ASEAN Market Watch: Indonesia Seeks Engineers, ASEAN ICT Masterplan, and Singapore-Malaysia High Speed Rail

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Indonesia faces shortage of engineers

Indonesia’s annual shortage of around 30,000 engineers is becoming a key obstacle to its infrastructure development plans. Currently, Indonesia has 57 million skilled workers but it would need 113 million by 2030 to meet the country’s requirements. Around 20 percent of Indonesia’s six million university and postgraduate students pursue Islamic studies, with most students ending up with unrelated jobs.

According to a 2015 national labor force survey, less than ten percent of Indonesia’s 250 million citizens have a university-level education. Of those, only eight percent choose an engineering study and more than half of these graduates work in different fields, such as banking. The government believes that the country needs a more skilled workforce if they are to keep up with other ASEAN countries and meet the Master Plan for Acceleration and Expansion of Indonesia’s Economic Development’s (MP3EI 2025) ambitious targets, which will be difficult to achieve with substantial infrastructure gaps.

Achieving Indonesia’s infrastructure development goals, which range from sea projects, airports, highways, and power plants, necessitates a technical workforce. The government is taking steps to establish more industry-oriented engineering colleges, technical institutes, and state-funded scholarships. The last few years have seen improvements, with 57 percent of Indonesians completing education after primary school in 2015, compared to 40 percent in 2002. Furthermore, the share of college-age Indonesians attending universities has risen from 20 percent to 25 percent over the last decade. However, economists believe that Indonesia still needs to do more to meet its infrastructure development goals by 2025.

Professional Service_CB icons_2015 RELATED: Pre Investment and Market Entry Advisory from Dezan Shira & Associates

Philippines: Government pursues program to improve manufacturing services

The Philippine Institute for Development Studies (PIDS), a state think tank, has advised the country in a recent study to prioritize the role of services in reviving the manufacturing sector to enhance competitiveness. The government’s 2016 Manufacturing Resurgence Program (MRP) focuses on rebuilding existing capacity, strengthening new facilities, and maintaining the competitive advantage. It also seeks to reform the agriculture manufacturing industry, smallholder farmers, and agriculture cooperatives through product development, value adding, and integration with larger organizations for marketing and financing purposes. The program seeks to address supply chain gaps, raw material access, expansion of domestic market, and exports for locally produced products. The goal is to achieve a deeper participation in the global value chain (GVC) and increase product competitiveness. Achieving the goal would require tackling issues such as smuggling, unreliable power supplies, uncompetitive exchange rates, and high logistics and energy costs. Other issues such as linking of SMEs and large firms, supply chain constraints, human resource development, and innovation should also be addressed to maximize competitiveness.

Apart from identifying areas where the manufacturing sector could be improved, the study also suggested that the government should prioritize services to enable manufacturers and exporters to move up the GVC. To do so, four types of upgrading have been identified: process, product, functional, and chain upgrading. Process upgrading requires streamlining production to lower costs, while product upgrading demands moving to more sophisticated product lines. The Philippines’ 26.67 percent share of services in manufacturing exports is one of the lowest in Asia, second only to Indonesia. The top two ASEAN countries are Singapore and Malaysia, with shares of 43.03 percent and 32.76 percent, respectively. As per the PIDS report, the Philippines need to bring in reforms and improve the regulatory regime for further inclusion of services such as ICT to sustain competitiveness and manufacturing resurgence.

ASEAN ICT Masterplan 2020 celebrates successful first year

In the recently concluded 16th meeting of the ASEAN TELMIN (Telecommunications and Information Technology Ministers), the member countries welcomed the progress made during the first year since the implementation of the ASEAN ICT Masterplan 2020 (AIM 2020), which seeks to achieve a more digitally-based economy. The member countries also laid down a set of key performance indicators to allow the monitoring of the impact of guidelines and measures implemented in AIM 2020. A framework for personal data protection was adopted, which establishes guidelines to strengthen the personal data protection mechanism in the region. The members also indicated their support for international mobile roaming services within the ASEAN countries to provide travelers and local businesses with an affordable way to communicate. Additionally, they proposed to increase broadband capacities across ASEAN and to adopt an ASEAN Cybersecurity Cooperation Strategy which calls for coordination among member countries for cybersecurity activities.

ASEAN members also acknowledged the support of its member countries’ partners China, South Korea, Japan, EU, and US in enhancing ICT policies, quicker adoption of new technology, and improving cybersecurity capacity across the region. China is working with ASEAN on developing ICT infrastructure and integration of internet with the manufacturing industry. On the other hand, the Japan-ASEAN cooperation seeks to promote cybersecurity through their ASEAN-Japan ICT Fund, while South Korea, EU, and US collaborate with ASEAN in areas such as The Internet of Things, broadband enhancement, cybersecurity, e-commerce, and telecommunications.

The next meeting of the members will be held in Cambodia in 2017.

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Singapore, Malaysia sign agreement for high speed rail project

The governments of Singapore and Malaysia signed a bilateral agreement on December 13, 2016 for the Singapore-Kuala Lumpur High Speed Rail (HSR) project. The rail lines will be linked to a bridge over the Straits of Johor. The agreement was signed by Coordinate Minister for Infrastructure and Minister for Transport Khaw Boon Wan (Singapore) and the Minister in the Prime Minister’s Department Abdul Rahman Dahlan (Malaysia). The rail project is scheduled for completion in 2026.

The agreement comes after a Memorandum of Understanding (MoU) was signed in July 2016. Around nine miles (15 km) of the HSR will be in Singapore while the remaining 208 miles (335 km) will be in Malaysia. The project will have eight stations between Singapore and Malaysia and trains are planned to reach a maximum speed of 186 miles (350 km) per hour, hereby expecting to cut travel time between the two countries to 90 minutes. Custom and Immigration facilities will be located in Singapore, Bandar Malaysia, and Iskandar Puteri. As such, international travelers will only need to go through customs and immigration at the departure point. The rail project is expected to boost connectivity and enhance business ties between the two countries.


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