At a three-story factory in Karawang that used to make television remote controls, most of the fluorescent lights have been turned off. The hallways are nearly silent, and three-quarters of the workers have been laid off.
A pencil factory down the road closed last September, laying off 100 workers. Another nearby factory that turned out carved and painted wooden window frames shut down and laid off 800 workers. And two Toyota factories, one here in Karawang and another in a nearby city, have not renewed the contracts of 277 temporary workers.
“In our 11 years here, this is the worst situation with so many layoffs — not even in 1998 was it this bad,” said Abraham Sauate, the manager of the television remote factory, comparing today with the Asian financial crisis in 1997 and 1998. “The problem now is we don’t know where to go, and we don’t know how long it will last.”
China and Japan draw the most attention, but the global slump in manufacturing is spreading across Asia. Industrial production is dropping in South Korea at the fastest pace since record keeping began in 1975. Taiwanese exports dived 40 percent last month compared with a year earlier. And ports from Indonesia to Thailand are handling ever fewer shipping containers.
“There’s not a country in the region that is not slowing sharply or in outright recession,” said Stephen Roach, the chairman of Morgan Stanley Asia.
During the last crisis, investors took their money out of country after country. Asian leaders thought they had found a solution — increases in exports to the West, particularly of electronics. But that dependence on exports fed this crisis. Now US and European buyers are pulling their import orders from country after country. And while governments have short-term economic stimulus plans, long-term answers seem more elusive.
Hard times in factory towns are especially troubling in Asia, where countries depend on manufacturing for a far greater share of economic output than Western countries do, as much as 40 percent in the case of China and other big exporters.
That is triple the current 13 percent in the US, and much higher even than the US peak of 28 percent in 1953.
While all of Asia is suffering, some economies are feeling the effects of the global downturn less than others.
Many of these countries are latecomers to the world market. They have even lower wages than China and were just starting to benefit from the arrival of businesses seeking to avoid a rapid increase in wages and other costs in China from 2003 through last summer.
For example, Bangladesh’s exports are dominated by the sale of low-cost garments to mass-market retailers like Wal-Mart that have fared well as consumers have begun shifting toward thriftier purchases. Garment workers in Bangladesh still earn US$40 to US$50 a month, barely half the minimum wage in export-oriented coastal cities in China.
Economic difficulties in the West “will have an impact on Bangladesh in terms of our growth rate, but I’m not concerned it will eat into our share” of the global garment market, said Mustafizur Rahman, the executive director of the Center for Policy Dialogue, a nonpartisan research group in Dhaka that specializes in trade and other economic issues.
The numbers bear that out. While overall US imports dropped 12 percent in November compared with a year earlier, imports rose from Bangladesh and from Vietnam. Each country shipped more knit apparel to the US, and Vietnam also shipped more furniture.
Few countries were hit harder in the Asian financial crisis than Indonesia. Much of the banking system collapsed, economic output plunged, riots ensued and the government fell.
But Indonesia is often described as one of the less vulnerable countries in Asia, because its insular economy relies less on trade than other countries in the region. With the world’s fourth-largest population — after China, India and the US — Indonesia has long had a domestic market big enough to sustain large industries without the need for foreign markets.
Yet the difficulties here in Karawang show how far the global economic downturn now reaches.
The factories here have attracted workers from all over Indonesia. A growing number of them are now losing their jobs, just as tens of thousands of migrant Indonesian workers are coming home after being laid off in neighboring countries like Malaysia and Singapore.
Indonesian President Susilo Bambang Yudhoyono, who is expected to seek a second term in elections in July, has already been forced to announce plans for US$6.8 billion in extra government spending this year to stimulate the country’s economy.
The stimulus program will help pay for road construction and neighborhood projects. (Indonesia’s constitution is unusual in requiring that a fifth of government spending be dedicated to education, so the program may have long-term benefits as well.)
US President Barack Obama lived in Jakarta as a boy, and many here hope that he will be able to pull the US and the rest of the world, including Indonesia, out of its economic slump.
“When Obama is president, everything will be better — we hope so because there are so many promises from him,” Sauate said.
Other Indonesians are more cautious.
“It’s an illusion that Obama can solve all the problems,” said Khamid Istakhoria, the secretary general of the Indonesian Trade Union Alliance Congress, “because no matter who is president, they will face real economic troubles.”
The Yomiuri Shimbun, the newspaper with the largest daily circulation in Japan, on Thursday last week published an article saying that an unidentified high-ranking Japanese official openly spoke of an analysis that the Chinese People’s Liberation Army (PLA) needs less than a week, not a month, to invade Taiwan with its amphibious forces. Reportedly, Japanese Prime Minister Fumio Kishida has already been advised of the analysis, which was based on the PLA’s military exercises last summer. A Yomiuri analysis of unclassified satellite photographs confirmed that the PLA has already begun necessary base repairs and maintenance, and is conducting amphibious operation exercises
On Thursday last week, European Commission President Ursula von der Leyen was re-elected in Strasbourg, France. Before her re-election she gave a speech to the European Parliament and published a document entitled “Europe’s Choice: Political Guidelines for the Next European Commission 2024-2029.” Her statement attracted headlines in Taipei and Beijing. In Taiwan, it was welcomed, whereas the Chinese Ministry of Foreign Affairs said the commission president was “playing with fire.” The part of her statement that sparked such different reactions was of course about Taiwan. Von der Leyen focused on the Indo-Pacific region in a way that previous European Commissions have not. She
When it comes to national security and foreign affairs, President William Lai (賴清德) has said he wants to maintain the same policies as his predecessor, Tsai Ing-wen (蔡英文). Unfortunately, he does not find himself in the same geopolitical circumstances as Tsai during her presidency. The loss of a legislative majority aside, the regional geopolitical situation is in a continuous state of flux. Regardless of the perception of the binary nature of the forces that conspire against or with Taiwan — the Chinese Communist Party (CCP) and the US — the actual situation is far more complex, as encapsulated by many
While new immigrants and their children born in Taiwan have grown to a population of more than 1 million, the legislature in a late-night session on Tuesday last week passed a basic act governing “new residents” to facilitate their integration into Taiwanese society. In addition to setting up a new special commission under the Executive Yuan to oversee new resident affairs and services, the act mandates that the government aid them with counseling, medical and maternity healthcare, employment rights protection, education, and cultural empowerment. It aims to protect their rights, help them obtain residency and integrate into a multicultural society in