The ASEAN Economic Community: A big bang for regional supply chains

The AEC is a tremendous opportunity to strengthen the ASEAN block. Singapore, Thailand and Malaysia will benefit the most, already acting as springboards to international value chains.

AEC companies will benefit from peer-pressure and synergies. First, they will access new markets and trade opportunities (+USD3.8bn in 2015 and +USD9.9bn in 2016 overall), second they should reduce their transaction costs (up to +USD7bn in savings on export costs), third they will attract fresh financing from investors (+USD8bn per year) and finally, they will benefit from better financing conditions.

An interesting (and favorable) reshuffling of regional value chains is yet to come, including those including China.

Electronics, chemical, automotive and agri-food will benefit the most while machinery and equipment, textile and energy may lag behind.

Credit risk will certainly offer some surprises as competition, protectionism and sensitivity to regional (and global) shocks will disrupt the most vulnerable (textile, ICT) and most political (mining, automotive) industries.