ABSTRACT
The five automotive producers of ASEAN – the Association of Southeast Asian Nations – have seen their vehicle output grow rapidly in recent years. As Table 2.1 shows, over the period 2000-2014, the output of the Philippines and Malaysia grew less rapidly than that of the other producers in relation to world production, though in Vietnam the rapid growth was from a lower base. Despite their slightly similar output levels in 2014, however, the Philippines and Vietnam are very different cases. The Vietnamese started their industry in the 1990s, whereas the Philippines’ industry dates back as far as that of Malaysia and Thailand. The growth of Thailand, ASEAN’s best automotive performer, is understated in Table 2.1 in the sense that if we took the period from 2000 to 2013, before the country’s political turmoil and subsequent military coup in 2014, its output rose almost six-fold. In this chapter we shall ask what policies lay
behind ASEAN’s rapid automotive development.1 We consider first the rationale for industrial policy, and then look at the region’s initial attempts to develop automotive production through import substitution and the various countries’ policies towards, and success at, attracting foreign investment. We ask how the countries have been able to carve out ‘policy space’ under the World Trade Organization’s rules from 2000 that try to outlaw previously popular policies such as local content (LC) requirements. As Table 2.1 indicates, Japan’s domestic automotive production declined over the 2000-2014 period, but its production overseas, particularly in Asia, increased. We look at the attitudes of the Japanese foreign investors who are so important in shaping the development of the industry in the region, whom we have interviewed extensively, and we draw where appropriate on literature both in English and in Japanese. We focus principally on the three main automotive producers – Thailand, Indonesia and Malaysia – with some additional discussion of the Philippines and the newest producer, Vietnam. We do not cover the motorcycle industry.
