AFTA: Transforming the ASEAN Dream Into Reality.

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AFTA: Transforming the ASEAN Dream Into Reality. AFTA 2002 Symposium Jakarta, Indonesia January 31, 2002 John Parker President, ASEAN Operations Passage Engine Organization. Managed Speculation Development High Esteem included Employments and Solid Fare Development. ASEAN under AFTA. AFTA.
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AFTA: Turning the ASEAN Dream Into Reality AFTA 2002 Symposium Jakarta, Indonesia January 31, 2002 John Parker President, ASEAN Operations Ford Motor Company

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Sustained Investment Growth High Value-included Jobs and Strong Export Growth ASEAN under AFTA The Automotive Industry Imperative The establishment of supportability in the vehicle business is worldwide intensity , which is a component of proceeded with liberalization Product Design And Development Integrated Manufacturing ASEAN Today Low Value-included Limited Exports Low Technology CKD National Regional Global Stages of Liberalization

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ASEAN Auto Growth… A Strong Recovery Strong Recovery after Crisis, yet slacks China in general size. ASEAN Industry Size Only Competitive if Viewed as One Region

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COUNTRY 2001 2002 2003 2004 2005 2006 2007 2008 Thailand 20 15 5 Philippines 20 5 Indonesia 15 5 Malaysia N/A N/A N/A N/A 20 15 10 5 Vietnam N/A N/A 20 15 10 5 Auto Manufacturers Have Invested Heavily in ASEAN since 1995… Millions US ($) BUT…

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THAILAND Ford Ranger Mazda Fighter Chevrolet Zafira Toyota Altis Honda Fit Ford Ranger Mazda Fighter Volvo S80 Chevrolet Zafira Honda Accord Nissan Sunny Toyota Altis Ford Laser Ford Escape Mazda Protã©gã© Mazda Tribute Ford Laser Ford Escape Mazda Protã©gã© Mazda Tribute Honda Stream Honda CR-V Nissan X-Trail Toyota Vitz Honda Stream Honda CR-V Toyota Vitz PHILIPPINES INDONESIA MALAYSIA ? Producing Rationalization begins in 2003: Is it “AFTA” or the “ Thai-Phil-Indo FTA ?” VIETNAM ? Source: Press Reports

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When Will Malaysia Join AFTA? Instability Jeopardizes Regional Integration Largest Mid-size Car Market in ASEAN (Represents 35% of ASEAN Vehicle Market). 5% AFTA Duty for CBU Deferred Until 2008 ( 5 years after the fact than Thailand and Philippines and 6 years after the fact than Indonesia ). Malaysia Could Be Integral Part of Regional Production But speculation choices for 2005 are being made today. Harms Investor Confidence in All of ASEAN Gives Economies of Scale Leadership to China

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CBU AICO: A Great Example of Forward Thinking Delivering Investment into ASEAN Ford Thailand Ford Philippines PARTS BENEFITS Eliminates Duplicative Vehicle Assembly and Supply Bases. Real (Multimillion Dollar) Investment in Both Countries for New Products, conceivable in light of Greater Economies of Scale. “Sneak Preview” into AFTA – item complementation, plant justification, economies of scale.

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Reality: China’s Diverting Investment Dollars From ASEAN 38% of Asia FDI 61% of Asia FDI Source: United Nations (Jan. 2002) 18% of Asia FDI 9% of Asia FDI Consider: China took 15% of Automotive FDI in 1990 however that number expanded to 64% in 2000. All inclusive, FDI dropped very nearly half in 2001. As per JETRO, 8% of Japanese MNCs will move from ASEAN to China in 2002 due to WTO promotion.

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With WTO Accession, China Will Increase Exports to Member Countries Source: UBS Warburg Unless AFTA is executed for the car business on time in all nations, China will keep on pulling in more car FDI and will soon begin to EXPORT.

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What ASEAN Should do to Position for Future Growth AFTA is key – Regional Tariffs Must Come Down Most Critical Aspect of Growing Volume. Malaysia’s Delay Closes the Largest Passenger Car Market in ASEAN to Regional Integration Until 2008. Meet WTO TRIMs Obligations Now Continuing TRIMs in Malaysia and Philippines Slows Down Global Competitiveness in Component Manufacturers and Prevents Regional Sourcing Integration for Components and Parts. Blend Vehicle Emissions/Safety Standards Harmonize “External” MFN Tariffs Will Result in Lower Cost CKD Imports – China Drops to 10% in 2006! Modernize Vehicle Tax Policies Current Structures Actively Suppress and Distort What Consumers Want.

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AFTA: Turning the ASEAN

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