Promoting Continued Growth of the Automobile Industry in the ASEAN Region Fujio Cho Chairman, Japan Automobile Manufacturers Association
Contents Intro: The World Automobile Market 1. The Automobile Market in ASEAN 2. JAMA Members Activities in ASEAN 3. Trade Liberalization in Asia 4. Issues and Opportunities for the ASEAN Automobile Industry 5. Japanese Proposals 6. Japanese Cooperation 2
Intro: The World Automobile Market World Automobile Demand in 2005 Europe: 21.0 China: 5.8 South Korea: 1.2 Japan: 5.9 North America: 20.0 India: 1.5 Global total: 66.0 million vehicles Malaysia Philippines Thailand Indonesia Australia and New Zealand: 1.1 ASEAN national markets relatively small 3
Intro: The World Automobile Market World Automobile Demand in 2005 Europe: 21.0 China: 5.8 South Korea: 1.2 Japan: 5.9 North America: 20.0 India: 1.5 Global total: 66.0 million vehicles ASEAN: 2.1 Australia and New Zealand: 1.1 ASEAN market overall larger than markets of India, South Korea, and Australia and New Zealand 4
Intro: The World Automobile Market Asian Demand Poised to Grow Europe: 21.0 China: 5.8 South Korea: 1.2 Japan: 5.9 North America: 20.0 2010 projection: 9.0 India: 1.5 2010 projection: 1.9 Global total: 66.0 million vehicles ASEAN: 2.1 Australia and New Zealand: 1.1 2010 projection: 2.6 5
Intro: The World Automobile Market Vehicle Ownership per 1,000 People (2004) United States 682 Japan 494 Malaysia 429 South Korea 228 Thailand Indonesia Philippines China India 38 25 24 22 152 Why the Automobile Industry Remains a Growth Industry in Asia: Large populations and low rates of vehicle ownership indicate huge potential for growth 0 100 200 300 400 500 600 700 6
1. The Automobile Market in ASEAN Continuing Growth since the Currency Crisis Aggregate demand in Indonesia, Malaysia, the Philippines, Singapore, and Thailand (x 1 million units) 2 2.0 1.5 1 0.5 0.5 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 7
2. JAMA Members Activities in ASEAN Japanese Automakers Long History of Manufacturing in the ASEAN Region 1950s 1960s 1970s 1980s 1990s~ Thailand Indonesia Malaysia Philippines Vietnam Reference: United States 8
2. JAMA Members Activities in ASEAN Growth in Production and in Exports Japanese automakers operated 79 plants that employed more than 120,000 people in ASEAN countries in 2005. (x 1,000 units) 2,500 2,000 1,500 1,000 Production Exports 500 0 34 42 74 93 128 126 110 139 212 264 406 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 9
2. JAMA Members Activities in ASEAN 6,000 Competitiveness through Complementation Intraregional trade among Indonesia, Malaysia, the Philippines, and Thailand (x US$ 1 million) 5,000 4,000 3,000 2,000 1,000 0 4,059 3,040 2,365 103 552 968 2002 2003 2004 Parts Vehicles 10
2. JAMA Members Activities in ASEAN The ASEAN Free Trade Area (AFTA) Promoting complementation among automakers operations in the region Strengthening the competitiveness of the ASEAN automobile industry AFTA Optimal purchasing, optimal production Intraregional complementation 11
3. Trade Liberalization in Asia Growing Momentum for Free Trade Agreements China South Korea India ASEAN Japan Aust. N.Z. 12
3. Trade Liberalization in Asia A Potential Market of 17 Million Vehicles Aggregate demand in ASEAN and in the countries with which ASEAN is negotiating free trade agreements totalled about 17 million vehicles in 2005. Demand in those markets will be comparable to European demand and to North American demand by 2010. China: 5.8 South Korea: 1.2 Japan: 5.9 2010 projection: 9.0 India: 1.5 2010 projection: 1.9 ASEAN: 2.1 Australia and New Zealand: 1.1 (x 1 million units) 2010 projection: 2.6 13
4. Issues and Opportunities for the ASEAN Automobile Industry Escalating Competition amid Trade Liberalization 25 Chinese and Indian exports of vehicles and parts (x US$ 1 billion) 20 15 10 China India 5 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 14
4. Issues and Opportunities for the ASEAN Automobile Industry Comparative Demand (x 1 million units) 20 10 Japan, China, India, S. Korea, Australia, New Zealand Japan, China, India, S. Korea, Australia, New Zealand 0 ASEAN ASEAN 2005 results 2010 projections 15
5. Japanese Proposals Proposal 1: Market Integration ASEAN Free Trade Agreement Eliminate all tariffs among six ASEAN members by 2010 or earlier Tariff eliminations for some items in 2007 under discussion 16
5. Japanese Proposals Proposal 1: Market Integration Regional Framework for Seamless Industrial Activity (1) Harmonize technical regulations and mutually recognize certification to Raise efficiency in promoting safety and environmental protection and in establishing pertinent regulations Reduce design and manufacturing costs Reduce lead times and costs in logistics 17
5. Japanese Proposals Proposal 1: Market Integration Regional Framework for Seamless Industrial Activity (2) Improve and harmonize fuel quality to Improve air quality Reduce design and manufacturing costs 18
5. Japanese Proposals Proposal 1: Market Integration ASEAN Industrial Cooperation (AICO) Program Operate the AICO program more effectively to promote greater complementation among industrial operations in ASEAN countries 19
5. Japanese Proposals Proposal 2: Closer Ties with Japan Economic Partnership Agreements 2002 2003 2004 2005 2006 Singapore Took effect Malaysia Philippines Thailand Indonesia Negotiations began Signed Basic agreement Negotiations began Basic agreement Negotiations began Basic agreement Negotiations began Took effect Brunei ASEAN Negotiations began Negotiations began 20
5. Japanese Proposals Proposal 2: Closer Ties with Japan Economic Partnership Agreements Eliminate tariffs on automotive parts to Raise the cost competitiveness of the vehicles produced in ASEAN countries and thereby Increase vehicle production and sales in the ASEAN region Increase the purchasing of parts and materials in the ASEAN region Strengthen the overall competitiveness of the ASEAN automobile industry 21
5. Japanese Proposals Proposal 2: Closer Ties with Japan Economic Partnership Agreements Eliminate tariffs on CBUs to Enable the augmenting of model lineups in ASEAN countries and thereby Expand the automobile market in individual countries by stimulating new demand 22
6. Japanese Cooperation Developing the Supporting Industries and Nurturing Human Resources Dispatch of technical experts (2001-2006) Five meetings of the Conference on ASEAN Auto Supporting Industries (1997, 1998, 2000, 2002, 2006) Assistance in establishing the Automobile Skills Certification System (2003, 2004) For Automobile Manufacturing Parts and materials industries: The industrial foundation Human resources: The wellspring of growth momentum 23
6. Japanese Cooperation Harmonizing Technical Regulations The ASEAN-Japan Joint Forum on Harmonization of Automobile Regulations and Mutual Recognition of Certification (2004) Seminars on improving fuel quality (2004) Assistance in creating a system for monitoring progress in improving fuel quality 24
6. Japanese Cooperation Assistance for the Automobile Industries in Cambodia, Laos, Myanmar, and Vietnam Dispatch of automotive maintenance and repair experts (2001, 2005) Training programs in third countries (2005) 25
Promoting Continued Growth of the Automobile Industry in the ASEAN Region Thank You! Fujio Cho Chairman, Japan Automobile Manufacturers Association