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ASEAN主要国産業調査 報告書
平成２２年度 経済産業省 経済連携促進のための産業高度化推進事業 ＡＳＥＡＮ主要国産業調査 報告書 平成２３年３月 ホワイト＆ケース外国法事務弁護士事務所 はじめに 東アジア地域における広域経済連携については、2009年の東アジア・サミットにお いて、東アジア包括的経済連携（ASEAN+6）、東アジア自由貿易協定 （ASEAN+3）の構想が、民間研究の段階から、政府間での検討に格上げされたとこ ろである。これを受け、我が国からは、本年8月のASEAN+6 の経済大臣会合で「イ ニシャル・ステップス」と題する提案を行い、検討の加速を提言し、同提案は本年 10月末の東アジア・サミットにおいても言及された。 また、本年11に閣議決定された「包括的経済連携に関する基本方針」において、東 アジア広域経済連携は、「交渉開始を可及的速やかに実現する」とされている。 本構想の推進に当たっては、参加各国（ASEAN+6）における、貿易・投資等の将来 的な影響・メリットを把握しておくことが必要不可欠である。特に、今後、市場の 拡大が見込まれるインドについては、ASEANとのFTAが発効され、市場として更に 重要な役割を占めることが予測される。 これらの観点から、ASEAN主要国であるフィリピン、タイ、マレーシア、インドネ シアにおける主要産業について、貿易・産業構造に関するバックデータを収集し、 また、対インドへのアクセスの状況について、本調査を行ったものである。 本調査報告書が今後の我が国のFTA網構築の一助となれば幸いである。 平成 23 年 3 月 ホワイト＆ケース外国法事務弁護士事務所 パートナー・外国法事務弁護士 梅島 修 目 次 第I章 A. 1. 報告書の概要.......................................................................................................1 インドネシア.......................................................................................................1 二輪車...................................................................................................................1 a) 業界団体...............................................................................................................1 (1) Indonesian Motorcycles Industry Association (AISI) .............................1 b) インドとの貿易・インドにおける市場占有率データ...................................2 c) インドへの投資...................................................................................................2 2. 合成繊維・織物...................................................................................................2 a) 業界団体...............................................................................................................3 (1) The Indonesian Synthetic Fiber Producer’s Association (Asosiasi Produsen Synthetic Fiber Indonesia) (APSyFI)) ................................................3 (2) The Indonesian Textile Association (Asosiasi Pertekstilan Indonesia (API)) 3 b) インドとの貿易・インドにおける市場占有率データ...................................4 c) インドへの投資...................................................................................................4 B. マレーシア...........................................................................................................5 1. 自動車部品...........................................................................................................5 a) 業界団体...............................................................................................................5 (1) Malaysian Automotive Component Parts Manufacturers (MACPMA) 6 (2) Malaysian Automotive Association (MAA) ..............................................6 b) インドとの貿易・インドにおける市場占有率データ...................................7 c) インドへの投資...................................................................................................7 2. パームオイル.......................................................................................................8 a) 業界団体...............................................................................................................8 (1) Malaysian Palm Oil Association (MPOA) ................................................9 (2) Palm Oil Refiners Association of Malaysia (PORAM) ...........................9 b) インドとの貿易・インドにおける市場占有率データ.................................10 c) インドへの投資.................................................................................................10 3. プラスチック・ゴム.........................................................................................10 a) 業界団体.............................................................................................................11 (1) ゴム産業： Malaysian Rubber Export Promotion Council (MREPC) 11 (2) ゴム産業： Malaysian Rubber Glove Manufacturers’ Association (MARGMA).............................................................................................................12 (3) ゴム産業： Malaysian Rubber Products Manufacturers' Association (MRPMA) ................................................................................................................12 (4) ゴム産業： The Federation of the Rubber Trade Associations of Malaysia (FRTAM) ................................................................................................12 (5) ゴム産業： Malaysian Rubber Board (MRB).....................................13 (6) プラスティック産業： Malaysian Plastics Manufacturers Association (MPMA) .............................................................................................13 b) インドとの貿易・インドにおける市場占有率データ.................................14 c) インドへの投資.................................................................................................14 4. 白物家電.............................................................................................................15 i 業界団体.............................................................................................................15 Electrical and Electronics Association of Malaysia (TEEAM) ............15 b) インドとの貿易・インドにおける市場占有率データ.................................16 c) インドへの投資.................................................................................................16 C. フィリピン.........................................................................................................17 5. 電気機器.............................................................................................................17 a) 業界団体.............................................................................................................17 (1) The Philippine Exporters Confederation, Inc. (Philexport) .................17 (2) Semiconductor and Electronics Industries in the Philippines Inc (SEIPI).....................................................................................................................18 b) インドとの貿易データ.....................................................................................19 c) インドへの投資.................................................................................................19 6. 乗用車.................................................................................................................20 a) 業界団体.............................................................................................................20 (1) The Chamber of Automotive Manufacturers of the Philippines, Inc., (CAMPI) ..................................................................................................................20 (2) Motor Vehicle Parts Manufacturers Association of the Philippines, Inc (MVPMAP)..............................................................................................................21 b) インドとの貿易データ.....................................................................................21 c) インドへの投資.................................................................................................22 D. タイ.....................................................................................................................22 1. 自動車部品.........................................................................................................22 a) 業界団体.............................................................................................................22 (1) Auto Industry Parts Club under the Federation of Thai Industries (AIPC-FTI) ..............................................................................................................23 (2) Thailand Auto-Parts Manufacturers Association (TAPMA) ................23 (3) Thailand Automotive Institute (TAI) ........................................................24 b) インドとの貿易・市場占有率データ.............................................................24 c) インドへの投資.................................................................................................24 2. 化学工業品.........................................................................................................25 a) 業界団体.............................................................................................................25 (1) Chemical Business Association (CBA) ..................................................25 (2) Petrochemical Industry Club (PC-FTI)...................................................26 b) インドとの貿易・インドにおける市場占有率データ.................................26 c) インドへの投資.................................................................................................26 3. 食料品.................................................................................................................27 a) 業界団体.............................................................................................................27 (1) Thai Food Processors Association (TFPA)...........................................27 (2) Thai Frozen Foods Association (TFFA).................................................28 (3) Food Processing Industry Club under the Federation of Thai Manufacturers (FTI-FP)........................................................................................28 b) インドとの貿易・インドにおける市場占有率データ.................................29 c) インドへの投資.................................................................................................29 4. 