ASEAN: Regional Trends in Economic Integration, Export ... - USITC

CHAPTER 7
Automotive: Motor Vehicle Parts
Automotive Overview 1
The automotive industry, including the motor vehicle parts industry, is highly desired by
many countries as a driver of economic growth, job creation, and technology
development. The countries of the ASEAN region are no exception. They have succeeded
at developing individual automotive industries over the past decades in part through the
use of local-content requirements, high tariffs, investment incentives, and tax policies
designed to promote and protect their respective industries. Moreover, the region’s large
population of 550 million has attracted investment from foreign automakers and their
suppliers because of its potential market size.
To further integrate the region’s automotive industries, the ASEAN Secretariat developed
the Roadmap for Integration of the Automotive Products Sector (Roadmap) 2 to
“strengthen regional integration efforts through liberalisation, facilitation and promotion
measures to ensure full integration of the automotive sector by 2010” and to promote
private sector participation. To achieve these goals, the Roadmap focuses on three groups
of measures that are dedicated to expanding intra-ASEAN trade and investment,
increasing the ASEAN automotive industry’s technological capabilities, and improving
human resources capability. Within these three groups are 60 measures largely related to
tariff elimination, elimination of non-tariff measures (NTMs), customs cooperation,
effective implementation of the ASEAN Industrial Cooperation Scheme (AICO) 3 and
Common Effective Preferential Tariff (CEPT) schemes, improvement of the rules of
origin, harmonization of standards and conformance, promotion of future investment,
improvement of logistics services, enhancement of ASEAN car manufacturing capability,
and establishment of a training and skill certification system. Although this Roadmap 4 is
quite comprehensive in terms of initiatives and goals, no sectoral group reportedly exists
to help move the Roadmap forward. 5 Some industry officials have indicated that the
Roadmap is less significant now that ASEAN-6 duties have been eliminated, whereas
other sources continue to see value in the Roadmap goals.
1 See app. F for a list of the Harmonized System numbers covered under this priority sector.
2 The automotive priority sector includes a wide variety of automotive and transportation-related products,
including tires, engines, air conditioning systems, self-propelled trucks, bearings, gaskets, batteries, electrical
equipment, truck tractors, golf carts and similar vehicles, special-purpose vehicles (e.g., ambulances, hearses),
passenger cars, trucks, motor vehicle parts, tanks and other armored vehicles, mopeds, motorcycles and their
parts, and trailers and semi-trailers.
3 The AICO is an ASEAN industrial cooperation scheme designed to increase industrial production,
achieve closer integration, increase investment, increase intra-ASEAN trade, improve economies of scale,
enhance the technology base, create internationally competitive industries, increase private sector
participation, and increase industrial complementation. ASEAN, ASEAN Industrial Cooperation Scheme
(accessed May 6, 2010). The program encourages joint manufacturing activities between ASEAN-based
companies, with a minimum of two companies in two different countries receiving preferential rates of duty
on goods exchanged between the signatory countries, subject to a government-approved AICO arrangement.
For more information on the AICO system, see box 7.2.
4 Indonesia has the lead on this priority sector Roadmap.
5 Government official, interview by USITC staff, Jakarta, March 1, 2010.
7-1