Southeast Asia emerged as a new world region just after World War II. In 1967 a group of states in the region—Indonesia, Malaysia, the Philippines, Singapore and Thailand—joined together and formed an alliance called the Association of South East Asian Nations (ASEAN). Since then the organization has expanded to include Vietnam, Laos, Cambodia, Burma (Myanmar), Singapore, Indonesia, Brunei and East Timor.
Other countries around the world refer to the five countries including Vietnam, Laos, Cambodia, Thailand and Myanmar as the Land States, or Peninsula States. The other five countries including Malaysia, Singapore, Indonesia, Brunei and the Philippines are called Ocean States, or Island nations.
Today, ASEAN is one of the most dynamic and promising regions in terms of economic development globally, which should be attributed to its location, peoples, customs and natural resources. In this fertile land, the nonwovens industry is looking to further increase its development. Leading global industry players favor the long-term prospects for growth in this huge market while investment dollars in the sector has grown stronger and stronger.
Populations, economic status and prospects of Southeast Asia
ASEAN covers a land area of 4.57 million square kilometers and has a population of approximately 560 million people, among which, about 33.5 million people are overseas Chinese, accounting for 6% of the total population in ASEAN, and 73.5% of 45 million overseas Chinese spread around the world.
Since the 1980s, at least 2.5 million Chinese and their families have immigrated into ASEAN, plus another two million immigrants from Indian and one million from the rest of the world.
The abundant natural and human resources in ASEAN has laid a solid foundation for its economic development. Traditionally, the economy in the region followed a simple structure and relied heavily on monsoon cultivated rice agriculture and tropical plantations.
Since the 1960s countries in the region started down the road of developing an export-oriented market economy combined with state intervention. Major features of this new market economy included a focus on manufacturing sector development, with priorities placed on the textile and assembly industries that are labor-intensive and produce fast capital turnover. Another feature of this new system was to expand the production and export of commodities.
Today, ASEAN has become one of the most dynamic and promising regions. It will play an increasingly important role on the world stage as it occupies a strategic position in the world with new political and economic structures in the future.
Progress of ASEAN nonwovens industry development
In the last decade ASEAN has become a major focus of the world economy, with more and more multinational companies from various industries around the world establishing a presence here. It is the huge low cost labor pool along with the vast consumer market that has attracted their investment dollars here. Meanwhile, these key elements in turn are helping to drive the industrial advancement of the region.
The same also goes for the nonwovens industry. Leading global nonwovens manufacturers continue to build plants here in the hope of generating high profits with lower labor cost competitiveness, while at the same time boosting the whole nonwovens industry development in ASEAN with Thailand and Indonesia leading the way.
ASEAN nonwovens industry has grown rapidly due to it reliance on the importation of nonwoven products from other markets outside the region.
Driven by the rising demand for nonwovens in China and ASEAN market, Thailand, Indonesia and India have been valued as promising growth markets. Some Japanese nonwovens manufacturers have already built facilities in Thailand due to the positive outlook.
For example, in September 2011, Asahi Kasei installed a spunbond nonwovens production line in Thailand with annual capacity of 20,000 tons per year. By the end of 2012, Toray expanded its spunbond nonwovens capacity from 30,000 tons per year to 50,000 tons per year in Thailand.
JNC also formed a company that sells and manufactures spunbond nonwovens in Thailand through its subsidiary JNC Fibers. The new location is helpful in meeting end users’ growing demand for hygiene products in ASEAN and the new company will also serve other emerging markets in India and the Middle East.
In September 2011, Toray Japan established P.T. Toray Polytech Jakarta (TP) in Jakarta, Indonesia, with a polypropylene filament-based spunbond production line that yields 20,000 tons per year of nonwovens. In April 2012 the production line started operations 2 months ahead of the schedule. The PP spunbond nonwovens fabrics can be used as top layer for baby diapers.
According to Toray, due to the rapid economic development of ASEAN, and the changes in life style stimulated by increasing earnings, the disposable diaper market in Indonesia is expected to grow 14% a year on average. The demand will increase from 1.9 billion pieces in 2010 to about 3.7 billion in 2015. As disposable hygiene manufacturers are trying to source raw materials from the local market, PP spunbond fabrics demand is expected to reach 84,000 tons in 2015 in ASEAN.
Eye on India
India is technically a part of South Asia, but is often discussed within the context of growth in the Southeast Asia market due to its close proximity. India’s textile industry is currently witnessing a period of rapid development with huge market potential. According to an analysis by INDA, Association of the Nonwoven Fabrics Industry, the market demand for geotextiles, wipes, sanitary napkins and baby diapers in India are growing at 23%, 12.8%, 20% and 5.6 % respectively, offering a very promising future for the nonwovens industry.
