On January 1st of this year, the ASEAN trade block made another small step towards trade liberalisation with further implementation of the ASEAN Free Trade Agreement. However, progress on automotive market integration is proceeding too slowly according to Tony Pugliese, writing exclusively for just-auto.
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From January 1st, Indonesia reduced tariffs on all ASEAN-made automotive products, including CBUs, to between 0-5% as part of a ‘fast-track’ approach. However, Thailand chose not to adopt the fast-track approach, leaving tariffs at 15% for CBU vehicles until the end of the year, and likewise the Philippines will keep its 15-20% CBU tariff rate until January 2003. Both are committed to reducing tariffs to 5% or lower from the beginning of 2003.
Pugliese maintains in the just-auto article that, ‘these latest developments do indicate that progress is being made in developing free trade in the ASEAN block, and that except for Malaysia the AFTA agreement is indeed on track. Nevertheless, it is becoming increasingly apparent that ASEAN is failing to keep up with broader regional automotive industry developments and seems to be losing out on quality, long-term investment.
‘Governments and policy-makers have focused too long on whether they will be able to compete with their fellow trade block members, rather than looking at the long-term, big picture. They appear to be oblivious to the fact that vehicle manufacturers themselves need to have complimentary operations in all major markets, if only for logistical purposes and for reducing currency risk.’
The full article is available to just-auto members and can be accessed at:
https://www.just-auto.com/features_detail.asp?art=621&app=1&sct=fotw
