COVID-19 surge hits Japanese firms' supply chains in Southeast Asia

Hanoi (VNA) – Surging coronavirus cases in Southeast Asia, in such countries as Malaysia and Indonesia, have started affecting the supply chains of Japanese companies, with the possibility of regional production disruption becoming more real, the Kyodo news agency reported.

In Malaysia, where lockdown has been in place since June 1, plants belonging to Toyota Motor Corp. and Honda Motor Co. remain closed.

The lockdown has already been extended twice, with more stringent restrictions imposed since July 5 on Malaysia's capital region, where Japanese companies operating in the country are concentrated.

Mitsui Mining & Smelting Co., which makes smartphone materials in Malaysia, announced a production halt on July 5. Even though the government has since allowed the electronics industry to resume work, a press representative of the company says production will not return to earlier levels until sometime between late July and early August.

Kyodo noted Japanese companies have also been hit hard in Indonesia, where daily new infections surpassed 40,000 on July 12. A survey conducted by the Japan External Trade Organisation (JETRO) showed many manufacturers decrying the increase in infections and the impact on their operations. One company reported having 18 percent of its workforce infected.

Also finding it difficult to operate at full capacity due to restrictions imposed on people's movements, many Japanese companies operating in Indonesia are considering sending their Japanese expatriates back home.

An official of a Japanese automaker in Southeast Asia said in the region, where vaccine rollouts remain slow, it is difficult to make a one-year forecast. The difference between the coronavirus pandemic and natural disasters lies in the former having a long-term impact on supply chains and hitting multiple areas simultaneously.

Thailand, considered a linchpin of Japanese companies' production networks in the region, has had a curfew imposed on the Bangkok region since July 12. But that has yet to be accompanied by strong restrictions on corporate operations.

Kyodo cited Kitami, a researcher at JETRO Bangkok, as saying that while Japanese companies are doing their best amid the pandemic, "there is a possibility that if infections continue to spread in other countries, regulations as strong as Malaysia's could be adopted there."

That could sap the appetite for investment, he said./.