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

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Inbound Investment The investment environment in the ASEAN region has been significantly liberalized within the ASEAN-6 countries, 79 as identified in the Roadmap, and most ASEAN member countries are actively seeking foreign direct investment (FDI) in their auto parts industries. The investment environment for the auto parts industry is, for the most part, open and unrestricted, with 100 percent foreign ownership permitted. According to the U.S. Chamber of Commerce, the creation of a single market would likely stimulate greater industry investment because of the opportunities it would offer to reach a large common market and to manufacture with scale economies. 80 Through their investment policies, most governments are seeking ways to make it easier for foreign investors to enter and leave the market. 81 Thailand, for example, offers corporate income tax holidays, reduction or exemption of import duties on machinery and raw materials, land ownership rights for foreign investors, and other privileges. 82 Both Thailand and Malaysia are offering incentives to automakers and parts producers to jump-start their green vehicle initiatives. ASEAN investment trends by source and destination continue to reflect the production patterns already established in the region. Because Japanese automakers and parts producers are ingrained in this region, Japan will likely continue as the leading investor in the ASEAN auto parts sector. Toyota, for example, reportedly considers the ASEAN region to be its “second mother country.” 83 Japan accounted for 62 percent of the total investment in the ASEAN auto components industry, with investments of nearly $1.6 billion since 2003 in 123 projects. 84 Of Japan’s 1.1 trillion yen ($10.6 billion) investment in the transportation sector worldwide in 2008 (on a balance of payments basis), ASEAN accounted for 10 percent (112 billion yen or $1.1 billion), which exceeded Japan’s investments in China (nearly 102 billion yen, or $987 million). 85 U.S. investment in the region totaled $139 million, with most of that investment occurring in the last two years in Thailand and Vietnam. Investment by Germany totaled $450 million and was more diverse in its destinations, covering all four major ASEAN auto parts-producing countries and, to a lesser extent, Cambodia, Singapore, and Vietnam. Only one project was reported by China, a $14 million project in Malaysia implemented by the Shanghai Automotive Industry Corporation. 86 In terms of completed mergers and acquisitions as reported by Zephyr, 87 investment was concentrated in Vietnam, Malaysia, Thailand, and Singapore. 79 The Roadmap identifies staggered timelines for compliance with the measure to eliminate investment restrictions for sensitive industry sectors: 2010 for the ASEAN-6; 2013 for Vietnam; and 2015 for the remaining ASEAN countries. 80 U.S. Chamber of Commerce, written submission to the USITC, March 12, 2010, 4. 81 Industry official, interview by USITC staff, Singapore, March 9, 2010. 82 ASIAtalk, “Thailand: Auto Parts,” September 2008. 83 The Nation, “Major firms see ASEAN as second investment base,” October 27, 2009. 84 Data collected by USITC staff from FDIMarkets database (accessed January 10, 2010). 85 Japan’s net outflow of investment focused on Thailand and Indonesia, which accounted for 63 percent and 21 percent, respectively, of the total. Malaysia, the Philippines, and Vietnam were secondary FDI recipients. Ministry of Finance, “Japan’s FDI Flows.” 86 Data collected by USITC staff from FDIMarkets database (accessed January 10, 2010). 87 Zephyr is a database of mergers and acquisitions, initial public offerings, and venture capital deals. Zephyr database (accessed January 10, 2010). 7-16
Although inbound investment data specific to this industry segment are not available, investment statistics for broader aggregations within the transport industry suggest that Thailand is the leading recipient of transport-related FDI in the ASEAN region. Thailand is not only an attractive investment site because of its large established automotive industry, technological and R&D capabilities, support network, and business-friendly atmosphere, but it also serves as a doorway to other markets via its trade agreements with Japan, Australia, New Zealand, and India. 88 Of total identified investments of $2.6 billion in the ASEAN automotive components sector since 2003, investment in Thailand amounted to $1.6 billion, nearly 62 percent of the total with 114 projects. Vietnam came in second at $468 million with 27 projects. The total number of projects identified in the ASEAN region reached 189. 89 Malaysia’s focus on its national car brands has made it a somewhat less attractive investment site for global auto parts manufacturers. It is too early to tell whether the recent changes to its automotive policy will encourage the type of investment Malaysia seeks in order to raise its competitiveness to the level of its neighbor, Thailand. 90 For example, Malaysia has been seeking an investment partner for its automaker Proton but it has not been successful, in part because Proton intends to keep its current suppliers and is reportedly not open to any new suppliers. 91 Indonesia is considered by many to be a growth opportunity for the automotive industry, given that it has the region’s largest population (over 240 million) 92 and a relatively low rate of vehicle ownership. 93 The operating environment in the Philippines is open, but its industry is relatively small and lacks the economies of scale and range of capabilities that would attract significant levels of investment. By comparison, FDI from all sources in China’s transport equipment manufacturing sector amounted to $2.6 billion in 2007 alone, from a total of 1,242 projects. 