• Madani Sahari

Auto SMEs to take part in global value chain through AEC, Apec

While economic regionalization of the Asean region through the formation of Asean Economic Community (AEC) is fast taking shape towards the end of the year, globalization of the regional economy is progressing through the Asia-Pacific Economic Cooperation (APEC).

Regionalization of Asean and its important roles in the Asia-Pacific economy have been subjects of interest to governments and industry players alike for a long time now. Initiatives towards fulfilling many of the economic agendas are close to becoming realities.

AEC and Apec share similar economic objectives and inspirations towards achieving economic liberalization and integration.

The formation of AEC will be a significant advancement in support of the Apec mission, in particular to assist developing member nations to achieve trade and investment liberalization by 2020.

Apec economy, comprising of 21 developed and developing member nations, with a total population of 2.8 billion, make up 56 per cent of the global gross domestic product with US$21 trillion (RM75 trillion) in annual goods and services trade.

Almost 70 per cent of global vehicles are produced by 14 of the Apec member countries.

The biggest automotive producing nations of the Apec are China, the United States, Japan and South Korea.

Medium-sized annual total industry volume (TIV) is produced by Mexico, Thailand, Canada, Russia and Indonesia, while the smaller annual TIV producers are Malaysia, Taiwan, Australia, the Philippines and Vietnam.

More than 120 million light vehicles are expected to be on global demand by 2020 and 46 per cent of the TIV, or about 60 million vehicles, are expected to be from the Apec member countries.

To achieve this forecasted demand by 2020, right regulatory and policy environment issues among the member nations are essential.

In this respect, it is the task of the automotive leaders and governmental regulators to work together to facilitate the automotive industrial growth and trade in the Asia-Pacific region through Apec.

It is a common belief among small and medium enterprises (SMEs) in each of the member countries, automotive SMEs included, that trade liberalization is of no benefit to them.

The perception among SMEs remains that all goods from overseas entering the respective nation’s local market at low or zero duty will be a threat to their business well being, while documentation bureaucracies are hindrance to their export initiatives.

The Apec 22nd Automotive Dialogue Meeting in Manila last week saw continuous dialogue on automotive industry sustainable development agendas.

Automotive manufacturing and trade is an important area of economic activity in the Asia-Pacific region as well as the AEC member countries.

Malaysia Automotive Institute is one of the participating organizations in the dialogue.

Malaysia, as the co-sector lead with the Philippines, is conducting the survey as part of the meeting’s proposed work programme for this year.

The study will include the identification of the tariff and non-tariff barriers to trade and investment that the automotive SMEs face in their integration into global value chains.

The exercise will lead to the development of practical solutions to address the barriers.

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