The Automobile Industry in the ASEAN Countries: On the Way of Becoming a Second China or Remaining a Disintegrated Peripheral Player in the Auto Industry

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Abstract:
In 2015 the ASEAN member states founded the ASEAN Economic Community (AEC). The ASEAN Economic Community has two objectives: First, to establish a common production base and, secondly, to create a single market (ASEAN Secretary, 2015).
As in the past, ASEAN seems to be focused on production integration (establishing a common production base) first. Market integration seems to be secondary and it is not really making progress. Internal tariff barriers have been widely removed, but, as could be expected, non-tariff barriers proof to be the highest hurdles for market as well as production integration in ASEAN. ASEAN simply lacks the institutional organization, which could implement legally binding regulations and, as it seems, also the political will to approach and solve these problems (Inama and Sim, 2015, pp. 3-7).
Despite the fact that Japanese automobile manufacturers and brands are dominating the auto industry in ASEAN, the auto industry in the three main automobile producing countries Thailand, Malaysia, and Indonesia, and, most important, the automobile markets in these countries have developed very differently from each other. Automobile policies, car taxation, industry support, as well as technical regulations were too different and not compatible with each other. Undoubtedly, various schemes implemented to increase regional production integration like the BBC (Brand to Brand Complementation Scheme) scheme (1987), the AICO (ASEAN Investment Cooperation) scheme (1995), the CEPT (Common External Preferential Tariff) scheme (1992) and also the ATIGA (ASEAN Trade in Goods Agreement) scheme, which is now in place, increased regional integration, but so far have been insufficient to establish a real ASEAN automobile industry and create homogeneous car markets.
However, things are changing. External pressure for not loosing competitiveness and investments, the need for developing ecological cars, obvious failures of national policies (Proton in Malaysia for instance), new company concepts for cars aiming at lower income consumers (Toyota IMV program) are profoundly changing the ASEAN automobile industry.
The paper will argue (and try to proof) that ASEAN like the EU in the 1950/60s has to make a decision, whether to accomplish a real economic community and establish a common market with over 600 million customers and compete as one economic region with China, India, Japan and Korea, the USA and the EU or to remain a region with a disintegrated industry and very different markets and finally fall behind other evolving automobile producing countries or regions.
The paper will depart from a historical analysis and then concentrate on regional and national policies and their influence on trade, market development, investment trends, car ownership as well as on issues of division of labour, wages, inner ASEAN and inner Asian competition etc.