Subject
Investment needs in ASEAN's textiles and garments sector.
Significance
Textiles and garments will be a benchmark for the regional integration of manufacturing as ASEAN edges towards the ASEAN Economic Community (AEC) single market in late 2015. However, developing cross-border partnerships in garments production is constrained due to high costs and inadequate supply chains, deterring some investors looking to relocate low-end assembly operations from China.
Impacts
Integrating supply chains would reduce costs and over-reliance on imports, but infrastructure and transport limits will act as hurdles.
Producers will invest in additional capacity and upgrading of operations to meet buyer demands.
Emerging trade alliances could offer a competitive lifeline if producing countries commit to tariff reforms.
Pressure to reform intra-ASEAN labour mobility regulations may grow.