Supply chain disruptions are costing ASEAN nations more than $17bn every year, according to calculations by TMX Global.
Disruptions – identified as mostly comprising ongoing Chinese Covid-19 restrictions, as well as from simmering geopolitical tensions – are calculated to be losing these nations around 0.47% of their annual sales revenues.
ASEAN nations comprise ten countries in South East Asia, including Singapore, Malaysia and Thailand. And while they are still predicted to be the world’s fastest-growing region – with GDP there forecasted to more than quadruple over the next two decades – the research indicates growth could be higher if supply chain issues didn’t still exist.
Commenting on the findings, Dean Jones, managing director of TMX Global (Asia), said: “Businesses in the region should not let their guard down when it comes to ensuring supply chain resilience.
“Supply chains thrive on predictability, and so the ability to take away as much of the uncertainty as possible through a resilient supply chain is crucial.”
Supporting research from the Economic Research Institute for ASEAN and East Asia (ERIA) found it tended to be the region's larger economies – including Singapore, Malaysia and Thailand – that saw greater negative supply and demand shocks to their supply chains during the pandemic than smaller economies like Brunei and Myanmar.
TMX Global's data echoes this, finding that supply chain problems still persist with Singapore now losing S$2.6bn (US$1.9bn) annually due to supply chain disruptions. Thailand, meanwhile, saw losses of ฿82.5bn (US$2.4bn) – also due to repeated disruptions caused by flooding – while Malaysia is losing RM8.7bn (US$1.9bn) due to supply chain disruptions.
Singapore’s lost sales were mostly due to Covid-19 restrictions and global political tensions, and latest figures from the Singapore Institute of Purchasing and Materials Management (SIPMM) have also reported that Singapore’s latest manufacturing sentiment “does not bode well”. It dipped by 0.1 point from the previous month, to post a fourth month of continued contraction, at 49.7.
Greg O’Shea, country manager of Malaysia and Singapore at TMX Global, said: “While Singapore fared better than its regional counterparts during the pandemic, businesses in the country were not exempt from the effects of supply chain disruptions.
“In fact, some businesses are still feeling the impact of ongoing disruptions. These include delays in raw material shipments, higher freight costs driven by global shortages in containers and vessels, as well as port congestion.”
To negate this, the Singapore government has recently introduced its S$18m “Supply Chain 4.0” Initiative, which aims to integrate digital and automated solutions to help businesses anticipate any disruptions to their supply chains better.
“The Singapore Trade Data Exchange – a public-private partnership – has also been launched, to enable the secure sharing of information between the supply chain ecosystem participants via a common data corridor.
Because it is a major automobile production hub, TMX Global found that Thailand has been particularly hit by raw material shortages. Not helping this has been floods in 2020 that impacted manufacturers in Ayutthaya and in Pathum Thani (Navanakorn). This had a considerable knock-on effect for some of the world’s biggest automakers.
Malaysia, meanwhile, has been impacted by the supply chain disruptions impacting semiconductor manufacturers since mid-2020.
O’Shea said: “As the world continues to recover from the impacts of the pandemic and as we approach the new year, now is the best time for businesses to already start putting some of the key lessons learnt from supply chain disruptions into practice.”
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