Pegatron will join other iPhone manufacturers Wistron and Hon Hai Precision Industry in expanding operations in Vietnam.
The release of the three-stage plan – which will culminate with the shift of Pegatron’s research and development centre from China to Vietnam – coincided with reports Foxconn, another Taiwanese giant, is shifting more of its Apple manufacturing from China to Vietnam.
Last month Reuters reported Foxconn would expand its plant in Vietnam’s north-eastern Bac Giang province to accommodate the new assembly lines. The company has been diversifying out of China for years.
Other market watchers say recent investment decisions demonstrate the different approaches taken by south-east Asian nations to woo multinationals.
Regulatory certainty
Indonesia has taken steps to streamline regulation and reduce generous worker entitlements this year, but the country still views global giants as a source of industrial development. Various government departments do impose strict requirements for local input or content – demands that can change at will depending on the minister in charge.
In contrast, Vietnam makes a point of providing the regulatory certainty multinationals value.
Recent investment decisions by Apple and its suppliers reveal how these strategies can play out.
In 2017, Apple overturned a ban on iPhone sales in Indonesia by committing $US44 million to a research and development facility, thus addressing the Indonesian government’s demands it feature local content.
However, that pales against the jobs generated by the Apple global machine in Vietnam in recent years. Although Indonesia can rely on its huge consumer market to pull in funds – in recent months the likes of Google and Amazon have piled into Indonesian tech companies Gojek and Tokopedia – it struggles to attract investment in factories.
Now multinationals can also consider differences in pandemic management. Nomura economists have noted Asia as a whole has done a much better job of containing the coronavirus than Western nations.
Although Indonesia could soon be rolling out a China-developed vaccine, thousands of new cases a day put its recovery behind Vietnam, which has logged just 1377 cases since the pandemic began.
While it will be a mixed story of recovery, overall Asia is well positioned to benefit as global growth takes off next year, once the virus is suppressed, according to Mr Subbaraman.
“Asia is in a pole position to attract the biggest share of capital inflows next year. As uncertainty over COVID-19 eases, business will accelerate investment decisions,” he said.
