Page 50 - ASEAN-EU Dialogue 2018: Regional and Inter-Regional Economic Cooperation: Identifying Priorities for ASEAN and the EU

Table 8.6: Selected ASEAN Countries: Grubel Lloyd IIT Indices for Electronics and
Electrical (E&E) Goods, 2010-2016

Country/Year 2011/2 2013/4 2015/6 2017/8
Indonesia 0.61 0.53 0.55 0.5
Malaysia 0.92 0.92 0.92 0.90
Philippines 0.92 0.87 0.77 1.0
Singapore 0.87 0.89 0.87 0.9
Thailand 0.96 0.93 0.99 1.0
Vietnam 0.65 0.90 0.94 1.0
Source: Authors’ estimates.

Table 8.6 shows the overwhelming importance of IIT in the ASEAN countries with major E&E
exports, the sole exception being Indonesia. With the exception of Singapore and possibly
Malaysia, location of supply chains in Southeast Asia is often to take advantage of low cost
labour in host countries. Labour intensive (relative to other parts of the supply chain) assembly
is what ASEAN host countries specialize in. In this situation, the transfer of technology may
be limited. It is therefore highly plausible for low domestic technological capability to be
compatible with relatively high technology-intensive exports.

It can also be noted that if assembly operations are undertaken, then not much value is added
to the products in these chains. One way to test this is to review the value of net exports, which
is exports minus imports of the same product, in this case, E&E. This is shown in Table 8.7.

Table 8.7: Selected ASEAN Countries: Net Exports of E&E as % of Manufactured Exports,
2010-2016

Year 2010 2012 2014 2016
Country Gross Net Gross Net Gross Net Gross Net
Indonesia 25.6 -33.1 26.8 -46.7 24.1 -39.9 21.7 -57.7
Malaysia 67.1 9.9 65.6 8.6 67.0 9.7 68.1 12.0
Philippines 69.7 12.3 70.7 15.8 70.9 26.1 75.0 3.1
Singapore 71.6 15.9 67.4 13.3 67.6 15.2 70.2 15.9
Thailand 46.6 3.2 43.4 -6.8 44.0 0.5 45.3 1.1
Vietnam 23.7 -25.8 39.1 -9.0 42.8 -5.0 49.1 -1.3
Source: UN Comtrade Database

Table 8.7 shows the wide disparity between gross export and net export values. For Malaysia,
the Philippines and Singapore, and in the near future Vietnam, from shares of gross exports in
manufactured exports of around 70%, the net export share of manufactured exports is reduced
to less than a quarter of the gross export share. This translates into high import content for these
countries’ E&E exports.

A more direct way to visualize the domestic contribution of E&E exports is to calculate the
value-added of these exports. While such data are unavailable for ASEAN countries, the
modest values of net exports suggest that such value-added should be modest. Further, the
technology intensity of E&E exports has most certainly originated from imports.

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