If measured by the annual growth rate of GDP, the economies of the five major countries in Southeast Asia (Thailand, Malaysia, Vietnam, the Philippines, and Indonesia) have all experienced a decline in 2020. The new crown virus has had a devastating impact on key industries in these five countries, especially those countries that rely heavily on tourism. Like almost every country in the world, the new crown virus has also caused border closures, business shutdowns and a sharp rise in unemployment. The government's response is to substantially increase economic stimulus and unemployment spending.
Although the economic prospects of these regions in 2021 are uncertain, the overall prospects are optimistic. GDP growth will depend on the management of vaccines, the control of disease, and the management of exports and internal lockdowns. China’s economic strength is expected to boost Asia’s economic prospects and provide support for these five countries’ exports to China.
Table 1 shows preliminary estimates of the GDP growth of these five major countries in Southeast Asia in 2020. Only Vietnam has achieved positive GDP growth, an increase of 2.6%. After Indonesia, the region's largest economy, has achieved a 5% annual growth rate since 2014, it has recorded a -2.4% decline in 2020.
In Malaysia, GDP fell by 5.2%, after the previous performance in 2019 was weaker than the same period before. In Thailand, GDP in 2020 is 6.4% lower than in 2019. The Philippines' GDP has fallen the most, with GDP falling by 9% in 2020. When assessing changes in GDP in small economies, one must be aware that the year-on-year changes in GDP are greater than those in larger economies. As the total economies of various countries grow, the annual GDP growth measured by the average annual percentage change will weaken over time.
The impact of the new crown epidemic on the nonwovens industry of these five countries is far less than its impact on the overall economy. Due to the surge in demand for domestic and export protective products (protective clothing, masks), the production of non-woven fabric rolls has been promoted. Just like in other countries, consumer demand for disinfectant wipes and other wipes and sanitary products (diapers, etc.) are on the rise.
Driven by favorable demographics, economic conditions, increasing market penetration, and strong local and export demand, Southeast Asia remains a very promising region for the nonwovens industry. Despite the uncertainty brought about by the new crown epidemic, the impact of the recent economic slowdown in the region and the relatively small impact on manufacturing investment and consumer spending will be quickly resolved through economic stimulus plans.
In Southeast Asia and China (the market penetration rate is still low), the gradual increase in the market penetration rate of disposable and durable nonwovens is a positive factor for the good growth of demand for nonwovens in these major Asian markets and their exports. As time goes by, it is expected that the nonwoven fabric manufacturers in the above five Southeast Asian countries will benefit from the strong demand from China, Japan, and other countries within and outside the Asia-Pacific region. The largest end market for nonwovens will be sanitary products, followed by durable geotextiles and other markets.
Several global and regional manufacturers of disposable hygiene products have already deployed in Southeast Asia, including Kimberly-Clark, Johnson & Johnson, Kao, Procter & Gamble and Unicharm. The increase in the production capacity of sanitary products in Southeast Asia indicates the growth in demand in the region and also proves that the region is increasingly becoming a manufacturing base for exports to other Asian regions.
In 2020, the production capacity of nonwovens in Southeast Asia will mainly include spunbond/spunmelt, staple fiber needling and/or thermal bonding, and polypropylene spunbond needling technology. There are also some small-scale hot air production lines that are constantly developing.
During 2015-2020, the production capacity of fine-denier spunbond and spunmelt polypropylene nonwovens installed in five countries/regions in Southeast Asia increased by an average of 6.6% annually, from 185,000 tons in 2015 to 255,000 tons in 2020. Among the 70,000 tons of new capacity added during this period, CNC/Fitesa has 15,000 tons in Thailand, Asahi (Thailand) and Toray (Indonesia) each have 20,000 tons, and Fibertex (Malaysia) has 15,000 tons.
CNC/Fitesa opened a new Reifenhauser 5 production line at the end of 2020, with an annual production capacity of 33,000 tons. Asahi will install a new production line with a capacity of 15,000 tons in Thailand in the second half of 2021. During the same period, Fibertex will put into production the Reifenhauser 5 production line in Malaysia, with an annual production capacity of 15,000 tons. Both production lines will be put into operation in 2022. Through these investments, the annual production capacity will increase by 63,000 tons (24.7%). These new capacity may lead to an oversupply situation in the region.
In 2020, the annual production capacity of Southeast Asia's fine denier and mid-denier spunbond/spunmelt polypropylene technology will be 264,000 tons, accounting for approximately 7% of the total global production capacity of this technology category.
The production capacity of this technology is mainly concentrated in Thailand. Currently, four manufacturers account for 43% (114,000 tons) of production capacity. In Malaysia, the total production capacity of the two manufacturers is 94,000 tons, accounting for 36% of the region's production capacity. In Indonesia, the production capacity of the two manufacturers is 52,000 tons, accounting for 20% of the region's production capacity. The Philippines also has a small amount of production capacity.
In Southeast Asia, most large nonwoven fabric manufacturers only use fine-denier polypropylene spunbond/spunmelt technology and supply a large number of sanitary products to the market. As of the end of 2020, Fibertex (Malaysia) is the largest nonwoven fabric manufacturer in Southeast Asia with a production capacity of 85,000 tons.
Asahi (Thailand) has a production capacity of 40,000 tons of fine denier spunbond in early 2021. Fitesa/CNC (Thailand) has a fine-denier spunbond production capacity of 72,000 tons at the beginning of 2021, and Mitsui (Thailand) has a production capacity of 30,000 tons.
Southeast Asia’s fine-denier spunbond/spunmelt producers will continue to rely mainly on exports to achieve an acceptable level of capacity utilization. Although the demand for disposable nonwovens in Southeast Asia is growing, it is still small compared to the capacity of the installed production lines in the region.
Unitika put into production a 30,000-ton polyester spunbond production line in Thailand in 2017, making it the sixth largest nonwoven fabric manufacturer in Southeast Asia. This series of products are used in carpet backing, geotextiles, roofing materials, automobiles and other industrial applications.
Airflow nonwovens producers in Southeast Asia include OceanCash in Malaysia, JNC in Thailand and Daiwabo in Indonesia. Nanliu announced that it will install new spunlace and airflow nonwoven production lines in India and will also invest in new production lines in Vietnam. The details have not been announced yet.
If measured by the annual GDP growth rate, the economies of the five major Southeast Asian countries (Thailand, Malaysia, Vietnam, the Philippines, and Indonesia) have all experienced a decline in 2020. The new crown virus has had a devastating impact on key industries in these five countries, especially those countries that rely heavily on tourism. Like almost every country in the world, the new crown virus has also caused border closures, business shutdowns and a sharp rise in unemployment. The government's response is to substantially increase economic stimulus and unemployment spending.
Although the economic prospects of these regions in 2021 are uncertain, the overall prospects are optimistic. GDP growth will depend on the management of vaccines, the control of disease, and the management of exports and internal lockdowns. China’s economic strength is expected to boost Asia’s economic prospects and provide support for these five countries’ exports to China.