白物家電.............................................................................................................29 a) 業界団体.............................................................................................................29 (1) Thai Refrigeration Association (TRA) ....................................................30 (2) Thai Electrical and Electronics Institute (EEI).......................................30 a) (1) ii (3) FTI) (4) Air Conditioning and Refrigeration Industry Club under the FTI (AR31 Electrical Electronics & Allied Industry Club under the FTI (EEA-FTI) 31 b) インドとの貿易・インドにおける市場占有率データ.................................31 c) インドへの投資.................................................................................................32 E. インド市場における外国貿易及び外国直接投資に対する障壁.................33 1. 間接税.................................................................................................................33 a) 輸出入制限、関税、通関手続.........................................................................33 b) サービス税.........................................................................................................33 c) 付加価値税.........................................................................................................34 d) 物品税.................................................................................................................34 2. 直接税.................................................................................................................34 3. 工業基準.............................................................................................................34 a) 1986 年インド基準局法に基づく制限...........................................................34 b) 1980 年公害防止管理法に基づく制限...........................................................35 c) 1986 年環境保護法に基づく制限...................................................................35 d) 1948 年工場法に基づく制限...........................................................................35 4. 特別経済区域（SEZ）.....................................................................................35 5. 外国為替制限.....................................................................................................36 a) 株式、優先株、社債への外国投資.................................................................36 b) 外国直接投資を受け容れることが認められる企業.....................................36 6. 外国投資家の所有制限.....................................................................................36 7. 知的財産権の保護.............................................................................................37 第 II 章 INDONESIA.......................................................................................................38 A. Motorcycle Industry..........................................................................................38 1. Trade Associations ..........................................................................................38 a) Indonesian Motorcycles Industry Association (AISI) ..................................38 2. Production Data and Trade Statistics ...........................................................39 3. Trade and Investment Activities of the Motorcycle Industry in India........40 B. Synthetic Fiber and Textile Industry..............................................................40 1. Trade Associations ..........................................................................................41 a) The Indonesian Synthetic Fiber Producer’s Association ...........................41 b) The Indonesian Textile Association ..............................................................42 2. Production Data and Trade Statistics ...........................................................44 3. Trade and Investment Activities of the Synthetic Fiber and Textile Industry in India .............................................................................................................45 第 III 章 MALAYSIA.........................................................................................................47 A. Automotive Parts Industry...............................................................................47 1. Trade Associations ..........................................................................................48 a) Malaysian Automotive Component Parts Manufacturers (MACPMA) .....49 b) Malaysian Automotive Association (MAA) ...................................................51 2. Production Data and Trade Statistics ...........................................................54 3. Trade and Investment Activities in the Automotive Parts Industry in India 54 B. Palm Oil Industry ..............................................................................................56 1. Trade Associations ..........................................................................................57 iii The Malaysian Palm Oil Association (MPOA) .............................................57 The Palm Oil Refiners Association of Malaysia (PORAM) ........................59 2. Production Data and Trade Statistics ...........................................................60 3. Trade and Investment Activities in the Palm Oil Industry ..........................61 C. Rubber & Plastics Industry .............................................................................62 1. Trade Associations ..........................................................................................62 a) Rubber Associations........................................................................................63 (1) Malaysian Rubber Export Promotion Council (MREPC).....................63 (2) Malaysian Rubber Glove Manufacturers’ Association (MARGMA)...65 (3) Malaysian Rubber Products Manufacturers' Association (MRPMA).66 (4) Federation of the Rubber Trade Associations of Malaysia (FTRAM) 66 (5) Malaysian Rubber Board (MRB).............................................................67 b) Plastics Associations .......................................................................................69 (1) Malaysian Plastics Manufacturers Association (MPMA).....................69 2. Production Data and Trade Statistics ...........................................................70 3. Trade and Investment Activities of the Rubber & Plastics Industry in India 71 a) Rubber Industry ................................................................................................71 b) Plastics Industry ...............................................................................................72 D. White Electric Home Appliance/Electrical and Electronic Industry ..........73 1. Trade Associations ..........................................................................................74 a) The Electrical and Electronics Association of Malaysia (TEEAM) ...........74 2. Production and Trade Statistics .....................................................................77 3. Trade and Investment Activities of the Electrical and Electronics Industry in India77 第 IV 章 PHILIPPINES....................................................................................................79 A. Electric Device Industry...................................................................................79 1. Trade Associations ..........................................................................................79 a) The Philippine Exporters Confederation, Inc. (Philexport) ........................80 b) Semiconductor and Electronics Industries in the Philippines Inc (SEIPI)83 2. Production Data and Trade Statistics ...........................................................86 3. Trade and Investment Activities of the Electric Device Industry in India.86 B. Passenger Vehicle Industry............................................................................88 1. Trade Associations ..........................................................................................88 a) The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) ......................................................................................................................89 b) Motor Vehicle Parts Manufacturers Association of the Philippines, Inc. (MVPMAP)..................................................................................................................90 2. Production Data and Trade Statistics ...........................................................93 3. Trade and Investment Activities of the Passenger Vehicle Industry in