This presentation will provide a high-level view when it comes to countries trying to compete in the world economy. The presentation is not about pointing fault at the system, but looking at ways to compete against low cost producing countries.

1. LOW COST PRODUCING COUNTRIES
BY: PAUL YOUNG, CPA, CGA

2. PAUL YOUNG BIO
 Contact: paul_young_cga@Hotmail.com
 25+ years of experience
 Academia
 Corporate Reporting and Analysis
 Internal Audit and Risk Management
 Cost Control and Management
 Re-engineering business process
 IT Financial Performance and Risk Management Solutions

3. CHARACTERISTICS OF LOW COST PRODUCING COUNTRIES
 Many low cost producing countries
 Government restrictions on imports
 Labor laws that do not protect workers
 Lapse Environmental rules
 Water Treatment
 Emissions
 Land management

4. TOP LOW COST PRODUCING COUNTRIES
Southeast Asia
 Bangladesh
 Cambodia
 India
 Indonesia
 Malaysia
 Pakistan
 Phillipines
 Sri Lanka
 Thailand
 Vietnam
Source: http://www.businessinsider.com/kpmg-countries-manufacturers-low-cost-china-2011-9#bangladesh-1

5. NORTH AMERICA / MEXICAN
 Mexico has been able to pull itself out of an economic and social slump by bringing regulation change through continued
support from NAFTA. Mexico’s investment in their infrastructure garners great support for investment in manufacturing. For
example, the 2014-2018 Infrastructure Reform promises to use 598 billion dollars to implement 743 infrastructure projects.
262 of those projects will be focused on energy improvements, and 233 projects are catered towards communications and
transportation. Increased productivity, accessibility, and transport will build the maquila workforce and enable more skilled
laborers to accrue necessary knowledge about industrial culture. As the Mexican infrastructure strengthens, maquila workers
are able to contribute to their growing economy and make room for an up-and-coming middle class.
 Mexico has an educated workforce with the ability to surpass traditional maquiladoras and work with advanced mechanical
operations. Young professionals benefit from manufacturing jobs and hold positions such as factory workers, programmers,
and operations management positions. Mexican workers are provided with opportunities to succeed in their careers, as
heightened manufacturing production maintains the country’s growing exports. With a new social status, Mexican quality of
life improves and more attention is given to work as the middle class contributes to the Mexican economy. But good news
for the new Mexican middle class is also good news for the U.S. labor force.
Source - http://offshoregroup.com/2016/09/01/mexican-manufacturing-catalyst-u-s-economic-growth/

6. COST COMPETITIVE INDEX
Source: - https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Manufacturing/gx-global-mfg-
competitiveness-index-2016.pdf

7. LOW COST PRODUCING COUNTRIES /CHINA
 The exodus of factories moving out of China in search of lower-cost options in southeast and central
Asia is accelerating, as manufacturers face increased pressure to reduce unit costs.
 Few industries have been spared amid the search for cheaper manufacturing alternatives, with rising
Chinese labour rates cited as a major concern affecting industries as diverse as apparel and high-
technology.
Source: http://www.scmp.com/business/companies/article/1863709/manufacturers-step-search-low-cost-
alternative-china

8. TOP COUNTRIES – LOWEST LABOR RATES
 1 – Madagascar $0.18 Hour
 2 – Bangladesh $0.23/Hour
 3 – Pakistan $0.32/Hour
 4 – Ghana $0.32/Hour
 5 – Vietnam $0.39/Hour
 6 – India $0.48/Hour
 7 – Kenya $0.50/Hour
 8 – Senegal $0.52/Hour
 9 – Sri Lanka $0.62/Hour
 10 – Egypt $0.80/Hour
Source: http://www.therichest.com/rich-list/poorest-list/countries-with-the-cheapest-labor/

9. LABOR / MINIMUM WAGES
 Many developed countries have established labor laws for minimum wages. Minimum wages for
developed countries tend to be higher than those of low cost producing countries.
 Vietnam monthly minimum wages is about $145 month which is far less than say Canada at
$2,080/month
Source: http://www.ecotripsos.com/highestminimumwage/

10. SOCIAL SPENDING/GDP
 Social spending
 Healthcare
 Education
 Pensions
 Infrastructure
 Child tax benefits/Child Care
 Defense
 Environment

11. SOCIAL SPENDING / GDP
Source: https://www.oecd.org/els/soc/OECD2014-Social-Expenditure-Update-Nov2014-8pages.pdf

12. WHAT CAN BE DONE
Areas of focus
 Trade/FIPA
 Fair Trade Deals
 Adopting BEPS
 New transfer pricing Rules
 Innovation
 Investment in education
 Expand opportunities
 Advance manufacturing
 Information technology
 Expert Farming
 Extraction/refining
 Clean Technology