The ongoing pandemic is continuing to cause issues across the Asia-Pacific region.
There have been over 2.4 million COVID-19 cases in Malaysia since the start of the pandemic, and Melbourne has spent more time in lockdown than any other city in the world. Not only this, but the Singapore government has extended its stabilization phase by an extra month following an increase in daily cases.
The spread of the delta variant has led to lockdowns in countries including Malaysia, Singapore and Australia.
While some industries have benefited from the ongoing pandemic, such as medical and PPE, other industries have suffered significant setbacks. One of these industries has been the used equipment industry.
Heavy machinery asset values have fluctuated unpredictably across Asia and Australia during the pandemic, and it is hard to gauge when and how values will stabilize.
If the current situation worsens, how will the used equipment market be affected?
A potential loss of investment
Let’s take the current situation in Malaysia. When lockdown began, and more restrictive measures were in place, only specific industries were allowed to operate, and this was at a reduced workforce capacity.
If conditions continue as they are, foreign and multi-national companies may opt to shut down their operations and move out of the country. Not only because they are tied down by unpredictable restrictions, but for the safety of their staff, owners and families.
Although the situation has now improved, it is still not stable. A rise in infection rates could mean returning to previous restrictions at any time. When the Malaysian government first went into protective measures in January 2021, it was expected that the measures would end in August. This was not the case.
Dutch, German and Japanese trade groups have urged the government to understand that an unpredictable lockdown approach is disrupting supply chains and forcing foreign businesses to rethink their investments. They are requesting improved risk mitigation strategies and increased controls.
Investors moving out of any country can have a drastic effect on its economy. As well as external trade taking a hit, unemployment rates rise, and equipment suppliers can go out of business.
A flurry of sudden activity
When manufacturers relocate, they are likely to want to get rid of their old machinery so they can start afresh with new equipment. If equipment is in poor working order, it is likely to be scrapped. If equipment is in good working order or needs minor repair work, it is likely to be sold.
This flurry of buying and selling activity will be of benefit to those in the used equipment industry. It is in their best interests to keep a close eye on the situation in their respective countries to ensure they can capitalize on any profits to be made.
We will be watching the current situation regarding the used equipment market with interest at Hilco, and will keep you updated with the latest developments.
For a confidential discussion about how our asset expertise can help your business in these trying times, please get in touch.