Building ASEAN as a global automotive hub

Résumé:

In 1993, ASEAN member states decided to adopt the Common Effective Preferential Tariff (CEPT) mechanism, which has the aim of reducing tariffs to 0-5% by 2010. Newer ASEAN members will soon adopt CEPT: Vietnam in 2013, Laos and Myanmar in 2015 and Cambodia in 2017. The main qualification is that according to rule of origin (RoO) specifications, local content must be at least 40% to qualify for the low tariffs. CEPT is laying the groundwork for the ASEAN Economic Community (AEC), which aims at creating a single regional market out of the diverse national economies.
This paper will investigate possibilities to develop ASEAN into a global automotive hub. ASEAN already hosts substantial automobile and automotive parts manufacturing, but it comes under increasing pressure from its large emerging neighbours China and India. Member states and ASEAN as a whole competes against those two emerging giants for foreign direct investment (FDI) from the global automotive industry. Therefore, by interviewing ASEAN-based and foreign automobile firms, it will be investigated what ASEAN can do to increase its competitiveness and attractiveness for investors. However, ASEAN members will be subdivided into automotive industry pioneers (Indonesia, Malaysia, and Thailand), followers (the Philippines and Vietnam) and latecomers (Cambodia, Laos, and Myanmar). States that are primarily automobile consumers (Brunei and Singapore) are not deeply investigated.
This paper is organised as follows: First, the overall production and sales trends in ASEAN and individual member states will be explored to give an overview over the development and present condition of the automobile industry in the ASEAN region. Second, the interconnections between industry development, in particular localisation strategy, and ASEAN and member states policies will be analysed. Third, the question if the ASEAN-China Free Trade Agreement (ACFTA) opened the door for cheap Chinese exports into ASEAN will be investigated based on trade data. Fourth, against the background of ACE 2015, interviews with ASEAN-based, Japanese, Korean and Chinese Original Equipment Manufacturers (OEMs) and parts suppliers in the automobile industry were conducted to obtain information on remaining trade inhibitors, including non-tariff barriers and regulative aspects. Based on the responses, policy recommendations are derived to strengthen ASEAN’s role as a global automotive hub.