According to an economic study released by General Motors earlier this month, the removal of non-tariff measures (NTMs) in the automotive industry that prevent free trade within ASEAN would create up to 500,000 new jobs as well as an increase economic output.
The study, commissioned by GM and carried out by Oxford Economics, reveals that while import tariffs have progressively fallen, almost 190 additional NTMs were implemented across ASEAN member countries between 2009 and 2013, and these remain a significant impediment to achieving the fundamental aims of the ASEAN Economic Community (AEC) to establish the free movement of goods across borders.
Oxford Economics found that the automotive sector lags behind other sectors in removing NTMs, with over 70% of imports of motor vehicles and auto parts subject to some kind of non-tariff barrier in Indonesia, Malaysia, the Philippines, Singapore and Thailand.
The most common NTMs are technical barriers to trade, followed by quantity control, affecting 25% of the automotive sector. Excise taxes are also often used as an NTM across ASEAN to implicitly or explicitly discriminate against imports.
This is accomplished through the application of differential rates or thresholds that favour domestically produced vehicles or via reference to different tax bases (for example, by using CIF prices for imports versus ex-factory prices for domestic producers).
Opening trade would support a globally competitive automotive industry in the region and give ASEAN motorists greater choice of vehicles, said GM international vice president of government relations and public policy, Matt Hobbs.
“ASEAN motorists are missing out because of non-tariff barriers. NTMs deny them choice because they prevent the majority of imported vehicles from being sold in ASEAN markets at a competitive price, or getting to those markets at all,” he said.
He said that with the December 31, 2015 deadline fast approaching for regional economic integration under the AEC and many Free Trade Agreements (FTAs) in place within ASEAN as well as between ASEAN and other countries, motorists in the region should be spoiled for choice.
“But across many ASEAN countries, automotive industry policy is being used to prevent large-scale imports of vehicles from other ASEAN members and countries outside the region. This also makes it very difficult for new market entrants to industrialise in ASEAN countries,” said Hobbs.
He added that while the ASEAN automotive industry has the potential to be globally competitive and access major markets outside the region, it is being held back by not operating as a single market.
“Almost four million vehicles were produced in ASEAN in 2014. This is on par with South America, India and South Korea. But it does not act as one market. If it did, ASEAN would have the size, scale and expertise to become a globally competitive automotive manufacturing base that could export to major markets around the world,” Hobbs said.
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This idealism only works if the income disparity amongst ASEAN is similar or not too much vary from each other. As it is right now, 499k of the jobs will go to Thai, Indon, MY. Once these countries become more expensive, 498k jobs will go to cheaper ASEAN countries like pinoy, laos, vietnam, cambo.
The only way to secure a long term presence in the county is to have home-grown brands which due to political & rakyat pressure, will be less likely to shift wholly to cheaper parts just to maintain profit margins.
ASEAN Free trade = 500,000 jobs
AP used car dealers = 3,800 jobs
You choose lah wahai BN govt yang bijaksana.
Btw, Perodua running out of capacity and workers to meet high demand. Anybody with empty car factory and excess workers silakan tolong Perodua okay!
Creating the 500K jobs elsewhere by slashing of ASEAN countries. Superb!
Always impressive by BN make “empty promises” and Never stop doing it…. And thia time GM following them or other way around???
In bolehland cannot la… Nasi lemak will be affected… They just want get lazy and get lazy while making automatic money flow into their account. Thats how nasi lemak system works!
Nobody eats nasi lemak everyday, not even the Malays that I work with. So how will this affect nasi lemak industry, hmm?
AFTA was the ultimate con job of the Malaysian govt. If it was implemented sincerely all Asean sourced cars should be taxed only 5%. Malaysia reduced the tax and increased the excise duty to compensate back to square one. That’s why a Jap B segment car is still twice the price of a Proton B-segment.
Even Proton is subject to excise duty wor
True but the rate is not the same. Look at Langkawi prices and Peninsular prices. That will give you a good idea.
Proton Preve Thailand, Rm70k
Proton Preve local, Rm70k
Toyota Vios J Thailand, Rm56k
Toyota Vios J local, Rm76k
Free trade is ASEAN would create 500k jobs only for competitive country with competitive people and policy. The 500k jobs will be created jobs for mainly Thailand and Vietnam. Maybe Malaysia would lost some job to them. Our automotive policy is so outdated and irrelevant.
On the contrary, much of those 500k jobs would go from Thai to myanmar, laos, cambo. Thats why they dun want TPPA
Bolehland might not able to compete for projects, not even outsource jobs. Thais, Indon & Viets will benefit most.
Bolehland Government only care about bumi benefit and rights, it does not has business in mind. This AFTA will be same as TPP someday….
This is coming from GM ? LOL
Not too long ago, the U.S. government had to bail out GM at a cost of USD$11.2 billion… money that came from the American taxpayer.
The best-selling passenger car in America (the Camry) is not American-badged (but it is American assembled at least). Only one GM model (the Chevy Silverado) has placed in the Top 10. GM recently shut down Pontiac and soon, Holden as well.
So why should ASEAN governments care about what GM has to say ? Obviously, they have their own personal agendas, to them, we’re just a bunch of third world fools which they can flog their subpar products to, presumably, with the help of the TPPA.
The reality is that genuinely free trade cannot exist in ASEAN, not yet at least. We all have our own national interests to protect, we simply don’t trust each other enough. Unlike the EU, most ASEAN members are not developed, mature countries, we are a mixed bag of sorts. It will be difficult to unite all ASEAN members, but compared to just 50 years ago, we are more united today than ever before. Indonesia doesn’t want to destroy us anymore, and there’s no war in Indochina. We must let time and tide bring us together, like any friendship, it cannot be forced.
ASEAN should copy EU…same policy for all member countries..easier for investors doing biz
Thats what GM is saying, but the income disparity of ASEAN is worse than EU. It would create another Greece-gate much much sooner, much much worse than currently happening. And to let SG drive the ASEAN economy? We would all be slaves to them.