Manufacturers surveyed by Standard Chartered said much of the Association of Southeast Asian Nations remains to be the preferred destination for China manufacturers looking to relocate their production facilities.
Standard Chartered said Cambodia and Vietnam were the most favored destinations, as in prior years, by those opting to move capacity overseas.
However, Malaysia was not seen as a popular destination for their relocation by China manufacturers this year.
The report also showed that only less than five respondents would move capacity out of China to that country in 2016.
In the 2017 survey, not one of the respondents selected Malaysia as the preferred destination to relocate their manufacturing facilities.
The report also said that while Vietnam’s share of the response, which is 23 percent, is still high, it dropped materially from the 42 percent it got in 2016.
The reason is that the firms have developed an interest in other ASEAN markets such as Myanmar and Bangladesh for cheaper labor.
In addition, the report said the termination of the Trans-Pacific Partnership or TPP trade pact is also one of the reasons cited for investing in ASEAN.
Since 2015, foreign direct investment in ASEAN has grown at a compound annual growth rate of 1 percent.
Comparatively, FDI has grown globally and 10 percent in Asia, according to Standard Chartered.
