She aims to drive Asean's auto industries in the same direction as AEC hits the road
Nissan Motor Thailand vice president for government relations Piengjai Kaewsuwan was unanimously elected new chairperson of the Asean Automotive Federation (AAF) for 2013-2014 at the AAF annual meeting on January 11 in Bangkok.
This is great news for Thailand, especially with the coming of the Asean Economic Community (AEC). It is expected that Thailand’s strengths in the automotive industry will enable it to strengthen its leadership in Southeast Asia.
Last year, Thailand produced more than 2 million vehicles, with domestic sales reaching a record 1.4 million, thanks to the government’s First Car Buyer Programme.
Apart from her position at Nissan, Piengjai is also president of the Thai Automobile Industry Association (TAIA). She had recently been elected president of the TAIA for a second term.
With three major jobs in hand, Piengjai is being closely watched. She is the only chairwoman of the TAIA in its 29-year history, as well as the first woman to be elected chairman of the Automotive Industry Club.
Piengjai talked the The Nation about her plans for the near future.
The AAF position
Piengjai said there are many issues that need to be brought up in order to help push Asean’s auto industry in the right direction. The next two years will see preparations being made for the AEC, which will come into being in 2015.
The AAF consists of 10 member countries, but the influence comes from the major auto-manufacturing nations of Thailand, Indonesia, Malaysia, the Philippines and Singapore.
“As there aren’t many member nations, the chairman’s position usually revolves alphabetically according to the country’s name. Actually, this is Singapore’s turn to lead the AAF, but it declined the offer, so Thailand was given the task instead,” said Piengjai. “As president of the TAIA, being elected chairwoman of the AAF means that my main duty is to discuss various regulations, including those of each Asean country so that we all move in the same direction. This also includes the standards for auto parts, emissions and fuel, which is not an easy task. Even the European Union, which has been in existence much longer than Asean, still has problems today concerning these issues,” she pointed out.
According to Piengjai, the lifting of the import duty under AFTA is still in effect.
“However, there are still differences concerning the domestic tax in each country and we cannot touch them. This is each country’s internal affair so this means that it will take considerable time for everything to be sorted out.”
She said the AAF had, in the past, been responsible for trading among Asean nations. The import duty for automobiles has been completely lifted and now the criteria concerns investment and harmonisation among Asean countries. More cooperation and fewer conflicts at the policy level will lead to investments that are connected between the automobile industry and related industries.
At the Asean Economic Ministers meeting in October 1992, members agreed on setting up the Asean Consultative Committee for Standards and Quality (ACCSQ) in order to help eliminate non-tariff barriers or Technical Barriers to Trade, and set up a common standard for automobiles and auto parts. The ACCSQ’s duty is also to offer testing and accreditation services, as well as make preparations for the creation of AFTA.
The ACCSQ concentrated on adjusting the standards for the top 20 products so that they conform to the Mutual Recognition Agreement (MRA), starting from the field that is most important.
“Product Working Groups have been set up by the ACCSQ for products that are important, so that we can progress from the standards designated in the roadmap towards the AEC,” Piengjai added.
At the ACCSQ meeting in August 2004, an Automotive Product Working Group (APWG) was set up. It was jointly chaired by Indonesia and Thailand, and its main duty is to carry on with the standards and accreditations for products, designate a roadmap and produce a MRA leading to the AEC in 2015.
The APWG comprises 10 member nations and aims to eliminate technical trade barriers concerning automotive products.
The main activities include:
1. Exchanging product standard information
2. Analysing information in order to designate a working direction
3. Harmonisation of standards in member countries
4. Jointly produce a MRA in terms of automotive products standards
5. Designate a roadmap/timetable of various activities
6. Prepare infrastructure for the AEC in 2015
The APWG has met 16 times and members have agreed on accepting the Economic Commission for Europe Regulation, under the 1958 Agreement, which is an international standard that covers 19 major products, to be followed by another 32 products in the future.
Golden Era for Asean
Thailand’s next target is to produce 3 million automobiles by 2017, and cumulative investment in the Thai auto industry has already totalled more than Bt1 trillion, with Bt100 billion being invested in automobile and auto parts R&D.
“The large investment has strengthened the Thai auto industry and taken it to higher levels than in other countries, but in order to move ahead securely, Thailand needs a stronger technology base. We also need strong cooperation from every sector in developing human resources as well as the supply chain so that it is more systematic,” Piengjai pointed out.
Thailand’s automobile market makes up 50 per cent of the Asean market, which means that when Thailand produces 3 million vehicles per year, Asean’s production will reach 6 million.
Investments are expected to continue pouring into this region, due to the economic crunch in the US and Europe.
“This is a golden opportunity for Asia, and Asean is a rising star. If we maintain continuous cooperation, promoting Asean as a major regional market would not be difficult,” she said.
What does Thailand get from AAF?
In 2012 Thailand was able to secure the top 10 position in the world in terms of auto production. Although it was only for a short while, it served as strong proof of the potential of the Kingdom’s auto industry. This translates to more opportunities in the future, both in terms of investment and technology transfer.
“This year, it is possible Thailand will maintain the position. Thailand has enjoyed a very high level of investment in the auto sector, and last year we saw dramatic growth in auto production due to strong vehicles like the pickup truck and eco-car, which was highly successful. The eco-car will continue to attract investment for the Thai auto industry in the next eight years,” she said, adding that cumulative investment in the eco-car project is expected to reach Bt200 billion.
There are also other channels for growth, including connecting with other free trade areas such as AFTA and JTEPA (Japan-Thailand Economic Partnership Agreement).
“We must quickly discuss the automotive framework and various conditions in order to create clarity and a common direction, which will lead to raising the potential for the Thai and Asean automotive industry,” she said.