94 Although not directly comparable, these FDI data clearly highlight the preeminent role played by China’s automotive sector in attracting FDI relative to that of the ASEAN region. Its dominance has likely “sent a clear message that ASEAN needs to act like a single country, providing economies of scale to compete for those investment dollars.” 95 Trade Facilitation, Logistics Services, and E-Commerce Improved trade facilitation, logistics, and e-commerce are all important to the greater competitiveness of the ASEAN auto parts industry. Advancement in these areas, however, does not appear to be moving rapidly and remains problematic in certain countries, according to some sources. 88 ASIAtalk, “Thai Auto-Electronics Spark Investment,” August 2008. 89 Data collected by USITC staff from FDIMarkets database (accessed January 10, 2010). 90 The Japan Automotive Digest, “Malaysia Opens Auto Industry,” November 2, 2009, 4. 91 Industry official, interview by USITC staff, Kuala Lumpur, March 11, 2010. 92 CIA, The World Factbook: Indonesia, April 21, 2010. 93 The vehicle ownership rate in Indonesia is estimated at 2.8 units per 100 people, compared to 4 units per 100 people in Thailand and 28 units per 100 people in Malaysia. EIU, Indonesia: Automotive Report, September 21, 2009. 94 Invest in China database (accessed January 20, 2010). 95 Chrysler, “New ASEAN-China Trade Pact,” February 11, 2010. 7-17
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United States International Trade C
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U.S. International Trade Commission
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Abstract This report describes tren
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CONTENTS―Continued Chapter 5 Wood
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CONTENTS―Continued Tables—Conti
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Acronyms 3PL ACCSQ ACDD ACE ACIA AD
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LPI MDF MFN MOU MRA MTCC NAFTA NAP
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Executive Summary The Association o
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Infrastructure and the legal framew
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Despite tariff reductions, the regi
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CHAPTER 1 Introduction Purpose, Sco
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Participating countries also gain a
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TABLE 1.2 Export Competitiveness Fa
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transactions, reinvested earnings,
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Bibliography Acoca, Brigitte. Empow
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CHAPTER 2 ASEAN and Selected Region
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BOX 2.1 Timeline of important miles
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BOX 2.2 AEC Blueprint: Goals and me
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BOX 2.3 ASEAN-wide free trade agree
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progress has been only achieved in
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BOX 2.4 What is ATIGA? ATIGA builds
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TABLE 2.2 Intra-ASEAN imports and e
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TABLE 2.4 Total imports, exports, a
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China is often viewed as a major co
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cases of dispute, but does not prov
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TABLE 2.6 Minimum permitted equity
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TABLE 2.8 Ease of trading across bo
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it maximally useful, such as the ab
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TABLE 2.9 ASEAN in the World Bank
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foreign ownership of express delive
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population that regularly uses the
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Bibliography Acoca, Brigitte. Empow
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ASEAN Economic Ministers. “Joint
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Malaysian Institute of Economic Res
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CHAPTER 3 Electronics: Computer Com
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competition between ASEAN countries
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Regional Integration, Export Compet
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Supporting industries Another impor
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The AEF is unique within the region
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TABLE 3.3 Computer components: ASEA
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joint R&D. 71 These advantages of l
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order to compete for investment (bo
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efficient service to tenants. Despi
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Bibliography Asian Productivity Org
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World Trade Organization (WTO). Inf
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Project to stimulate intra-ASEAN pr
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TABLE 4.2 Certain cotton woven fabr
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includes the production of cotton y
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BOX 4.1 Cotton woven apparel: Profi
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national government source stated t
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strengthen supplier relationships.