India 94 第V章 THAILAND.........................................................................................................96 A. Automotive Parts Industry...............................................................................96 1. Trade Associations ..........................................................................................96 a) The Auto Industry Parts Club under the Federation of Thai Industries (AIPC-FTI) ..................................................................................................................97 b) Thailand Auto-Parts Manufacturers Association (TAPMA) .......................98 c) Thailand Automotive Institute (TAI) .............................................................100 2. Production Data and Trade Statistics .........................................................102 a) b) iv 3. India-Related Trade and Investment Activities in the Automotive Parts Industry .........................................................................................................................103 B. Chemical Product Industry............................................................................105 1. Trade Associations ........................................................................................105 a) Chemical Business Association of Thailand (CBA) ..................................106 b) The Petrochemical Industry Club (PC-FTI)................................................107 2. Production Data and Trade Statistics .........................................................108 3. India-Related Trade and Investment Activities in the Chemical Product Industry .........................................................................................................................109 C. Food Industry ..................................................................................................110 1. Trade Associations ........................................................................................110 a) The Thai Food Processors Association (TFPA)........................................110 b) Thai Frozen Foods Association (TFFA)......................................................112 c) The Food Processing Industry Club under the Federation of Thai Manufacturers (FP-FTI)..........................................................................................114 2. Production Data and Trade Statistics .........................................................115 3. India-Related Trade and Investment Activities in the Food Industry .....116 D. White Electric Home Appliance Industry ....................................................117 1. Trade Associations ........................................................................................117 a) Thai Refrigeration Association (TRA) .........................................................117 b) The Electrical and Electronics Institute (EEI) ............................................118 c) The Air Conditioning and Refrigeration Industry Club under the Federation of Thai Industries (AR-FTI) ................................................................119 d) Electrical Electronics & Allied Industry Club under the Federation of Thai Industries (EEA-FTI) ...............................................................................................120 2. Production Data and Trade Statistics .........................................................122 3. India-Related Trade and Investment Activities in the White Electrical Home Appliances Industry.........................................................................................122 第 VI 章 BARRIERS TO FOREIGN TRADE AND INVESTMENT IN INDIA ........124 1. Indirect Taxation .............................................................................................124 a) Restrictive Export/ Import Trade, Duty and Customs Clearance Procedures ...............................................................................................................124 b) Service Tax .....................................................................................................130 c) Value Added Tax / Central Sales Tax.........................................................131 d) Excise Tax .......................................................................................................131 2. Direct Taxation................................................................................................131 3. Industrial Standards .......................................................................................134 a) Restrictions under the Bureau of Indian Standards (BIS) Act, 1986......134 b) Restrictions under Air (Prevention and Control of Pollution) Act, 1981.136 c) Restrictions under the Environment Protection Act, 1986.......................136 d) Restrictions under the Factories Act, 1948 ................................................137 4. Special Economic Zones (SEZ) ...................................................................137 5. Controls on Foreign Exchange ....................................................................138 a) Foreign Investments in Equity or Preference Shares or Debentures ....139 b) Entities into which FDI can be made...........................................................140 6. Foreign Ownership Limitations Applicable to Foreign Investors ............141 7. Protection and Implementation of Intellectual Property Rights...............143 v 第I章 報告書の概要 本報告書は、ASEAN 主要国であるフィリピン、タイ、マレーシア、インドネシアに おける次の主要産業について、当該主要産業の品目を所管する主要業界団体を特定 し、最近の主な貿易・投資自由化に対する見解、貿易・産業構造に関するバックデ ータを収集し、また、対インドへのアクセス、即ち輸出、投資の状況について、調 査を行ったものである。 調査対象国及びその主要産業・品目 1) インドネシア： 二輪車、合成繊維・織物 2) マレーシア： 自動車部品、パームオイル、プラスチック・ゴム、白物家電 3) フィリピン： 電気機器、乗用車 4) タイ： 自動車部品、化学工業品、食料品、白物家電 さらに、それら産業について、インドにおける外国貿易に対する障壁、外国直接投 資に対する障壁について調査を行った。 本章は、次章以降の調査結果報告の概要をまとめたものである。 A. 1. インドネシア 二輪車 インドネシアは、中国、インドに次ぐ世界第 3 位の二輪車生産国であるが、その殆 どは国内向けである。2009 年の生産 7,395,390 台のうち、輸出は Timor-Laste 社が 3 万台弱を主にフィリピンへ輸出したに過ぎない。 インドネシアの主な二輪車生産者は、ホンダ、ヤマハ、スズキ、カワサキの日系企 業と、インドの TVS 社である。 a) 業界団体 インドネシアの二輪車業界団体は Indonesian Motorcycles Industry Association (Asosiasi Industri Sepeda Motor Indonesia) (AISI) のみである。 (1) Indonesian Motorcycles Industry Association (AISI) (a) 組織の概要 AISI は 1971 年にインドネシア政府の二輪車産業育成政策に対応して設立された。会 員企業は 8 社。会員企業相互の協力によりインドネシア二輪車産業を発展させるこ とを目的とする。会員企業間の情報共有及び協力促進、国内外の規制の監視等を行 っている。現在の会長は Ing Gunadi Sindhuwinata 氏である。 1 (b) 通商問題に対する態度 AISI は、貿易、投資自由化に前向きな発言をしている。2010 年 5 月、AISI 会長は、 ASEAN インド FTA がインドネシア二輪車産業に与える影響は微少であると述べて いる。これは、既にインドネシア二輪車産業として確固たる地位を築いていること、 そもそも輸入関税の引き下げ幅が僅かであることなどによる。 b) インドとの貿易・インドにおける市場占有率データ 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 表1 2007-08 2008-09 2009-10 インドネシア二輪車・インドとの貿易データ インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 311,958 57,653 16,557,400 5207.6% 39,197 -32.0% 7,111,414 -57.0% 118,361 202.0% 表2 インドネシア二輪車・インド市場占有率 2007-08 2008-09 2009-10 0.090% 0.065% 0.161% c) インドへの投資 調査の結果、インドネシア二輪車産業の中でインドへ投資する者は見当たらなかっ た。他方、インド企業である PT TVS Motor、Bajaj Auto は、インドネシアへ投資し ている。 2. 合成繊維・織物 インドネシアの繊維産業は、合成繊維、総合織物工場、綿糸、小規模工業、手織、 の 5 分野に分かれている。その主力輸出製品は合成繊維、衣料品である。しかし、 その貧弱かつ非効率な生産設備及び技術、電力及び労務費の上昇が問題とされてい る。2009 年には 155 社が破綻した。 同産業は、2004 年の統計で、全体として 2,661 社、うち合成繊維生産企業は 28 社、 織物・編み物企業 1,044 社、衣料品企業 861 社で構成されている。 2 a) 業界団体 インドネシア合成繊維・織物の業界団体としては、次の 2 団体が特定された。 ・ The Indonesian Synthetic Fiber Producer’s Association (Asosiasi Produsen Synthetic Fiber Indonesia) (APSyFI)) ・ The Indonesian Textile Association (API) (1) The Indonesian Synthetic Fiber Producer’s Association (Asosiasi Produsen Synthetic Fiber Indonesia) (APSyFI)) (a) 組織の概要 APSyFI は 1975 年に設立された。会員企業は 13 社。それら企業は、ポリエステル短 繊維、ポリエステルフィルム、ポリエステル長繊維、ナイロン長繊維を生産してい る。APSyFI はホームページも開設しておらず、また、我々の聞き取り調査にも応じ なかった。 (b) 通商問題に対する態度 APSyFI は、ポリエステル短繊維についてインド、中国、台湾産に対するアンチダン ピング調査を提訴している。また、国際競争により、繊維生産企業は 18 社から 12 社に減少し、生産量も減少していると主張している。 ASEAN 中国 FTA については、中国製品との競争が激化するとして、その実施に懸 念を表明している。 APSyFI は、貿易、投資全般については何らの声明も発表していないが、上述の点か ら、自由化には否定的であると思われる。 (2) The Indonesian Textile Association (Asosiasi Pertekstilan Indonesia (API)) (a) 組織の概要 API は独立系の非営利法人として 1974 年に設立された。会員企業は 1,070 社。その 活動は、主に、繊維産業を代理して、政府、繊維機械メーカー、学会、報道機関等 に、意見表明をおこなうことである。また、繊維産業に関する情報収集も行ってい る。現在の会長は Ade Sudrajat 氏である。 3 (b) 通商問題に対する態度 API の貿易、通商問題に対する姿勢は、問題点によって異なる。ASEAN 中国 FTA について、API は、中国の通貨が安く評価されており、インドネシアへの輸入が増 加するとして、その完全実施に反対している。 他方、ASEAN インド FTA について、API 会長は、男性用シャツ、女性用衣料品は インド製品よりも品質が優れているとして、当該 FTA は輸出機会と輸入の脅威の双 方があると述べている。 インドネシア-インド包括的経済連携協定については、API は態度を表明していない。 同協定交渉は、未だ、初回オファー交換がなされていない。 b) インドとの貿易・インドにおける市場占有率データ 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 表3 2007-08 2008-09 2009-10 表4 インドネシア合成繊維・織物・インドとの貿易データ インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 43,049,241 32,948,938 38,276,990 -11.1% 106,293,482 222.6% 37,997,385 -0.7% 55,629,935 -47.7% インドネシア合成繊維・織物・インド市場占有率 2007-08 2008-09 2009-10 0.15% 0.48% 0.25% c) インドへの投資 以下には、非日系企業のインド市場に対する主な活動について報告する。 ・ PT. Mutu Gading Tekstil： 同社は、ポリエステル織物糸を生産し、その 60%を、EU、中東、オーストラリア、インドへ輸出している。 ・ PT Indorama Synthetics Tbk： 同社は、生産するポリエステル製品の過半数 を輸出している。その主な輸出先は米国、カナダ、EU であり、また、イン ド、オーストラリア、中東地域への輸出が近年増加している。 ・ Asia Pacific Fibers： 同社は PTA、ポリエステル糸、ポリエステル繊維を、 インドを含む諸外国へ輸出している。 4 ・ Sulindafin (Susila Indah Synthetic Fibers Industries)： 同社は、ポリエステル 繊維製品を、インドを含む諸外国へ輸出している。 ・ Panasia Indosyntec： 同社は、ポリエステル繊維製品を、インドを含む諸外 国へ輸出している。 B. 1. マレーシア 自動車部品 2010 年 8 月現在で、マレーシア国内には 28 の完成車組立工場があり、963,300 台の 自動車及び 1 百万台のオートバイ生産能力を有している。 自動車部品企業は、690 社あり、2009 年の売上高は、58 億リンギ、その 70%は OEM 市場向けである。また、20 億リンギの自動車部品を主に中国、タイへ輸出す る一方で、44 億リンギの自動車部品輸入がある。 プロトンの国内部品調達率は 80%程度であるが、外国自動車の国内部品調達率は 35%-40%に止まる。 プロトン社は、2011 年にタイその他の国へ自動車部品輸出を開始する予定である。 自動車部品企業の内訳は、金型・ダイス関係約 20 社、鋳造約 18 社、金属加工 50 社 以上、プレス 300 社、金属表面加工 40 社以上、熱処理 20 社以上、などである。 a) 業界団体 自動車、自動車部品関係としては、次の業界団体を挙げることができる。 ・ Malaysian Automotive Component Parts Manufacturers (MACPMA) ・ Malaysian Automotive Association (MAA) ・ Malaysia Automotive Institute (MAI) ・ Motorcycle and Scooter Assemblers and Distributors Association of Malaysia (MASAAM) ・ The Federation of Malaysian Manufacturers (FMM) Malaysian Automotive Tyres Manufacturers Industry Group (FMM MATMIG) これらのうち、規模、活動内容から、MACPMA 及び MAA について報告する。 5 (1) Malaysian Automotive Component Parts Manufacturers (MACPMA) (a) 組織の概要 MACPMA は個別自動車部品産業団体の上部団体で、会員企業は 91 社。自動車部品 産業の公式見解を表明し、マレーシア政府との交渉を行っている。また、自動車組 立メーカーとのつなぎ役を果たし、各国の自動車部品工業会との会話も行っている。 さらに、会員企業に対して、政府政策、施策、規則、その他の情報提供なども行っ ている。現在の会長は Peter Lim Yoke Cheong 氏である。 (b) 通商問題に対する態度 MACPMA は、貿易、投資自由化を支持する立場を取っている。ASEAN 地域内では、 ASEAN 自動車連盟の会合に参加し、ASEAN 地域での自動車産業の発展策について 協議し、また、政府代表団にアドバイスをしている。会員企業に対しては、貿易ミ ッションを組織して輸出相手国、潜在的市場の開拓を行っている。 インドとの貿易について、MACPMA は、the Association of Component Manufacturers of India (ACMA) と覚書を締結して、貿易協力関係を築いている。 ただし、MACPMA、その会員企業共、FTA についての具体的な立場を表明していな い。 (2) Malaysian Automotive Association (MAA) (a) 組織の概要 MAA の前身母体は 1960 年に設立され、その後、他の団体と合併して、2000 年 1 月 に、現在の MAA となった。会員企業は 244 社。MAA は、政府の外郭団体であるが、 他方で、自動車業界の立場を表明し、政府との交渉も行う。また、各種統計値の収 集、会員企業への情報提供も行っている。現在の会長は Datuk Aishah Ahmad 氏であ る。 (b) 通商問題に対する態度 マレーシア自動車産業は、プロトン社設立以来、相当に保護されてきた。しかし、 MAA の立場は微妙である。国内自動車メーカー会員は輸入からの保護継続を求める 一方で、外国メーカー会員は自由化を支持している。 2006 年の国家自動車政策（NAP）は 2009 年 10 月に変更され、自由化に対応したも のとなった。これに対する MAA の立場は次の通り。 6 ・ 関税削減・自由化： マレーシアの自動車、自動車部品に輸出機会を提供 するものである。マレーシア国内の自動車メーカーに過度に依拠すること は今後の発展に限界があると認識されてきている。 ・ 物品税： マレーシアは完成車、CKD に 60%から 125%の物品税を課して いるが、MAA は、これを引き下げるよう政府に働きかけている。 ・ 製造ライセンス： ている。 100%外資企業に製造ライセンスを与えることを歓迎し ・ ハイブリッド車： る。 ハイブリッド車の物品税を廃止したことを歓迎してい ・ 中古部品の輸入禁止： いる。 ・ 中古車の輸入禁止・フランチャイズ許可の廃止： 一部の企業は AP 制度は 一部の企業のみを利するものであるとして歓迎しているが、他の一部企業 は、2015 年の廃止後に中古車輸入が急増するのではないかと懸念している。 ・ プロトンと OEM 供給者とのパートナーシップ： 国家自動車プロジェクト は自動車部品産業を 600 社までに拡大した功績があり、政府の政策を支持 するとしている一方で、国家自動車プロジェクトを永久に維持することは できないとも指摘している。 b) 国内部品の売上高が増進されるとして、歓迎して インドとの貿易・インドにおける市場占有率データ 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 表5 2007-08 2008-09 2009-10 マレーシア自動車部品・インドとの貿易データ インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 1,378,522 5,701,675 3,441,318 13,457,964 136.0% 149.6% 3,808,695 12,130,198 -9.9% 10.7% 表6 マレーシア自動車部品・インド市場占有率 2007-08 2008-09 2009-10 0.008% 0.018% 0.016% c) インドへの投資 以下には、非日系企業のインド市場に対する主な活動について報告する。 7 ・ Proton： 同社は、インド市場におけるビジネスについて 2011 年前半まで に纏めるとしている。同社は、インド市場に Exora, Persona, Emas を投入す るとしている。また、同社は、ヒンドスタン・モーターにおいて、Exora を 組み立てる予定であると報道されている。また、タタ・モーターと協議し ているとも伝えられている。 ・ UMW/Perodua： 両社は、インドにおいて合弁事業を行い、各種自動車部 品を製造している。 ・ Naza： ナザ・グループは、2006 年、チェンナイに組立工場を設立すると 発表したが、その後、この工場について何ら言及されていない。 ・ Wheels Electronics Manufacturing： 2006 年、合弁会社 Crosslink Wheels Electronics 社をインド・バッディに設立し、スマートカード・インモビライ ザー、その他の自動車警備用品を製造している。 2. パームオイル マレーシアはパームオイル及びパームオイル製品の世界最大の輸出国で、2009 年の 輸出高は 496 億リンギであった。主な輸出先は、中国、印度、EU、パキスタンであ る。 マレーシアの証券取引所では、41 社のパームオイル生産者が上場されている。この 成功は、原材料パームオイルからパームオイル製品へと輸出品目を移してきたとこ ろが大きい。 a) 業界団体 パームオイル業界団体として、川上製品から川下製品まで、次の団体が挙げられる。 ・ Malaysian Palm Oil Association (MPOA) ・ East Malaysia Planters Association (EMPA) ・ Incorporated Society of Planters (ISP) ・ Palm Oil Millers Association (POMA) ・ Palm Oil Refiners Association of Malaysia (PORAM) ・ Malaysian Edible Oil Manufacturers Group (MEOMA) ・ Malaysian Oleochemical Manufacturers Group (MOMG) これらのほとんどは、国内市場、会員企業間の問題を取り扱っている。通商問題に ついては、MPOA 及び PORAM が発言をしている。したがって、この報告書では、 それら 2 団体を取り上げる。 8 (1) Malaysian Palm Oil Association (MPOA) (a) 組織の概要 MPOA は 1999 年にマレーシア政府の後押しで 4 団体が合併して設立された。会員企 業は 128 社。会員企業の声を一つに纏め、また、プランテーション産業の種々の要 求及び利益のバランスをとって、全体として発展することを目指している。MPOA は、パームオイルに加え、ゴム、ココア、お茶、その他の非穀物類の問題を取り扱 っている。その主な活動は、国内外における産業の代表、ロビー活動、研究開発、 市場開拓、会員企業への情報伝達などである。現在の会長は Dato’ Azhar Abdul Hamid 氏である。 (b) 通商問題に対する態度 MPOA は貿易、投資自由化について特定の立場を表明していないが、自由化を支持 していると思われる。特に、パームオイルのインド輸出は 2008 年に前年から倍増し た。これは、インド政府が低所得者層に植物油を普及させていることによるところ が大きい。また、MPOA は、原料パームオイル輸出からパームオイル製品輸出への 移行を促している。 MPOA は、また、インドネシア輸出者とパームオイル市場の改善、共同投資、その 他貿易、環境問題などについて協力協定を締結した。この協定では、EU、米国の輸 入規制について共同で取り組むこと、原料パームオイル市場価格を支配すべきこと なども合意している。 マレーシア・インド包括的経済連携協定では、パームオイル製品について、ASEAN インド FTA よりも優遇する関税削減率に合意している。これにより、MPOA 会員企 業は、より有利な条件でインド輸出が可能となる。 (2) Palm Oil Refiners Association of Malaysia (PORAM) (a) 組織の概要 PORAM は、パームオイル精製業の利益を代表し、増進させることを目的として、 1975 年に設立された。会員企業は正会員 21 社、準会員 79 社。その活動には、パー ムオイル製品輸出の増進、ビジネスコンタクトの創設、市場情報、法令、規制等の 情報伝達、セミナー等の開催などがある。現在の会長は En. Wan Mohd Zain Wan Ismail 氏である。 9 (b) 通商問題に対する態度 PORAM は、貿易、投資について、マレーシア政府と接触している。2009 年 7 月に は、マレーシア・パキスタン FTA における無税枠について政府と協議している。ま た、他のマレーシア内の事業団体と、マレーシアの FTA 交渉、WTO 交渉について 話し合っている。 b) インドとの貿易・インドにおける市場占有率データ 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 表7 2007-08 2008-09 2009-10 マレーシア パームオイル・インドとの貿易データ インドからの輸入 金額(USD) 前年比増加率 *** *** n.a. *** n.a. 表8 インドへの輸出 金額(USD) 前年比増加率 151,891,903 224.3% 492,533,759 59.8% 787,112,295 マレーシア パームオイル・インド市場占有率 2007-08 2008-09 2009-10 10.2% 18.7% 18.5% c) インドへの投資 以下には、非日系企業のインド市場に対する主な活動について報告する。 ・ IJM Plantations Berhad： 2008 年 2 月、Godrej-IJM Plam Oil Ltd (GIPOL)とイ ンドにおけるパームオイル栽培についての合弁会社を設立した。しかし、 2010 年 11 月、同社はその過半数の株式をインド側に売却し、合弁を解消し た。 ・ Sime Darby Berhad： 2010 年 3 月、インドに 100%子会社 Sime Darby Edible Products Private Limited (SDEPI)を設立し、パームオイルその他のパーム・プ ランテーション製品の製造、販売、輸出入を行うと表明した。 3. プラスチック・ゴム マレーシアのゴム産業は、ラテックス、フォームラバー、ラバースレッド、ドライ ラバーの 4 種類に分かれ、2009 年の全体の貿易額は 157.5 億リンギ。おもな輸出先 は中国、米国、ドイツ、日本、英国である。 10 プラスティック産業は、用途により、梱包用、電子電気機器用、家庭用、自動車用、 建設用、農業用、その他に分かれる。2009 年の全体の貿易額は 132.7 億リンギ。お もな輸出先はシンガポール、日本、英国、米国、タイである。 a) 業界団体 ゴム産業については、業界団体として次の 4 団体がある。 ・ Malaysian Rubber Export Promotion Council (MREPC) ・ Malaysian Rubber Glove Manufacturers’ Association (MARGMA) ・ Malaysian Rubber Products Manufacturers' Association (MRPMA) ・ The Federation of the Rubber Trade Associations of Malaysia (FRTAM) また、公的機関である Malaysian Rubber Board (MRB) についても、本報告書で扱う。 マレーシアのプラスティック産業の業界団体は、次の 1 団体である。 ・ Malaysian Plastics Manufacturers Association (MPMA) (1) ゴム産業： (a) Malaysian Rubber Export Promotion Council (MREPC) 組織の概要 MREPC は、ゴム製品の輸出促進及び円滑化のため、2000 年に設立された。会員企 業は 500 社を超える。その活動は、輸出市場の特定、市場アクセスの向上、見本市、 セミナー等の開催、会員企業への情報提供などである。現在の会長は YB Datuk Billy Abit Joo 氏である。 (b) 通商問題に対する態度 MREPC は、輸出促進団体であり、貿易、投資自由化に前向きである。見本市、セミ ナー、トレードミッションによる相手国訪問などをおこなっている。2010 年 10 月 の ASEAN 中国 FTA セミナーでは、同 FTA により中国輸出が 23.4%増加したと述べ ている。 また、AFTA についても、会員企業にすばらしい潜在的な輸出機会を提供している としている。 インドは主たる輸出先ではないが、衛生用品の普及が見込まれると考えている。 2007 年には、インド・ゴム EXPO2007 にマレーシアゴム業界を代表して参加してい る。 11 今後の問題は、世界各国においてゴムに対する仕様、規制が厳しくなってきている ことにある。 (2) ゴム産業： Malaysian Rubber Glove Manufacturers’ Association (MARGMA) (a) 組織の概要 MARGMA はラテックス手袋生産者の利益を保護し、増進する目的で 1989 年に設立 された。会員企業は正会員 48 社、準会員 85 社。会員企業相互の理解向上、ラテッ クス手袋の標準化と改善、会員企業の利益向上、記述情報の伝達を業務とする。現 在の会長は Lee Kim Meow 氏である。 (b) 通商問題に対する態度 MARGMA の活動は貿易、投資を含んでいないため、それら事項についての立場は 表明していない。なお、MREPC 及び MRB と共同歩調であると思われる。 (3) ゴム産業： (MRPMA) (a) Malaysian Rubber Products Manufacturers' Association 組織の概要 MRPMA はゴム製品の技術、品質、生産性の向上に資することを目的として、1977 年に設立された。会員企業は 110 社。 (b) 通商問題に対する態度 MRPMA は貿易、投資について公式の見解を表明していないが、我々のインタビュ ーに答えて、MREPC 及び MRB と共同歩調であると述べている。 (4) ゴム産業： The Federation of the Rubber Trade Associations of Malaysia (FRTAM) (a) 組織の概要 FRTAM は ASEAN ゴムビジネス協議会においてマレーシアのゴム産業を代表するた めに、MRB が設置した団体である。会員企業は 17 社。現在の会長は Dato’ Seri Hwang Sing Lue 氏である。 12 (b) 通商問題に対する態度 我々のインタビューに対して、FRTAM としての立場は表明できないが、MRB を支 持していると述べている。 (5) ゴム産業： (a) Malaysian Rubber Board (MRB) 組織の概要 MRB は、マレーシアの政府機関で、1998 年、3 機関が合併して設立された。マレー シアのゴム産業の競争力を強化し、持続的成長政策を策定し、成長を促進し、正確 かつ効率的な情報サービスを提供し、速やかな技術移転を行うことを任務としてい る。現在の長官は Datuk Dr. Salmiah Ahmad 氏である。 その下部団体として、Malaysian Rubber Exchange (MRE) が組織されている。会員企 業は正会員 158 社、準会員 16 社。ゴム及びゴム製品の開発、発展に資することを目 的としている。ASEAN ゴムビジネス協議会の常任事務局でもある。 (b) 通商問題に対する態度 MRB、MRB とも、貿易、投資自由化についての公式見解は発出していないが、ゴ ム産業の貿易、投資自由化を支持していると考えられる。そのホームページからゴ ム産業に関する FTA 情報が提供されている。 (6) プラスティック産業： (MPMA) (a) Malaysian Plastics Manufacturers Association 組織の概要 MPMA は 1967 年に設立された。会員企業は 900 社を上回る。マレーシアのプラス ティック生産者を代表し、政府と接触し、工業基準、リサイクルなどの調査研究、 会員企業の教育を提供している。