Crisis Effects on the Electronics Industry in Southeast Asia

Abstract

The financial crises of 1997–98 and 2008–09 each had a debilitating effect on Southeast Asian market economies because of the dominance of exports and foreign ownership. However, the 1997–98 financial crisis positively impacted electronics exports, production and employment, due to a booming US economy. The contraction in demand in the US during the 2008–09 crisis reduced electronics exports from Southeast Asia with the exceptions of Indonesia and the Philippines, which were shielded by regional linkages with Singapore, Malaysia and China. Foreign labour repatriation and fiscal stimulus packages helped Malaysia and Thailand rebound quickly from the 2008–09 crisis. In the Philippines, the 2008–09 crisis expanded further the casualisation of labour as retrenched workers from Malaysia and Singapore returned home. State grants encouraged upgrading in Singapore and to some extent in Malaysia, but the liberal approach of Indonesia, the Philippines and Thailand limited them to low-value-added activities. However, Singapore’s and Malaysia’s transnational-based strategy failed to reproduce the technological leapfrogging experience of South Korea and Taiwan. Also, Malaysia’s ethno-patronage policies discouraged upgrading in national firms.