KUALA LUMPUR: Malaysia has retained its pole position in the Established Index as the most attractive manufacturing market of choice for future relocation according to a 'Cushman & Wakefield' report.
The credit goes to Malaysia's infrastructure services, which are conducive to productivity with the quality of infrastructure relatively high, despite some concerns surrounding water availability and power outages of late, it said.
"While other middle-income countries may be catching up with Malaysia in terms of infrastructure standards, a recent report by the World Bank indicated that Malaysia still ranks higher than many of these peers in terms of overall logistics performance in relation to quality of trade and transport infrastructure," it said in the report entitled "Manufacturing Risk Index 2017.”
Headquartered in Chicago, United States, Cushman & Wakefield provides commercial real estate services to help clients turn fixed assets into dynamic assets.
The "Manufacturing Risk Index" is an annual survey of the manufacturing sector which measures how political, economic, technological and environmental risks are managed during portfolio assessment and site selection by occupiers.
It contains an Established Index which ranks the 30 largest countries by manufacturing output and a Pioneering Index which ranks the top 10 manufacturing locations, by growth, and are less established in terms of output but have the potential to mature as a location of choice.
Malaysia, along with Taiwan, China, South Korea, Singapore, Thailand and Japan continued to dominate the top 15, occupying seven places within the top half of the Established Index.
Given the varying maturity level of technology adoption and priorities across Asia Pacific, each country in the region has a specific focus on areas of innovation to promote sector growth – such as smart manufacturing in the form of automation in China due to wage inflation or the offer of a connected society and strong conditions for doing business in Singapore, despite a higher cost profile, said the report.
In China, it said policies, either encouraging or directly funding investments in science and technology, technology transfer, sustainability, and infrastructure development, appear to be helping Chinese-based companies to create a significant competitive advantage through critical mass, although the region does face some competition from neighboring markets.
India, on the other hand, rose five places last year - given the present government’s focus on "Make in India".
The report said India is witnessing increased investments by global manufacturers.
"It is anticipated that this increase in investment will further support infrastructure improvement projects, especially as further policies and regulations actually take shape," it said.
On the overall assessment of the market, the report said in the short-term, manufacturing remained partly constrained by a lack of capital investment in plants, reducing near-term radical shifts in location decisions.
"But, in the medium-term, many questions would be raised about locations that fundamentally serviced a different era as we migrate into what management consultant, McKinsey, calls Industry 4.0 or the 4th industrial revolution," it said.
In the current environment, cost remains the most significant location criterion for many companies.
However, the Manufacturing Risk Index assessed other fundamentals such as operating conditions and country risk profiles.
"We anticipate these, and other criteria, becoming more important contributors to future decision making," it added. -- BERNAMA