現在の会長は Lim Kok Boon 氏である。 (b) 通商問題に対する態度 MPMA は、近年のプラスティック産業の景気後退を受けて、関税自由化は会員企業 に悪影響を及ぼすとしている。 他方、工業基準の開発、環境、安全、健康問題については前向きに取り組んでいる。 13 インドとの貿易・インドにおける市場占有率データ b) 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 表9 マレーシア プラスチック・ゴム・インドとの貿易データ 2007-08 2008-09 2009-10 表10 インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 51,986,793 103,041,537 56,391,955 8.5% 137,668,815 33.6% 46,328,894 -17.8% 150,221,315 9.1% マレーシア プラスチック・ゴム・インド市場占有率 2007-08 2008-09 3.5% c) 2009-10 3.3% 2.8% インドへの投資 以下には、非日系企業のインド市場に対する主な活動について報告する。 ゴム産業 ・ MARDEC Berhad： 国有企業で、標準マレーシアゴムの最大の生産者、輸 出者である。インドでは、2000 年に MRK Latex を合弁で設立し、ISNR10 及び ISNR20 を生産している。 ・ Top Glove Corporation Berhad： 世界最大のラテックス手袋生産者。中国、 マレーシア、タイ、ドイツ、米国で生産している。2010 年、同社は、イン ド、中国、アルゼンチン、ブラジル等の新興国市場に注目していると述べ ている。 ・ Richter Rubber Technology： ドイツ系企業である同社は、インド・カルカ ッタに、関連会社 Kailash Richter Rubber Tech Private Limited を有している。 ・ R1 International： シンガポール系企業で、ゴム商社である同社は、インド に貿易を行う R1 International (India) Pvt Ltd を有している。 ・ Kossan Rubber Industries Berhad： マレーシア企業である同社は、インドに 輸出している。 14 プラスティック産業 ・ Kumpulan Jebco： 同社は、その生産する振動吸収ゴム、プラスティック、 ポリウレタン製品をインドへ輸出している。 ・ Polyplastics Asia Pacific Sdn Bhd： 同社は、そのインド子会社 Polyplastics Marketing (India) Private Ltd.に製品を輸出している。 ・ MK Plastic Machinery Sdn Bhd： 同社は、その製品である押し出しモールド 機等をインドを含め輸出している。 ・ S.E. Printing (M) Sdn Bhd： め輸出している。 4. 白物家電 同社は、そのプラスティック製品をインドを含 マレーシアの白物家電は、電子電気機器工業のうち、電気機器部門の電気消費者小 部門に属する。この小部門には、洗濯機、エアコン、掃除機、電子レンジ等が含ま れる。 マレーシアには電気機器企業が 381 社ある。 a) 業界団体 マレーシアの電子電気機器業界団体としては、次の 2 団体が挙げられる。 ・ Electrical and Electronics Association of Malaysia (TEEAM) ・ Federation of Malaysian Electrical Appliances Dealers Association (FOMEDA) このうち、FOMEDA は著作権、e コマースなどに関心を集中している。よって、本 報告書では TEEAM を取り上げる。 (1) Electrical and Electronics Association of Malaysia (TEEAM) (a) 組織の概要 TEEAM は 1952 年に設立された、マレーシアの電子電気機器を代表する業界団体で ある。会員企業は約 1,600 社。その活動は、ビジネス上の問題、法令、政府許認可、 基準認証などについて、会員企業を代表することにある。また、見本市、貿易代表 団を組織してビジネスの機会拡大を行い、さらに熟練工の訓練セミナー等も開催し ている。現在の会長は Engr Fu Wing Hoong 氏である。 15 (b) 通商問題に対する態度 TEEAM は、政府の貿易、投資自由化政策に前向きである。政府の FTA 交渉を後押 しし、FTA 特恵関税による輸出利益を享受している。また、輸入関税が低減される ことにより、生産コストも引き下げられるとしている。 また、認証基準の国際的統一を求めている。全電子電気機器について検査基準を設 定し、執行することも求めている。 b) インドとの貿易・インドにおける市場占有率データ 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 表11 2007-08 2008-09 2009-10 マレーシア白物家電・インドとの貿易データ インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 2,609,027 77,293,893 2,185,968 -16.2% 55,702,685 -27.9% 1,623,704 -25.7% 41,569,980 -25.4% 表12 マレーシア白物家電・インド市場占有率 2007-08 2008-09 2009-10 0.95% 0.87% 0.62% c) インドへの投資 以下には、非日系企業のインド市場に対する主な活動について報告する。 ・ Dyson： 2009 年、同社は、インド、中国、マレーシアで製品販売を展開す るとしていたが、2010 年下期時点で、マレーシアでの製品販売が行われて いるのみである。 ・ Pensonic： 2009 年の売上高 3 億リンギのうち、1 割が輸出である。同社は、 マレーシアの経済改革プログラムにおいて、家庭用家電のハブに認定され れた。今後、同プログラムに基づき、ASEAN 及び中東市場に対して複数ブ ランドマーケティング戦略を展開する予定である。 ・ Ban Seng Lee Industries Sdn Bhd： る。 同社はインドにもその製品を輸出してい 16 C. 5. フィリピン 電気機器 フィリピンの電気機器産業は、フィリピンの輸出の主力産業で、2010 年の総輸出額 の 53.7%を占めている。フィリピン国家統計局の分類によると、この産業は、次の 9 分野に分かれる。 ・ 半導体 ・ 電子データ処理 ・ 事務機器 ・ 消費者電気機器 ・ 電気通信 ・ 通信及びレーダー ・ 制御機器 ・ 医療・工業設備 ・ 自動車用電子機器 a) 業界団体 フィリピンの電気機器生産者の業界団体として次の団体を挙げることができる。 ・ Semiconductor and Electronics Industries in the Philippines Inc (SEIPI); ・ Federation of Electrical & Electronics Suppliers & Manufacturers of the Philippines, Inc. (FEESMI); ・ Electronics Industries Association of the Philippines (EIAPI); ・ Philippine Exporters Confederation, Inc. (Philexport)（EIAPI、SEIPI を会員に含 む、各業界団体を取り纏めている団体）。 このうち、会員企業の国内外の利益を代表していると言えるのは Philexport 及び SEIPI である。よって、以下ではこの 2 団体について説明する。 (1) The Philippine Exporters Confederation, Inc. (Philexport) (a) 組織の概要 Philexport は、傘下に 20 支部、52 の個別産業団体があり、会員企業 3 千社を擁する、 政府認可非営利法人である。現在の会長は Sergio R. Ortiz-Luis, Jr.氏である。 17 (b) 通商問題に対する態度 Philexport は、市場アクセスの向上により輸入原材料の価格が引き下げられ、輸出競 争力が増すという観点から、貿易、投資の自由化、特に ASEAN-インド FTA、日比 EPA について、積極的な姿勢を取っている。また、市場アクセスの改善と同時にビ ジネス・コストの引き下げがなされる必要があると指摘している。 同団体は、貿易工業省（DTI）、輸出開発委員会（EDC）と共同して、輸出環境改 善に努めている。2009 年 12 月には、シンクタンクである U-ACT と契約して、EU との FTA による利益についての啓蒙活動を展開している。ただし、U-ACT は、電器 産業の潜在的な傷つきやすさに配慮し、また関税削減ステージングなどについての 途上国に対する柔軟性を活用すべきとしている。 インドとの FTA について、フィリピン企業、特に、半導体、自動車部品、紙製品、 機械製品企業は、この機会を逃すべきではないとしている。また、情報技術につい てインドの輸入者に対するアウトソーシング受託、またインドからの投資受け容れ の機会であるとしている。 (2) Semiconductor and Electronics Industries in the Philippines Inc (SEIPI) (a) 組織の概要 SEIPI の会員企業は 235 社を数え、電子製品輸出の 70%を占めている。会員企業の うち、44%はフィリピン資本企業、18%は日系企業、15%は米国系企業である。 Ernie Santiago 氏が会長を務めている。 同団体は、半導体及び電子産業の世界競争力を向上させることを目的として活動し ている。また、そのウェブ・ホームページは、電子産業についての最新情報を提供 している。 (b) 通商問題に対する態度 2007 年、Ernie Santiago 会長は、FTA は、フィリピンの半導体、電子産業の成長、雇 用拡大に貢献するとしている。また、Arthur Young 議長は、FTA によるフィリピン の輸入関税無税化により、原材料価格が下落し、消費者の購買力が向上して、生産 者が利益を受けるとしている。また、製品品質安全基準の変更は、貿易自由化を促 進し、フィリピンの電気製品の品質向上に資すると歓迎している。 投資については、インド、中国からのフィリピン電力投資により、フィリピンの電 子産業の競争力は向上するとしている。 SEIPI は、2011 年 3 月のニューデリーにおけるインド－ASEAN ビジネスフェアなど、 貿易フェアへの参加に積極的である。また、インドの Communications Multimedia & Infrastructure Association of India (CMAI)と協力協定を結んでいる。 18 ただし、SEIPI はフィリピン政府への働き掛けが弱いとする声があった。 b) インドとの貿易データ インドへの電気製品の純輸出国である。2007-10 年の輸出入及びインド市場における 市場占有率は次の通り。 表13 2007-08 2008-09 2009-10 フィリピン電気機器・インドとの貿易データ インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 *** 32,990,166 166.5% 106,293,482 n.a. 87,925,497 -27.3% 159,260,042 49.8% 63,928,031 表14 フィリピン電気機器・インド市場占有率 2007-08 ** c) 2008-09 2009-10 0.27% 0.42% インドへの投資 入手できた情報によると、非日系フィリピン企業のインドへの主な投資は次の通り である。フィリピン資本企業については、インド投資についての情報を得られなか った。 ・ Texas Instruments： 同社は SEIPI 会員企業で、フィリピンで生産を行って いるが、インド国内でも工場、R&D 施設、40 社の協力企業、販売網を有し ており、2011 年のインドでの売上は 34 億ドル弱を見込んでいる。また、 FET 工場をインドに建設する予定である。 ・ Fairchild Semiconductor： 1976 年からフィリピンで生産をおこなっている 同社は、太陽電池の部品である MOSFET 及び IGBT その他の製品の設計拠 点をインド・Pune に設立している。 ・ NXEP Semiconductors Philippines： 1981 年からフィリピンで半導体を生 産している同社は、インド Bangalore、Delhi、Munbai において、自動車用 ソフトウェア、デジタルテレビ、携帯電話、デジタル・オーディオ機器を 生産している。2011 年には、自動車・太陽エネルギー分野に進出するとし ている。 ・ ST Microledctornics： 同社は、IC 生産（ファブ）、電子製品をインドで生 産している。 19 ・ Ionic EMS Philippines： 同社は、インド企業と提携して、電子部品、ポリ マー部品の製造を行っている。 6. 乗用車 フィリピンの自動車産業は、77 千人を雇用する重要な産業であり、輸出も増加して いる。 自動車産業は完成車産業と自動車部品産業とに分かれ、完成車産業は、さらに乗用 車産業と商業車産業とに分けることができる。 a) 業界団体 フィリピンの自動車業界団体としては、次の次の団体を挙げることができる。 ・ The Philippine Automotive Federation, Inc. (PAFI) ・ The Chamber of Automotive Manufacturers of the Philippines, Inc., (CAMPI) ・ The Philippine Exporters Confederation (Philexport). ・ The Philippine Automotive Competitiveness Council, Inc. (PACCI) （CAMPI 会員 であるトヨタ、ホンダ、いすゞ、三菱、フォード、自動車部品工業会（the Motor Vehicle Parts Manufacturers Association）、自動車輸入配給店協会（, Association of Vehicle Importers and Distributors (AVID)）、及び完成車輸入業 者で組織。） これらの中では、CAMPI が完成車メーカーの意見を代弁している。 (1) The Chamber of Automotive Manufacturers of the Philippines, Inc., (CAMPI) (a) 組織の概要 CAMPI は、自動車開発プログラム（MVDP）の目的に沿って、自動車産業の利益を 向上されるための組織で、完成車メーカー16 社を中心として、二輪車メーカー、部 品メーカーから組織されている。会長は、Elizabeth H. Lee 女史である。 (b) 通商問題に対する態度 CAMPI は貿易自由化に反対する立場を取り、完成車輸入から国内産業を保護するよ う主張している。例えば、会長は、ASEAN 諸国からの輸入によりフィリピン国内市 場を奪われているとしている。 20 また、AIFTA では完成車をセンシティブ品目とするよう主張していた。日比 EPA に ついては、2010 年、日本からの輸入を自由化することにより、フィリピン自動車産 業は壊滅的な打撃を受けるとしている。 なお、会員企業である現代自動車は、フィリピンが韓国との二国間 FTA に合意して 完成車に対する関税引き下げに応じた場合、フィリピンに投資するとし、ASEAN 韓 国 FTA においてフィリピンが完成車をセンシティブ品目として 30%の関税を課して いることに不満を表明している。 (2) Motor Vehicle Parts Manufacturers Association of the Philippines, Inc (MVPMAP) (a) 組織の概要 MVPMAP は、フィリピンの WTO 加盟、ASEAN における貿易自由化に対応して、 輸入自動車部品に対抗するために 1996 年に組織された。自動車部品企業 101 社の声 を代表している。議長は Eddie Jose 氏、会長は Rafael Villarreal 氏である。 (b) 通商問題に対する態度 MVPMAP は、貿易自由化に反対の立場を取っているが、次第に貿易促進の方向に動 いている。2009 年には、これまでの方針を変更して、台湾の貿易フェアに参加し、 15 百万ドルの輸出に成功した。今後、年間 50-80 百万ドルの輸出が期待されている。 これは、台湾を中継基地として、中国、中東、EU、アフリカへ輸出されるものであ る。2010 年 10 月には、PACCI と共同で明日のフィリピン自動車部品産業について 会議を開催して、ASEAN 及びオーストラリアとの協調を模索している。 FTA については、2009 年 10 月、日比 EPA における市場開放を 2013 年まで延期する よう求めている。2009 年 11 月には、CAMPI と共同で、全自動車輸入について 10% の関税賦課（MFN 税率は 30%）と補助金交付を求め、AFTA0%の実施を延期するよ う求めていた。AFTA 税率が０％となった現在でも、ASEAN 中国 FTA、ASEAN イ ンド FTA、ASEAN 韓国 FTA の関税実施の延期とセンシティブ品目・除外品目に加 えることを主張している。 また、AFTA に基づく製品品質安全基準の変更にも反対している。 b) インドとの貿易データ フィリピンは、インドとの輸出入額からすると、乗用車輸入国である。2007-10 年の 輸出入及びインド市場における市場占有率は次の通り。 表15 フィリピン乗用車・インドとの貿易データ インドからの輸入 金額(USD) 前年比増加率 21 インドへの輸出 金額(USD) 前年比増加率 2007-08 2008-09 2009-10 2,685,338 18,160,076 14,030,934 表16 576.3% -22.7% n.a. n.a. フィリピン乗用車・インド市場占有率 2007-08 2008-09 0.0001% *** c) 11,123 *** 9,850 2009-10 0.00004% インドへの投資 フィリピン乗用車産業は、日本メーカーの現地工場が支配的である。非日系企業と しては次のメーカーが挙げられる。 ・ フォード： 同社は、インドにおいて Ford India を設立し、チェンマイの組 立工場に 5 億ドルの投資をおこなっている。 ・ 現代： インド市場に Accent を 50 万ルピーで投入し、2011 年 2 月には 52 千台を販売している。 ・ 起亜： D. タイ 1. 2011 年 3 月、インドでの操業を棚上げすることとした。 自動車部品 タイ自動車、自動車部品産業は、タイの GDP の 10%を占め、50 万人を雇用する産 業で、タイ第 2 位の輸出産業である。タイ国内には、1,800 の自動車部品メーカーが あり、そのうち 700 社は完成車メーカーへの OEM 企業である。 a) 業界団体 タイの自動車部品業界団体は次の通りである。 ・ Auto Industry Parts Club under the Federation of Thai Industries (AIPC-FTI) ・ Thailand Auto-Parts Manufacturers Association (TAPMA) ・ Thailand Automotive Institute (TAI) 22 (1) Auto Industry Parts Club under the Federation of Thai Industries (AIPC-FTI) (a) 組織の概要 1976 年に設立された AIPC-FTI は、FTI 傘下の団体で、会員自動車部品企業は 182 社。 