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Indonesia has limited potential as
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investment, 67 with much of the inv
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Bibliography Association of Southea
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CHAPTER 5 Wood-based Products: Hard
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some cases, on the export of sawnwo
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TABLE 5.1 Hardwood plywood and floo
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industry are limited, particularly
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important factors continue to hampe
Page 123 and 124: TABLE 5.3 Major intergovernmental p
Page 125 and 126: Export Competitiveness In 2008, ASE
Page 127 and 128: TABLE 5.6 Hardwood plywood and floo
Page 129 and 130: FDI in hardwood plywood and floorin
Page 131 and 132: Trade across land routes has been a
Page 133 and 134: Azarcon, Chulia J. “Comparative T
Page 135 and 136: Malaysia Timber Industry Board (MTI
Page 137 and 138: CHAPTER 6 Healthcare: Healthcare Se
Page 139 and 140: In recent years, the traditional in
Page 141 and 142: services industry by developing the
Page 143 and 144: Only a few countries export large v
Page 145 and 146: growing populations, and increasing
Page 147 and 148: has a healthcare MOU with Cambodia.
Page 149 and 150: BOX 6.1 Healthcare services: Profil
Page 151 and 152: competition for foreign patients in
Page 153 and 154: Singaporean provider provides train
Page 155 and 156: Giusti, Daniele, Bart Criel, and Xa
Page 157: Socio-economic and Environmental Re
Page 160 and 161: Within the broad priority sector, t
Page 162 and 163: Japanese automakers. Their supplier
Page 164 and 165: suppliers must be able to meet QCD
Page 166 and 167: BOX 7.2 Automotive: Profile of ASEA
Page 168 and 169: Thailand is considered to be the mo
Page 170 and 171: Despite the continued implementatio
Page 172 and 173: TABLE 7.2 Certain motor vehicle par
Page 176 and 177: Trade Facilitation The timely movem
Page 178 and 179: Bibliography Aldaba, Rafaelita M.
Page 180 and 181: Thailand in the 2000’s. “Indust
Page 182 and 183: (2) the development of ASEAN cooper
Page 184 and 185: productive in climates further from
Page 186 and 187: ASEAN members Thailand and the Phil
Page 188 and 189: Tariff, import tariffs on palm oil
Page 190 and 191: BOX 8.1 Palm oil: Profile of ASEAN
Page 192 and 193: chain, from plantations to retailer
Page 194 and 195: TABLE 8.6 Palm oil: Intra-ASEAN inv
Page 196 and 197: Brunei Burma Cambodia Indonesia Lao
Page 198 and 199: Hickman, Martin. “Online Protest
Page 201: APPENDIX A USTR Request Letter
Page 204 and 205: A-4
Page 207 and 208: E Federal Register /Vol. 74, No. 23
Page 209: APPENDIX C Calendar of Hearing Part
Page 213: APPENDIX D Positions of Interested
Page 216 and 217: Mr. Aquino noted that the Philippin
Page 218 and 219: FTA (AANZFTA), Australian and New Z
Page 220 and 221: cumbersome rules of origin, customs
Page 223: APPENDIX E Country Profiles
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BURMA ECONOMIC PROFILE Economic Ind
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INDONESIA ECONOMIC PROFILE Economic
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MALAYSIA ECONOMIC PROFILE Economic
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SINGAPORE ECONOMIC PROFILE Economic
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VIETNAM ECONOMIC PROFILE Economic I
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TABLE F.1 Agro-based products: Prio
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TABLE F.3 Electronics: Priority sec
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TABLE F.4 Healthcare: Priority sect
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TABLE F.5 Textiles and apparel: Pri
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