may benefit, Savills Asia Pacific recently said.
Global supply chains appeared to be returning to normal after three years of disruption, it is not business as usual for logistics, manufacturing and other industrial sectors, it noted.

Savills Asia Pacific, a subsidiary of London-based Real estate services company Savills, recently said if companies look for low-cost production centres in Asia, especially for labour-intensive and low-margin industries, nations like Indonesia and Vietnam may benefit.

Global supply chains appeared to be returning to normal after three years of disruption and the cost of shipping freight by sea or air had largely returned to pre-COVID-19 levels, it noted.

Container ships were no longer queuing outside major ports and businesses no longer cited ‘supplier delays’ as one of their most pressing problems, it said.

However, it is not business as usual for logistics, manufacturing and other industrial sectors, it clarified.

Cost continues to be key factor and a powerful lever of location-related decisions, it said.

Rising labour costs in China mean it is not as cost-effective as it once was, particularly when domestic incentives to re-shore and ongoing security concerns are factored in, Jack Harkness, director of regional industrial and logistics services at Savills, was quoted as saying by a Vietnamese media outlet.

Many firms with facilities in China are looking to complement rather than replace existing plants, Harkness pointed out.

Fibre2Fashion News Desk (DS)

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