国内の自動車部品産業の発展を目的として、政府機関との交渉、自動車部品企業間 及び政府機関との調整を行っている。TAPMA と共同して、政府政策、貿易自由化 に取り組んでいる。現在の会長は Yongkiat Kittipanach 氏である。 (b) 通商問題に対する態度 AIPC-FTI は当事務所の聞き取り調査にも余り応じていただけなかった。また、FTA についても声明等は発表していない。 上部団体である FTI は、2010 年 1 月、AFTA について、タイ自動車産業全般の発展 に寄与するとしている。また、高生産原価と開発能力に劣る部品企業は競争力を強 化する必要があるとしているとしているものの、ASEAN 域内ではタイ自動車部品企 業は優位にあるとしている。 (2) Thailand Auto-Parts Manufacturers Association (TAPMA) (a) 組織の概要 1987 年に設立された TAPMA は会員企業 528 社を擁し、タイ自動車部品産業の保護、 支援、発展のために活動する団体である。主たる目的は生産技術向上による市場競 争力の強化にある。現在の会長は Prasartsilp Ornhat 氏である。 (b) 通商問題に対する態度 TAPMA は、貿易、投資問題について、自動車部品企業を代表してタイ政府に働き かけている。2010 年 10 月には、AIPC-FTI と共同して、次の主張を行っている。 ・ タイ国内で生産量の不足している自動車部品について投資優遇措置を行う べきこと。 ・ 技術合致評価センターを 2015 年までに設立すべきこと。 ・ 政府は生産性向上プログラムを支援すべきこと。 ・ 政府は熟練労働者の教育プログラムを支援すべきこと。 また、ASEAN 諮問委員会基準自動車部品専門家部会にタイ代表として出席している。 23 (3) Thailand Automotive Institute (TAI) (a) 組織の概要 TAI は自動車及び自動車部品産業の世界的競争力強化を目的として 1997 年に設立さ れた。会員企業は 639 社。会長は Wallop Tiasiri 氏である。 (b) 通商問題に対する態度 TAI は貿易関連データを整備し、また、マレーシア、インドなどの貿易相手国の貿 易障壁、自動車政策についての情報を蓄積している。また、オーストラリア、EU、 インドネシアなどの貿易障壁について紹介し、また、タイの FTA が自動車部品産業 に与える影響を分析している。 会長の発言によると、FTA はタイ自動車・自動車部品産業の輸出機会を拡大してい るとしている。例えば、タイ豪 FTA により、豪州への自動車輸出は初年度に 30%増 加したと指摘している。 ASEAN インド FTA についても、タイ自動車部品産業のインド市場への輸出機会を 拡大すると評価している。 b) インドとの貿易・市場占有率データ 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 表17 2007-08 2008-09 2009-10 タイ自動車部品・インドとの貿易データ インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 37,694,263 46,784,271 53,312,280 41.4% 79,994,666 71.0% 103,325,856 93.8% 103,962,096 30.0% 表18 タイ自動車部品・インド市場占有率 2007-08 2008-09 2009-10 0.26% 0.42% 0.45% c) インドへの投資 2010 年、非日系企業であるタイ自動車部品企業 230 社がインドへ輸出している。以 下は、その上位 5 社についてである。 24 ・ Thai Summit Neel Auto Pvt. Ltd： 同社はタイ・サミットグループとインド JBM グループとの合弁企業である。JBM グループはインド国内で自動車鋼 板等を製造している。 ・ Siam Lemmerz Co. Ltd.： 米国企業との合弁会社である同社は、アルミホイ ールをインドへ輸出している。 ・ Auto Alliance (Thailand) Co., Ltd.： フォードとマツダの合弁会社である同 社は、インドへ、1 トンピックアップトラックの CKD をインドへ輸出して いる。 ・ TI Automotive (Thailand)： プラスティック燃料タンク、ポンプ、ブレーキ、 燃料パイプを生産し、インドへ輸出している。 ・ Walker Exhaust (Thailand)： 米国企業との合弁会社である同社は、排気系 構成部品をインドへ輸出している。 2. 化学工業品 タイ化学工業は、1981 年の天然ガスの採掘から、大きく川上産業と川下産業に分か れて発展した。川上産業は国有企業で占められ、石化製品に高関税を課して、民間 に開放されていた川下産業に、国内産の原料を購入させていた。しかし、1997 年の 通貨危機を契機に市場が自由化され、川上産業、川下産業双方に外資が参入して、 タイの化学工業は大きく発展した。現在では、タイ GNP の 5%乃至 7%を占めてい る。 a) 業界団体 タイ化学工業の主要な業界団体は次の 2 社である。 ・ Chemical Business Association (CBA) ・ Petrochemical Industry Club (PC-FTI) (1) Chemical Business Association (CBA) (a) 組織の概要 CBA は、1976 年に設立された。会員企業 103 社の意見を代理して、意見書を発表し、 政府との交渉を行っている。また、会員間の協力、ビジネス促進を図っている。現 在の会長は Sanpong Bumpensanti 氏である。 25 (b) 通商問題に対する態度 CBA は、そのホームページに FTA 関連情報を掲載しているものの、FTA、また貿易 自由化についてのコメントは発表していない。 (2) Petrochemical Industry Club (PC-FTI) (a) 組織の概要 PC-FTI は 2002 年に設立されたタイ工業連盟（FTI）の下部団体で、主要な石油化学 企業 33 社が加盟している。政府との交渉、会員間の情報交換及び協力促進による業 界の発展を目的としている。FTI 下部団体としては相当にしっかりとした組織を有 している。現在の会長は、Aditheb Bisalbutr 氏である。 (b) 通商問題に対する態度 PC-FTI は、そのホームページに FTA 関連情報を掲載し、また、FTA のタイ石油化 学産業に対する影響分析を行っている。しかし、FTA についての立場は表明してい ない。 b) インドとの貿易・インドにおける市場占有率データ 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 表19 2007-08 2008-09 2009-10 タイ化学工業品・インドとの貿易データ インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 119,227,988 70,442,431 142,363,004 19.4% 103,633,036 47.1% 154,465,594 8.5% 267,502,923 158.1% 表20 タイ化学工業品・インド市場占有率 2007-08 2008-09 2009-10 0.93% 1.05% 2.80% c) インドへの投資 2010 年の統計によると、タイ化学工業企業のうち 29 社がインドへ輸出し、または 投資を行っている。以下には、上位 5 社について報告する。 26 ・ Thai Carbon Black： 同社はインドとの合弁会社である。 ・ Polyplex (Thailand)： ポリエステルフィルムを製造する、インド・Polyplex Corporation の子会社である。 ・ Thai Rayon： 国へ輸出。 ・ TPT Petrochemicals PCL： ・ Indorama Petrochem Limited： ドを含む各国へ輸出。 3. 食料品 ビスコス短繊維を初めとする化学繊維製品をインドを含む各 PTA をインドを含む各国へ輸出。 PTA、ポリエステル繊維・フィルム等をイン タイは、コメ、缶詰・冷凍の海産物、エビ、マグロ、パイナップルの缶詰及び果汁 の世界最大の輸出国である。食料品産業は中小企業を含め約 1 万社、年 2.5 百億ド ルを生産する輸出志向産業である。 a) 業界団体 タイ食料品産業の数多くの業界団体のうち、加工食料品についての主な業界団体は 次の通りである。 ・ Thai Food Processors Association (TFPA) ・ Thai Frozen Foods Association (TFFA) ・ Food Processing Industry Club under the Federation of Thai Manufacturers (FTIFP) (1) Thai Food Processors Association (TFPA) (a) 組織の概要 1970 年に設立された TFPA は、会員企業約 200 社を擁し、加工食料品産業のビジネ スの発展、食品基準の検討などを主な活動としている。 (b) 通商問題に対する態度 TFPA は、国際通商の発展により会員企業の原価低減が図られ、取引の交渉力向上 に貢献するとの立場を取っている。 TFPA はタイ政府の FTA 交渉を支持している。FTA により、相手国の規則、基準が 明確化されることにより輸出促進に資するとしている。また、EU との FTA を推進 27 して、特に鶏肉製品の関税を引き下げるよう議会へのロビー活動を展開している。 特に、ベトナムと EU との FTA が先行して締結されることを警戒している。 さらに、EU、米国から、児童労働、EU のマグロ缶詰規制など、非関税障壁を問題 としている。なお、FTA はタイ輸出者よりもタイ輸入者を利する傾向にあるとして いる。 (2) Thai Frozen Foods Association (TFFA) (a) 組織の概要 TFFA は、1968 年、タイ貿易団体法により設立され、会員企業 217 社を擁する。冷 凍海産食品の国内販売、輸出促進、会員企業間の情報交換、協力促進、統計作成な どを目的としている。 (b) 通商問題に対する態度 TFFA はタイ政府の FTA 交渉を支持している。特に、AFTA により関税が 0％となっ たことを歓迎している。ただし、粗悪品のエビがタイに流入しないよう、関税当局 に検査の強化を求めている。 TFFA は、EU の海産物証明要求はタイの中小企業による輸出をほぼ不可能とするも のであるとして反発している。また、また、米国がタイ・エビ製品について児童労 働・強制労働により生産されているとして輸入禁止としていることについて、かか る事実はないと反論している。 (3) Food Processing Industry Club under the Federation of Thai Manufacturers (FTI-FP) (a) 組織の概要 FTI-FP は、FTI の下部団体として 1974 年に設立された。FTI-FP は、226 社を会員と して、冷凍海産物の調査研究、販売・輸出促進、産業発展の政策立案への参画、世 界の加工食料品産業団体との協力、会員企業間の情報交換などの活動をおこなって いる。 (b) 通商問題に対する態度 TFFA はタイ政府の FTA 交渉を積極的に支持している。特に、AFTA により関税が 0％となったことを歓迎している。ただし、タイ産の米はベトナム産の米に市場を奪 われているとしている。 28 また、EU の野菜及び果実に対する規制に懸念を表明している。 b) インドとの貿易・インドにおける市場占有率データ 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 表21 2007-08 2008-09 2009-10 タイ食料品・インドとの貿易データ インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 61,569,372 36,467,686 119,009,973 93.3% 65,284,803 79.0% 161,757,707 35.9% 209,827,093 221.4% 表22 タイ食料品・インド市場占有率 2007-08 2008-09 2009-10 0.15% 0.24% 0.68% c) インドへの投資 以下に、主な非日系食料品企業のインド輸出または投資について報告する。 ・ Thai Union Frozen (TUF)： TUF は、合弁で、インド Gujarat に 5,544 万タイ バーツを投資して、エビ加工を行う Avanti Thai Aqua 社を設立した。 ・ Charoen Pokphand Foods (CPF)： 同社は既にインドに Charoen Pokphand (India) Private Limited 社を設立して養殖産品の生産をおこなっているが、 2011 年 3 月には、さらに、インドを含め、13 億ドルの海外投資を行うと発 表した。 ・ Betagro： 2010 年 10 月に発表した 2011-2014 年計画において、インドを農 産品及び加工食品の重要市場と位置づけている。 4. 白物家電 タイは、ASEAN 最大の家電製品の生産拠点であり、エアコン生産では世界第 2 位、 冷蔵庫は世界第 4 位の生産国である。国内には約 800 の家電製品生産工場がある。 a) 業界団体 タイは、家電製品全体を代表する業界団体はないが、これに近いものとして、製品 別の次の団体を挙げることができる。 29 ・ the Air-Conditioning Engineering Association of Thailand ・ Thai Refrigeration Association (TRA) ・ Thai Electrical and Electronics Institute (EEI) ・ Air Conditioning and Refrigeration Industry Club under the FTI (AR-FTI) ・ Thai Electrical & Mechanical Contractors Association ・ Electrical Electronics & Allied Industry Club under the FTI (EEA-FTI) これら団体のうち、企業の声を代弁している団体について取り上げる。 (1) Thai Refrigeration Association (TRA) (a) 組織の概要 TRA は、冷蔵庫産業の発展のため、1991 年に設立された。会員企業は 95 社。冷蔵 庫ビジネス上の技術的諸問題について政府、民間団体に働きかけると共に、貿易シ ョー参加支援、会員企業間の情報交換及び相互理解、安全基準の設定、その他冷蔵 庫ビジネス拡大を目的としている。現在の会長は Khun Sumet Jiambutr 氏である。 (b) 通商問題に対する態度 TRA は技術的諸問題を中心としており、通商問題については何らの立場も表明して いない。 (2) Thai Electrical and Electronics Institute (EEI) (a) 組織の概要 1998 年に設立された、工業省管轄の業界団体。会員企業は 565 社。部品、原材料の 使用についての支援、安全基準設定の支援、電子電気製品輸出の促進、研究開発情 報の提供を目的としている。現在の執行役員は Somboon Hortrakul 氏である。 (b) 通商問題に対する態度 EEI は、そのホームページから通商情報を提供している。インドについても、その 技術基準、輸入手続等を記載している。 これらのインド情報の詳細は、EEI 会員にとってインドが重要な輸出市場であるこ とを示している。 30 (3) Air Conditioning and Refrigeration Industry Club under the FTI (AR-FTI) (a) 組織の概要 AR-FTI は、1979 年に FTI の下部団体として設立された。会員企業は 78 社。エアコ ン、冷蔵庫についての情報を収集し、会員企業間の情報交換及び相互協力、政府と の交渉、会員企業の利益増進等を目的としている。現在の会長は Pirat Ua-chuyos 氏 である。 (b) 通商問題に対する態度 AR-FTI 会長は AFTA により関税が 0%となったことを歓迎するとし、タイのエアコ ン、冷蔵庫産業は、FTA による最大の恩恵を受ける産業であるとしている。 AR-FTI は、そのホームページに FTA 関連情報を掲載し、また、最近では「輸出先 としてのインド」と題するセミナーを商務省外国貿易部と共同で開催している。 (4) Electrical Electronics & Allied Industry Club under the FTI (EEA-FTI) (a) 組織の概要 EEA-FTI は、1977 年に FTI の下部団体として設立された。会員企業は 178 社。電 気・電子機器についての情報を収集し、会員企業間の情報交換及び相互協力、政府 との交渉、会員企業の利益増進等を目的としている。現在の会長は Supachai Sutipongchai 氏である。 (b) 通商問題に対する態度 EEA-FTI の前会長は、ASEAN 中国 FTA について、低価格の中国製品に対する価格 競争力がないことに懸念を表明する一方、タイ政府に対して、中国に家電製品をセ ンシティブ品目から外すよう働きかけることを要請している。 EEA-FTI のホームページは、AR-FTI 同様に FTA 関連情報を掲載している。また、 AEC 2015 に向けたセミナーを開催している。 b) インドとの貿易・インドにおける市場占有率データ 2007-10 年の輸出入及びインド市場における市場占有率は次の通りである。 31 表23 2007-08 2008-09 2009-10 タイ家電製品・インドとの貿易データ インドからの輸入 インドへの輸出 金額(USD) 前年比増加率 金額(USD) 前年比増加率 665,081 69,854,161 1,218,502 83.2% 94,020,805 34.6% 769,845 -36.8% 135,505,717 44.1% 表24 タイ家電製品・インド市場占有率 2007-08 2008-09 2009-10 0.86% 1.47% 2.03% c) インドへの投資 タイの家電製品メーカーの殆どは日系企業である。以下には、日系企業以外の上位 5 社について報告する。 ・ LG Electronics (Thailand)： ・ Samsung Electronics (Thailand)： 同社は、テレビ、洗濯機、電子レンジ、 LCD・LED テレビ、冷蔵庫、エアコンを生産し、インドを含む世界各地へ 輸出している。 ・ Emerson (Thailand) Limited： エアコンのコンプレッサーを生産し、インド を含む世界各地へ輸出している。 ・ Haier Electric (Thailand)： 2007 年に Sanyo Universal electric を買収して以後、 冷蔵庫、冷凍庫、洗濯機、エアコン、カラーテレビ、LCD テレビを生産し、 インドを含む世界各地へ輸出している。 ・ Philip Electronics (Thailand)： LCD テレビ、DVD プレーヤー、充電歯ブラ シ等を生産し、インドを含む世界各地へ輸出している。 家電製品を世界各地へ輸出している。 