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Published on January 6, 2008

Toshiyuki Shiga, 54, the chief operating officer of Nissan Motor, is upbeat about the prospects of Thailand remaining the "Detroit of Asia".

As chief operating officer, second only to Carlos Ghosn, the Brazilian-born CEO credited for turning the Japanese carmaker around from 2000 to 2003, Shiga believes that Japan should enter into an economic partnership agreement (EPA) with Asean.

The so-called "Asean-plus-six" framework, which has been promoted by Japan, would link Asean members with China, Korea, Japan, India, Australia, and New Zealand via tariff reductions and other measures.

This framework expands on an earlier "Asean-plus-three" initiative, which did not include India, Australia and New Zealand.

As the person responsible for Nissan's global and Asia strategies, Shiga, who graduated from Osaka Prefecture University in 1976, said EPAs were mutually beneficial, especially for automotive and other manufacturing industries in Asean countries.

"[Such an arrangement] will help increase the competitiveness of the countries involved as more Asean parts and components could move around the region [for final assembly for re-exports to markets around the world]."

"At present, we have a "complimentary parts" programme involving manufacturing operations in Thailand, Indonesia and Malaysia, with a consolidation centre in Bangkok.

"Overall, both imports and exports of parts will rise. Thailand, for instance, is now our second-largest production base after Japan. And we have just announced a new investment scheme to produce 100,000 ecologically friendly vehicles in Thailand by the year 2010 in accordance with the Thai government's policy promoting the production of more fuel-efficient vehicles.

"Earlier, Japan and Thailand also entered into a bilateral EPA, which should be beneficial in the long term, when there is more of a demand for large completely built-up or CBU units in the Thai market.

"As for pickup trucks [where Thailand is a major production base], CBU imports should rise from around 20,000 units in 2007 to around 45,000 units in 2010.

"Hopefully, we could economically import more parts from Asean into Japan or our Asean operations could economically export to around 130 countries worldwide," he said.

Dubbed the "Detroit of Asia", Thailand currently has a combined annual production capacity of over one million units for domestic and export markets, with several major Japanese auto-makers operating large-scale local plants.

In addition, General Motors also has a large operation in Thailand, while Volkswagen of Germany is reportedly planning to invest in a large-scale operation here.

According to Shiga, the quality of output [parts and components as well as finished vehicles], cost effectiveness, economies of speed and competitive exchange rates are the key factors determining the viability of the cross-border auto industry.

Over the past three decades, the Thai government has consistently maintained an "open-door" policy for the automotive and other manufacturing sectors, while offering attractive tax breaks and other incentives to foreign investors.

In addition, the country has no national car project, which would require state protection and funding over a long period, while such schemes could also be seen as "state competition" to foreign auto-makers.

Besides Thailand, which is one of the world's largest production bases for one-tonne pickup trucks, Shiga said that Vietnam, which joined the World Trade Organisation last year, also had the potential to be a strong player in Asean's auto industry in the near future.

As for Nissan, he said 2007 worldwide sales totalled about 3.7 million, down from 3.8 million units the previous year.

Having been saved from bankruptcy during the period between 2000 and 2003 by a foreign CEO who was concurrently CEO of French carmaker Renault, the Japanese auto-maker is now pursuing more research and development into new fuel and other green technologies to stay competitive amid skyrocketing oil prices and rising concerns over global environmental problems.

Nophakhun Limsamarnphun

nop1122@yahoo.com