• Madani Sahari

Malaysia has bigger role to play in AEC

Malaysia has assumed the chairmanship of ASEAN 2015, taking over from Myanmar, on 1st January this year. The chairmanship appointment this round would be very challenging as it is now became the nation’s responsibility to lead the process towards the realization of “ASEAN Economic Community (AEC)” due to commence on 31st December.

“Our People, Our Community, Our Vision” is the adopted theme by the Malaysian chairmanship envisioning the creation of a people-centered ASEAN nations involving all sectors of the ASEAN community.

Impending towards the ASEAN summit, ASEAN Economic Ministers' (AEM) retreat was held last weekend in Kota Bharu, Kelantan. Attended by representatives from 10 member countries the retreat was to prepare work draft for the coming 8th meeting of the High-Level Task Force on ASEAN Economic Integration Working Group on Post-2015 Economic Vision and Plan for ASEAN.

The meeting, chaired by the minister of the Ministry of International Trade and Industry (MITI), Dato Sri Mustapa Mohamed focused on assessing and taking stock on achievements pertaining to critical regional integration measures as stipulated in the AEC blueprint.

The integration and transformation process of AEC would be gradual. Individual national priorities, economic nationalism and institutional and regulatory coordination among member countries are expected to be progressively transformed adapting to the new AEC scenario in a few years to come.

The formation of AEC, with a total population of about 600 million, will signify the importance of the region as a production platform for automotive manufacturing.

Global OEMs will be attracted to the region by the sizable market, trade liberalization and the community desire to create a common market within a trade bloc. Further the AEC will create a more level playing field for automotive players with less protectionism and greater competition.

Possibly, akin to the earlier experiences of the European Union (EU) formation, the most to benefits from the AEC formation may be those automotive OEMs already located and well networked within the region integrated market, but depending upon the degree of their components localization within ASEAN.

Localisation, which will enhance competitiveness, may also include human resource, procurement that meet the local content requirements, R&D activities, quality management, logistic establishment and sales network.

Hence, from this perspective, parts and components manufacturers within the AEC will benefit along with the expanding markets of the OEMs.

Reduced costs due to the removal of tariff barriers enhance the competitive position of parts and components manufacturers in all member countries.

Realizing these possibilities Malaysia Automotive Institute (MAI) has since focus on developing and enhancing the capabilities of the domestic Malaysian vendors in the light of capturing the enlarged economic of scale within the regional supply chain upon the progressive development of AEC.

Programmes on quality management enhancement, bench marking, R&D matching, after sales network and skill human capital development have been intensified.

MAI is also undertaking a study to assess the capability level of automotive vendors within the ASEAN region and the outcome of which, will lead to implement initiatives to develop the supply chain for the purpose to enhance the competitiveness of components manufacturers within the region.

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