32 E. インド市場における外国貿易及び外国直接投資に 対する障壁 本章は、調査対象産業について、インド市場における外国貿易及び外国直接投資に 対する障壁の概要をまとめたものである。 1. 間接税 a) 輸出入制限、関税、通関手続 ・ 特別追加関税： 輸入品に対して、特別追加関税 4%が付加価値税及び中央 売上税に代わり賦課される。還付手続はあるものの、複雑である。ただし、 最低価格以上の通関価格申告がなされた場合など、一定の基準を満たした 輸入については免除される。 ・ 輸入ライセンス： 化学品等の輸入は、輸入ライセンスを必要とされる。 その取得には、極めて詳細な情報提供を要求される。 ・ 関税評価手続： こととなる。 ・ 登録・公表手続： 求められる。 ・ 最低輸入価格： 自動車部品、電子電器製品、食料品などは、物品税に代 わる追加関税の計算において最低輸入価格が適用される。 ・ 関税中央データベース： ・ 基準認証： ・ 高関税： る。 b) 関連者取引などの場合、過度な関税評価調査手続を経る 一部の梱包済み製品の輸入については、登録・公表が 実行税率を容易に知ることができない。 食料品、輸入車などは、極めて厳しい基準認証が適用される。 調査対象産業の一部製品に対しては、高い関税が課せられてい サービス税 ・ サービス税が賦課される時点を変更する予算法案が提出されている。特に サービスの提供時点での課税が行われることとされた場合混乱が予想され る。 ・ 建設などのサービスに於いて、コスト増加要因となる。 ・ 虚偽申告に対する罰則が強化される。 ・ 輸出については免税であるが、そのための手続完了には困難さが伴う。 33 c) ・ 付加価値税 多くの州で、付加価値税の増税をおこなっている。 d) 物品税 ・ 物品税が現在の 4%から 5%への引き上げが提案されている。 2. 直接税 ・ 法人税について、外資企業の課徴金は減税されるものの、依然として 42.02%と高止まりしている。 ・ 最低代替税の増税。 ・ 特別経済特区(SEZ) に対する免税の撤廃。 ・ 特別経済特区(SEZ)開発企業に対する配当税の恩典の撤廃。 ・ 有限責任パートナーシップに対する代替最低税の課税。 ・ 輸出利益に対する最低代替税の賦課。 ・ 移転価格税制について、独立当事者間価格の 5%統一基準は無くなり、別途 に公告されることとなった。また、移転価格官の権限が強化され、迂回防 止規定も強化される。 ・ インド国内に事務所を持つ非居住者に対して、税申告義務が課される。 ・ インド国内企業の外国からの受け取り配当に対する課税は現在の 30%から 15%に減税される。 ・ 事業税の減税 特定の科学研究経費について加重控除幅が拡大する。 農産品倉庫、ホテル、病院、住宅、農薬生産工場などの資本支出は 100% 経費として認められる。 3. 工業基準 a) ・ 1986 年インド基準局法に基づく制限 インド基準局法に基づく基準、表示、品質認証に従う必要がある。 34 ・ 外国生産者も、インド基準局法に基づく認証を要する。 ・ 輸入時に、認証書の提出が要求される。 b) 1980 年公害防止管理法に基づく制限 ・ 公害管理地区に所在する工場の操業は、州公害管理評議会の承認を要する。 ・ 主要公害要因についての国家生活環境空気品質基準は、中央公害管理評議 会より通知される。 c) 1986 年環境保護法に基づく制限 ・ 中央政府は、生態系保護地域を設定している。 ・ また、環境森林省は、危険廃棄物の取り扱いについて通達を発している。 ・ 環境保護局は、さらに、排気・排水基準を、本調査の対象産業毎に設定し ている。 d) 1948 年工場法に基づく制限 ・ 作業環境における化学物質の使用可能レベルを設定している。 4. 特別経済区域（SEZ） ・ SEZ では、武器、原子力、危険物、アルコール、たばこ生産を除き、外資 100%企業は自動的に許可される。 ・ ただし、産業別に上限が定められれている。 ・ SEZ は 10 ヘクタール以上の広さを要する。 ・ SEZ 設定の承認手続は、各種政府機関の承認、登録等を要し、長く、煩雑 である。 ・ SEZ 内での生産、サービスには輸出義務が課されている。 ・ SEZ からインド国内への「輸出」には、関税が課される。ただし、一部に は免税措置がある。 35 5. 外国為替制限 a) 株式、優先株、社債への外国投資 ・ 非居住者は、銀行または非居住者口座を通じてのみ、株式、優先株、転換 社債を購入することができる。 ・ 技術協力契約に基づくロイヤルティの外国支払は商工省の許可が不要とな った。 ・ インド企業は、外国為替管理法に基づく評価方法により転換社債、優先株 を発行することができる。Depositary Receipt、外国通貨建転換社債等も外国 直接投資と取り扱われる。 ・ インド企業は、また、Depositary Receipt、外国通貨建転換社債を発行する場 合には、インド政府のガイドラインに従わなくてはならない。 ・ ただし、インド資本市場において資金調達を認められていないインド上場 企業は、当該外債発行はできない。 ・ 非上場企業は、当該外債発行と同時に、国内証券取引所に上場しなければ ならない。また、既に当該外債を発行している非上場企業は、利益計上後 または当該外債を発行した後 3 年以内に、国内証券取引所に上場しなけれ ばならない。 b) 外国直接投資を受け容れることが認められる企業 ・ インド企業は外国企業に持分権を発行することができる。 ・ インド人非居住者等は、本国送金しないという条件で、インドパートナー シップに投資できる。ただし、農業、プランテーション、不動産投資を除 く。本国送金をおこなう場合には、許可を得なければならない。 ・ その他の非居住者は、投資を行う前にインド準備銀行の承認を得なければ ならない。 ・ 信託口への外国直接投資は、ベンチャーキャピタルを除き、認められない。 ・ その他の団体に対する外国直接投資は認められない。 6. 外国投資家の所有制限 ・ 非居住者による投資は、インドの外国直接投資政策において認められた範 囲に限られる。 36 二輪車、合成繊維・織物、自動車部品、プラスティック、ゴム、白物家 電、電気機器、乗用車については、外国投資 100%が認められる。 化学工業について、 化学製品については、危険物質等の製造については外国投資 100%が 認められる。ただし、製造許可を得なければならない。爆発物につ いても同様である。 食料品、パームオイルについて、 農業分野については、花卉、園芸、種、野菜、キノコ、については 外国投資 100%が認められる。その他の農業分野に対する外国投資は 認められない。 お茶については外国投資 100%が認められる。ただし、5 年以内に、 インド人パートナーに 26%譲渡しなければならない。 アルコール、コーヒー、ゴムについいては外国投資 100%が認められ る。 ・ 工業団地 工業行為を行う目的であれば外国投資 100%が認められる。但し、一定の 社会基盤の整備、電気、道路、水道、電気通信、共用ビル、会議室、警 備、救急センター、救急車など共用設備の整備を要する。 「工業行為」とは、製造、電力、ガス、水道、電気通信、出版、供給、 コンサルタント、データプロセス、研究開発、実験、経営コンサルタン ト、設計、エンジニア、その他の技術的行為等をいう。 また、1 工業団地内には、10 区画以上が確保され、66%以上を「工業行 為」に用いること。さらに、単一企業に過半数を割り当ててはならない。 7. 知的財産権の保護 ・ WTO・TRIPS 協定を最低限としている。 ・ 特許については、2005 年特許法に規定されている。但し、一定分野につい て認められないことがあることに注意を要する。 ・ 地理的表示は、1999 年物品の地理的表示法に規定されている。 ・ 商標は、1999 年商標法に規定されている。 ・ 工業所有権は、1911 年デザイン法に規定されている。 37 第 II 章 INDONESIA A. Motorcycle Industry Indonesia is the third largest producer of motorcycles after China and India; however, the majority of motorcycles manufactured in the country are for the domestic market. 1 In 2010, Indonesia’s motorcycle production was 7,395,390 units of which only 29,395 units were exported mainly to the Philippines followed by Timor-Leste; 2 domestic sales amounted to 7,368,249 units. 3 Indonesian motorcycles are produced with a local content of approximately 90 percent.4 The manufacture and sale of motorcycles in Indonesia is dominated by foreign-branded companies, including Japan’s Honda, Yamaha, Suzuki, and Kawasaki as well as India’s TVS. In 2009 for instance, PT Astra Honda Motor and PT Yamaha Kencana Motor Indonesia led the domestic sales market controlling 46 percent and 45 percent, respectively. 5 Another non-Japanese motorcycle company that has a manufacturing presence is Indonesia’s Kanzen, which is produced by PT SEMESTA Citra Motorindo and sold by PT Inti Kanzen Motor. Notably, Piaggio Vespa stopped manufacturing in Indonesia in 20056 and started producing in Vietnam in 2009 for the Southeast Asian market.7 PT. Kymco Surya Raya, which produced Taiwanese scooters, also closed its factory in Cikarang due to market competition.8 1. Trade Associations Indonesia has only one trade association that represents the interests of the motorcycle industry, namely the Indonesian Motorcycles Industry Association (Asosiasi Industri Sepeda Motor Indonesia (AISI).9 a) Indonesian Motorcycles Industry Association (AISI)10 The AISI was established in January 1971 as the Association of Motorcycle Assemblers (PASMI) and later changed its name to the broader Indonesian Motorcycles Industry Association (AISI) in the early 2000s. It was established in response to the growing demand for motorcycles in the country and to respond to the Indonesian government’s efforts to form a strong and viable national motorcycle business and industry. The AISI is also a member of a number of international motorcycle associations, including the Federation of Asian Motorcycle Industries (FAMI), the ASEAN Automotive Federation (AAF), and the International Motorcycle Manufacturers Association (IMMA). 1 “Development of Motorcycle Industry in Indonesia,” Data Consult, Indonesian Commercial Letter, March 2010. See http://www.datacon.co.id/Auto-2010Motorcycle.html 2 “Motorcycle Production Wholesales Domestic and Exports,” AISI, accessed March 16, 2011. See: http://www.aisi.or.id/statistic 3 Nathalia, Telly. “Indonesia's motorcycle sales in 2010 rise 26 pct,” Reuters, January 18, 2011. See http://in.reuters.com/article/2011/01/18/indonesia-economy-motorcycles-idINL3E7CI0BL20110118 4 Automotive Report: Indonesia, Economist Intelligent Unit, September 10, 2010. 5 Ibid. 6 Ibid. 7 Meichtry, Stacy. “Buon Giorno, Mumbai: Vespa Woos Asia,” Wall Street Journal, July 26, 2010. 8 “Development of Motorcycle Industry in Indonesia,” Data Consult, Indonesian Commercial Letter, March 2010. See: http://www.datacon.co.id/Auto-2010Motorcycle.html 9 The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, websites, media sources, and government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations via email and/or phone contact. However, such information is limited due in some cases to a lack of responsiveness, or concern regarding information dissemination, from the trade associations contacted. 10 See: www.aisi.or.id Contact: Asosiasi Industri Sepeda Motor Indonesia (AISI). Wisma Indomobil 1, Basement, Jl. MT. Haryono Kav. 8, Jakarta. 13330. Indonesia. Tel: 62 21 856 6181. Fax: 62 21 857 0618. E-mail: [email protected] 38 Role and Function The AISI mission is to assist members achieve efficient motorcycle production through synergy and cooperation among AISI members. Its objectives are to (i) coordinate with the government to develop a competitive and responsible motorcycle business and industry; (ii) help members efficiently produce motorcycles while mutually benefitting society; (iii) foster a favorable business environment that is conducive to the development of the motorcycle industry to benefit stakeholders; and (iv) aim to develop fair and ethical business practices for the Indonesian motorcycle industry and in the international context. The AISI has a range of activities and functions. In addition to sharing motorcycle expertise and knowledge on motorcycles that are not competitive in nature, the AISI aims to continuously monitor domestic and international regulations that affect the motorcycle industry and coordinate member responses as requested. It has the role to support cooperation among members, particularly in safety improvement, exhaust emissions, regulations, homologation, and other beneficial areas. It strives for the development of fair, ethical and responsible business practices. The AISI will also provide supporting activities as requested by individual members and supporting activities that promote the image of motorcycles to the general public. Organizational Structure The AISI is led by a president, followed by two vice presidents, a secretary general, and treasurer, in that order. The AISI has three committees covering (i) technology, (ii) commerce, and (iii) legal matters. The current president is Dr. Ing Gunadi Sindhuwinata. Membership The AISI has eight members, the majority of which