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Indonesia to Join BRIC? Exploring opportunities as mature economies continue to slow


We know that 2012 started with great hope and promise, and while this is in no means a down year generally, beyond the hot wireless devices, it's been fairly soft overall. The main reason for this softness comes not from a problem along the supply chain, inventory levels have been well managed, and thus far disruptions have been minor, but the dark cloud of macro-economic uncertainty continues to unsettle consumer and corporate confidence.

Evidence of this conservative corporate position is found in reduced or 'on hold' CAPEX plans, softening M&A activity, and weakening outlooks for 2H12 (see also this latest forecast for DRAM memory pricing from Smith, published in EBN). So what is happening during the present holding period?

With China's actual growth potential questioned across headlines, similar questions surround other BRIC nations' ability to break out and continue to reach double digit GDP growth. There are countries, such as Indonesia, that are garnering recognition and investment by many, especially by EMS providers, as MMI details in their latest edition of Manufacturing Market Insider. According to MMI's lead story, Hon Hai is the latest of the Tier 1 EMS providers rumored to be considering major investments in Indonesia. Presently, there are "[a] number of EMS providers already operat[ing] in Indonesia," according to MMI. Although, as they note, Indonesia is certainly more on the 'upcoming' locations list, still lacking the level of developed infrastructure as more mature EMS locations in Asia.

After last year's devastating natural disasters in Asia, and this week's unfortunate grid failures in India, there are many reasons to use the present, macro-economic wait-and-see time to consider means to geographically diversify global supply chains. While Europe continues to weigh on the global economy sentiment and semiconductor investment in Europe, the risk management strategy of geographic diversity is moving in synch with the emergence of the next set of BRICS.

Lisa Ann Cairns, Ph.D.
Written on Thursday, 02 August 2012 15:33 by Lisa Ann Cairns, Ph.D.

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