The Indian government values its industrial textiles industry development and plans to invest 500 million rupees to promote the advancement of the sector in the coming years.
It can be said that the development of India’s nonwovens industry is under the spotlight while industry observers are closely watching this Asian giant. Experts predict that in the near future, India will be a very important force in the global nonwovens industry. Many major leading players from North America and Europe are choosing to build plants there.
According to statistics, nonwoven products manufactured and sold in India only accounts for about 6% of the Asian market, however, many Western companies have expressed certainty that India’s nonwovens market will definitely get on the fast growth track.
In 2012, Big Guns, an American company, announced that the company would invest a new spunmelt production line with 20,000 tons per year capacity in Nashik, India, which is scheduled to start its run in mid 2014. The second production line will also be built and put into operation in 2016. The company’s management claimed that this plant will be the most advanced nonwovens plant in India.
Recently, Fiberweb formed Terram, a subsidiary in India. The investment includes a geotextiles production line and a spunbond production line. As advanced geosynthetics, lightweight geotextiles are reliable elements that play a critical part in roads, railways and other infrastructure construction projects.
“India is investing heavily in its infrastructure to support its rapid economic development,” says Haner Dun, marketing expert at Fiberweb. “The market for geotextiles and geosynthetics will continue to expand.”
Fiberweb has formed cooperation with some local Indian customers. The country has become an important part of Fiberweb’s overseas market expansion plan. In addition, India also enjoys cost competitiveness in many aspects.
According to predictions from British Communication Corporation(BBC), by 2020, India’s domestic market size will be $14 billion. As the population increases and consumers become wealthier, this continued growth momentum will provide more opportunities for foreign investors and domestic players. For example, a spokesman for Andrew Webron Ltd., the U.K.-based bag filter maker, expressed clearly that the company will invest several needlepunch nonwovens production lines in India within two to three years.
Market potentials and advantages
Except Singapore, other countries in the region have less-developed economies, but they are catching up quickly, particularly India.
Currently, nonwovens consumption rate in India is 80 grams annually, while the figure for the U.S. and Europe is between 3.0 and 3.5 kilograms based on the growth rate from 2003 to 2007. Based upon the assumption that the average GDP growth rate from 2005 to 2050 is 4.6% for the U.S. and 13.27% for India, it is predicted that in 2035, the average nonwovens products consumption rate in India will be at the same level as the U.S. and Europe.
That is to say, where it will have taken 40 years for the developed world to consume three kilograms of nonwovens per year per capita on average, India will need only about 30 years time to reach the same level of consumption. The market potential and advantages are significant.
In addition, Technotex, the specialized industrial textiles and nonwovens exhibition in ASEAN is co-organized by Federation of India Chambers of Commerce & Industry (FICCI) and Ministry of Textiles, with great support from the Indian Technical Textile Association (ITTA). The show has great influence reaching more than 79 countries and regions including Asia, Africa, Europe and America. It offers a platform for industry players to present new products, exchange new technologies and to test new products, as well as provides good opportunities for developing customers, expanding markets and branding company images.
In 2013, the regional industry event attracted 114 exhibitors and 5,200 specialized attendees from 12 countries and regions including the U.S., Taiwan, mainland China, Japan, Switzerland, UK and Germany. Based on the positive outlook of the Indian industrial textiles and nonwovens market, 90% of these exhibitors expressed their willingness to exhibit at Technotex 2014. As the largest industry event in the region, the exhibition space is expected to reach 10,000 square meters and attract more than 200 exhibitors from around the world in 2014.
The large population of ASEAN provides abundant labor resources and competitive labor costs for investment in the region. Due to changes in consumption style, along with population growth, the major nonwovens application of disposable consumer goods such as baby diapers and sanitary napkins will be expanded further in the future.
Moreover, as the government is strengthening its investment in infrastructure development such as highways and bridges, the use of nonwovens and industrial fibers for civil engineering will also increase significantly. All these factors prove that there is great market potential and advantages for the nonwovens industry in ASEAN.
Today, China has surpassed the U.S. in terms of nonwovens output and is a great example of the emerging economies’ great market potentials. ASEAN nonwovens market, as it also enjoys great labor cost advantages and huge market opportunities, will be a promising land for future investment and offer great possibilities. As time passes by, the great economic and social development of ASEAN and China will further strengthen the bilateral and multilateral relations between the countries in the region.