Global Insight | March 2023

Investing in manufacturing – Top investment destinations in Asia

Global markets today are becoming more interconnected with liberalized trade policies, growing access across countries, and increasing bilateral agreements, led by technological revolution and digitization.

While manufacturing grew at a rapid pace in the United States, Europe, and Japan after World War II, multinationals started moving their large-scale manufacturing processes to China in the late 20th century.

Businesses are more interdependent on each other than ever before. While the concentration of bulk manufacturing processes in certain geographies has allowed economies of scale and facilitated robust supply chains, they have been subject to heavy changes, which were further accelerated by the pandemic. Several crises including geo-political conflicts, international trade tensions, continuing effects of the pandemic, etc. have urged companies to diversify and minimize their risks by assessing alternative manufacturing destinations.

South Asia has emerged as a preferred alternative for foreign direct investment. Emerging countries such as India, Thailand, Malaysia, Vietnam, etc., have considerable opportunities to provide solutions to fill the gap. In recent times, these economies have picked up the baton and have provided advantages to address manufacturing concerns in the areas of cost competitiveness, domestic market absorption, large labour, talent availability, etc. to the international business community.

With this backdrop, it would be interesting to assess these new potential manufacturing destinations. In this document, we assess nine South Asian countries through a relative comparison of various parameters from a business standpoint.

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