Malaysia and Singapore

Since the early 1980s it has become increasingly clear that rapid upgrading of industrial technologies is imperative in order to maintain high rates of economic advancement in the ASEAN region. In Malaysia, for example, it has been shown that, if the industrial wage rate was to rise by 50 per cent from the current level and other things to remain constant, a vast majority of the electronics assembly plants would lose their comparative cost advantages in the sense that the domestic resource cost coefficient would exceed unity.1 If the country is to compete in the export markets for manufactured goods, it needs to introduce more advanced technologies and microelectronics-based factory automation (FA) machinery in particular. With sizeable proportions of their labour force unemployed or underemployed, policy makers of the ASEAN-42 are, however, naturally concerned about potential labour-displacement effects of the new technology.