Technical Assistance I
The Directorate of ASEAN Negotiation of the Directorate-General of International Trade Negotiation (DGITN) in the Ministry of Trade, with technical support from ARISE+ Indonesia, conducted a study on Strengthening the Regional Value Chain (RVC). The study findings were presented in an internal working session on Tuesday (19/04).
The study aimed to support the Government of Indonesia in preparing to assume the ASEAN Chairmanship in 2023 by providing strategic recommendations on economic policy priority to develop ASEAN (Association of South-East Asia Nations) into a centre of Global Value Chains (GVCs) and increase the participation of ASEAN Member States in RVCs for three selected sectors: electronics, automotive, and medical devices.
The electronics and automotive sectors are critically important sectors in ASEAN, contributing around US$ 268 billion to Gross Domestic Production (GDP) and US$ 177 billion, respectively, creating 2.4 million jobs in each sector in the region. Meanwhile, the healthcare sector, specifically the medical devices industry, is considered a high priority sector to be integrated across the ASEAN to support the establishment of the ASEAN Economic Community (AEC).
The study, led by ARISE+ Indonesia Senior Expert Paul Baker, CEO of International Economics Consulting, analysed the three sectors' regional performance in Global and Regional Value Chains (RVCs), using deep-dive research to get insights into the structure, evolution and untapped regional trade potential. The study also reviewed the sectoral policies that are shaping the industry, both from the public and private governance perspectives, and investigated future industry trends and specific opportunities in each sector over the medium term. It sets a number of recommendations for regional coordination and action.
In the automotive sector, Industry 4.0 presents tremendous opportunities, and it is expected that autonomous driving vehicles, connectivity and the Internet of Things, electrification, and shared mobility vehicles (ACES) will drive growth.
Process Automation will be critical in the electronics sector, with a rise in automation investments by nearly 78%, from US$ 59 billion to US$ 105 billion globally. Investment in additive manufacturing or 3D printing is also growing, with an estimated market value exceeding US$ 22 billion by 2025. The trend in the electronics sector is also moving toward quantum computing and digital twins.
The outlook of the medical devices industry also appears to be very promising. The estimated steady growth of over 5% in global annual sales can be expected over the coming years, reaching US$ 800 billion by 2030. The key products in the healthcare sector include Medical Wearables, Minimally Invasive Devices, Non-Invasive Devices, Additive Manufacturing, Telehealth and Telemedicine.
Environmental, Social and Governance are also becoming an important element that drives the development of voluntary standards across the three sectors. While ensuring sustainability is critical, this could create a challenge and entry barriers for SMEs to participate in the industries. Thus, proper regulations are needed to ensure inclusivity.
The study proposed several recommended medium-term to long-term actions to strengthen ASEAN's competitiveness, positioning and resilience across GVCs and RVCs, including enhancing the policy framework for ASEAN RVC integration, upgrading ASEAN trade protocols, focusing on leveraging ASEAN and the recently enforced Regional Comprehensive Economic Partnership (RCEP), and other bilateral Free Trade Agreement (FTA) opportunities for enhancing regional trade and investment. Finally, the study emphasises the need to address Non-Tariff Measures (NTM), improve transparency, monitoring, harmonisation, and recognition mechanisms, and upgrade technological and innovative capability whilst promoting responsible and sustainable investment and RVCs.
The Secretary-General of DGITN, Mr Ari Satria, commended the reports and expressed his appreciation to ARISE+ Indonesia, providing valuable technical support for DGITN since 2019.
"Thank you for the highly comprehensive and up-to-date reports. This is very beneficial to feed the development of economic policy priority of the ASEAN Indonesian Chairmanship in 2023," Mr Ari said.
