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AFTA: Turning the ASEANDream Into Reality
AFTA 2002 Symposium
Jakarta, IndonesiaJanuary 31, 2002
John ParkerPresident, ASEAN Operations
Ford Motor Company
The Automotive Industry Imperative
National
CKD
Product DesignAnd Development
GlobalStages of
Liberalization
Low Value-added
Limited ExportsLow Technology
The foundation of sustainability in the auto industry
is global competitiveness, which is a functionof continued liberalization
Regional
IntegratedManufacturing
ASEAN
Today
Sustained Investment Growth
High Value-added Jobs and Strong Export Growth
ASEAN
under AFTA
ASEAN Auto Growth… A Strong Recovery
Growth1999-2000
Industry Size
2002(f)
Veh/1000
Driving Age Pop.
Thailand 22% 315,000 136Malaysia 19% 402,000 307Indonesia 223% 315,000 33Philippine
s 12% 96,000 49
Vietnam 67% 29,000 4TOTAL 47% 1.15 Mil Ave. 106China 14% 2.4 Mil 15
Strong Recovery after Crisis, but lags China in overall size.
ASEAN Industry Size Only Competitive if Viewed as One Region
$50 $60$46
$200
$100
$26
$650
$80$500$70
Ford Thailand GM ThailandBMW Thailand Toyota ThailandOriental-Honda Malaysia Nissan Indonesia Ford Philippines Ford VietnamDC Vietnam DC Indonesia
Millions US ($)
Auto Manufacturers Have Invested Heavily in ASEAN since 1995…
BUT…
5101520N/AN/AVietnam
5101520N/AN/AN/AN/AMalaysia
515Indonesia
52020Philippines
51520Thailand
20082007200620052004200320022001COUNTRY
Manufacturing Rationalization starts in 2003:
Is it “AFTA” or the “Thai-Phil-Indo FTA?”
PHILIPPINESPHILIPPINES
INDONESIAINDONESIA
THAILANDTHAILANDFord Ranger
Mazda FighterVolvo S80Chevrolet Zafira
Honda AccordNissan Sunny
Toyota Altis
Honda StreamHonda CR-VNissan X-Trail
Toyota Vitz Honda StreamHonda CR-VToyota Vitz
Ford LaserFord Escape
Mazda ProtégéMazda Tribute
Ford RangerMazda Fighter
Chevrolet ZafiraToyota AltisHonda Fit
Ford LaserFord Escape
Mazda ProtégéMazda Tribute
MALAYSIA ?MALAYSIA ?
VIETNAM ?VIETNAM ?
Source: Press Reports
When Will Malaysia Join AFTA? Uncertainty Jeopardizes Regional
Integration Largest Mid-size Car Market in ASEAN
(Represents 35% of ASEAN Vehicle Market). 5% AFTA Duty for CBU Deferred Until 2008 (5
years later than Thailand and Philippines and 6 years later than Indonesia).
Malaysia Could Be Integral Part of Regional Production But investment decisions for 2005 are being made
today. Damages Investor Confidence in All of ASEAN Gives Economies of Scale Leadership to China
CBU AICO: A Great Example of Forward Thinking Delivering
Investment into ASEAN
PARTS
BENEFITS Eliminates Duplicative Vehicle Assembly and
Supply Bases. Major (Multimillion Dollar) Investment in
Both Countries for New Products, possible because of Greater Economies of Scale.
“Sneak Preview” into AFTA – product complementation, plant rationalization, economies of scale.
Ford Thailan
dFord
Philippines
Reality: China’s Diverting Investment Dollars From ASEAN
Source: United Nations(Jan. 2002)
FDI Inflows
05000
100001500020000250003000035000400004500050000
1990 1992 1994 1996 1998 2000Year
Mill
ions
$
ASEAN-10China
9% ofAsia FDI
18% ofAsia FDI
61% ofAsia FDI
38% ofAsia FDI
Consider:1) China took 15% of Automotive FDI in 1990 but that number increased
to 64% in 2000.2) Globally, FDI dropped almost 50% in 2001.3) According to JETRO, 8% of Japanese MNCs will relocate from ASEAN to
China in 2002 because of WTO accession.
With WTO Accession, China Will Increase Exports
to Member Countries
Unless AFTA is implemented for the auto industry on time in all countries, China will continue to
attract more automotive FDI and will soon start to EXPORT.
China’s Share of Global Exports, in Percent
1995 2005eNon-WTO
2005eWTO
Textiles 8.4% 8.8% 10.6%Apparel 20 19 47Metals 3.4 5.5 6.5Autos 0.1 0.7 2.2Electronics 5.0 7.8 9.8Total 3.7 4.8 6.8 Source:
UBS Warburg
What ASEAN Should do to Position for Future Growth
AFTA is key – Regional Tariffs Must Come Down• Most Critical Aspect of Growing Volume.• Malaysia’s Delay Closes the Largest Passenger Car Market in
ASEAN to Regional Integration Until 2008. Meet WTO TRIMs Obligations Now
• Continuing TRIMs in Malaysia and Philippines Slows Down Global Competitiveness in Component Manufacturers and Prevents Regional Sourcing Integration for Components and Parts.
Harmonize Vehicle Emissions/Safety Standards Harmonize “External” MFN Tariffs
• Will Result in Lower Cost CKD Imports – China Drops to 10% in 2006!
Modernize Vehicle Tax Policies• Current Structures Actively Suppress and Distort What Consumers
Want.
AFTA: Turning the ASEAN Dream
Into Reality
Thank You