are Japanese-related ventures. They include (i) PT Honda Astra Motor (Honda), (ii) PT Inti Kanzen Motor (Kanzen), (iii) PT Kawasaki Motor Indonesia (Kawasaki), (iv) PT Kymco Lippo Motor Indonesia (Kymco), (v) PT Danmotors Indonesia (Piaggio), (vi) PT Suzuki Indomobil Motor (Suzuki), (vii) PT TVS Motor Company Indonesia (TVS), and (viii) PT Yamaha Motor Manufacturing (Yamaha). General Position on Trade and Investment Liberalization The association’s position on trade and investment liberalization is generally positive. In May 2010, AISI President Dr Sindhuwinata stated that the Indonesian motorcycle market would barely be altered by the implementation of the ASEAN-India Trade in Goods Agreement. This is primarily as Japanese motorcycle products are already well established in Indonesia, and have become entrenched over a substantial period of time, with enormous time and cost being required to compete with the existing industry. Furthermore, on several sensitive product groups, including motorcycles, Indonesia will only have to reduce the import tariff to 5 percent at some point before 2019.11 2. Production Data and Trade Statistics According to Data Consult, Indonesia’s production capacity in 2009 was 7.9 million units per year of which 7.7 million units are from AISI members.12 The Economist Intelligence Unit (EIU) noted rapid expansion in the motorcycle industry’s production capacity from new investment as reflected in AISI’s production statistics over the past five years. The data for actual production from the AISI was 4.5 million in 2006, 4.7 million in 2007, 6.3 million in 2008, 5.9 million in 2009, and 7.4 million in 2010. According to the AISI, Indonesia is the third largest motorcycle manufacturer in the world after China and India. AISI Chairman Dr. Sindhuwinata expects Indonesia to produce more than 10 million units 11 “ASEAN-India Free Trade,” Translation. Bataviase.co.id. May 21, 2010. See: http://bataviase.co.id/node/220431 12 “Development of Motorcycle Industry in Indonesia,” Data Consult, Indonesian Commercial Letter, March 2010. See: http://www.datacon.co.id/Auto-2010Motorcycle.html 39 by 2014, as anticipates that the market will grow by 12.5 to 15 percent by 2014, as motorcycles are an efficient and affordable mode of transportation for people in the country.13 According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Indonesia is a net importer of motorcycles14 from India. For the fiscal year (FY) 2009/10, Indonesia imported USD 7.1 million and exported USD 118,361 in motorcycles to India. These figures reflect a 57 percent decrease in imports from USD 16.6 million and 202 percent increase in exports from USD 39,197 from the previous year. As a result, Indonesia’s net imports in motorcycles with India significantly dropped by 58 percent from USD 16.5 million in FY 2008/09 to USD 7.0 million in FY 2009/2010. India sold in the domestic market only 0.07 percent and 0.16 percent 15 of the motorcycles imported from Indonesia for the FY 2008/09 and FY 2009/10, respectively. 3. Trade and Investment Activities of the Motorcycle Industry in India According to research, investment for Indonesian motorcycles stays within Indonesia as the majority of motorcycles are produced for domestic consumption. In fact, the research results showed that two Indian motorcycle producers, PT TVS Motor16 and Bajaj Auto,17 have invested in Indonesia to sell motorcycles in the Indonesian domestic market. There has been very little investment of trade activity into India by Indonesian producers. B. Synthetic Fiber and Textile Industry The Indonesian textile industry comprises five main subsectors: (i) man-made fibers, (ii) integrated textiles mill, (iii) cotton yarn, (iv) small-scale industry, and (v) handlooms. 18 Its strongest export categories in 2007 included man-made staple fibers and knitted and non-knitted apparel. 19 Investment constraints in the synthetic fiber subsector and the overall textile industry include poor operating efficiency; aging machinery and technology; rising costs, such as electricity and labor; and global competition.20 According to the Indonesian Textile Association (API), 155 textile producers went bankrupt in 2009.21 It reported 2,661 textile companies in 2004 of which 28 were in the manmade fiber subsector; 204 were in the spinning sector; 1,044 were in weaving, knitting and finishing 13 “Indonesia Produsen Sepeda Motor Terbesar Ketiga Dunia,” Antara News, November 3, 2010, Accessed March 16, 2011. See: http://otomotif.antaranews.com/news/1288766568/indonesia-produsen-sepeda-motor-terbesar-ketiga-dunia 14 This data is based upon statistics for products falling under HS 8711. 15 The market share of motorcycles imports from Indonesia into India is calculated by dividing (a) the motorcycles imported from Indonesia into India (“imports”) by (b) the total annual consumption of motorcycles in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 16 PT TVS Motor established its Indonesian operations in 2005, and has invested USD 45 million in a motorcycle plant in the Surya Cipta Industrial estate in Karawang, which is near Jakarta, and has planned to invest an additional USD 55 million by 2010. The factory is an integrated manufacturing facility that includes engine assembly, vehicle assembly, testing and painting facility, with a capacity of 300,000 motorcycles. TVS Motor Company India has designated PT TVS Motor Company Indonesia as its base for Southeast Asia. See: http://www.tvsmotor.co.id/ 17 Bajaj Auto started selling motorcycles in Indonesia by establishing PT Bajaj Auto Indonesia in 2006. See: http://www.bajajauto.com/ 18 Usman Ade Sudradjat, “III. Indonesia” from Unveiling Protectionism: Regional Responses to Remaining Barriers in the Textiles and Clothing Trade, UNESCAP Colombo Plan Secretariat, 2008. 19 Przemyslaw Kowalski and Margit Molnar, “Box 4. Indonesia’s textile and garment industry” from Economic Impacts of the Phase-Out In 2005 Of Quantitative Restrictions Under The Agreement on Textiles and Clothing, OECD Trade Policy Working Paper No. 90, July 22, 2009, p. 45. 20 Usman Ade Sudradjat, “III. Indonesia” from Unveiling Protectionism: Regional Responses to Remaining Barriers in the Textiles and Clothing Trade, UNESCAP Colombo Plan Secretariat, 2008. 21 “Lack of incentives stalls investment in textile industries,” The Jakarta Post, August 8, 2010. 40 sector; and 861 were in apparel manufacturing.22 Over 90 percent of the industry is located on the island of Java, with over 50 percent concentrated in West Java. Other significant production takes place on the island of Batam, which is a free trade zone near Singapore. 1. Trade Associations Indonesia has two main associations that represent the synthetic fiber and textile industry in Indonesia, namely the Indonesian Synthetic Fiber Producer’s Association (Asosiasi Produsen Synthetic Fiber Indonesia (APSyFI)) and the Indonesian Textile Association (Asosiasi Pertekstilan Indonesia (API)). Another organization, the Association of Indonesia Textile and Textile Products (Himpunan Pengusaha Industri Tekstil dan Produk Tekstil Indonesia (HIPTEKSINDO)) has been mentioned in the past; however, no recent information is readily available. There appear to be a number of smaller associations; however, information regarding these smaller groups is not publicly available.23 a) The Indonesian Synthetic Fiber Producer’s Association24 The Indonesian Synthetic Fiber Producer’s Association (Asosiasi Produsen Synthetic Fiber Indonesia (APSyFI)) was founded on May 31, 1975. Its members are involved in the production of polyester staple fiber, polyester filament yarn and nylon filament yarn. Role and Function Information regarding the role, function and objectives of the APSyFI is not currently available. The association does not have an active website and its representatives could not be reached or have not returned calls or email exchanges. Organizational Structure The head of APSyFI is Mr. Gita Redma Wirawasta. No other information is publicly available. Membership The APSyFI has 13 members including PT. ITS (Toray), PT. TIFICO (Teijin), PT. SULINDAFIN, PT. POLYCHEM, PT. VASTEX PRIMA, PT. POLYSINDO, PT. PANASIA, PT. INDORAMA, PT. SK KERIS, PT. POLYFIN, PT. C. G. N., PT. MUTU GADING, and PT. KAHATEX. General Position on Trade and Investment Liberalization The APSyFI petitioned for an AD investigation and the resulting order against polyester staple fiber originating from India, China and Taiwan. In recent years, it has complained about declining production from international competition and the fall in the number of producers from 18 companies in 2003 to 12 in 2009.25 It also vocalized its concerns about ACFTA’s implementation and competition from Chinese producers. 26 While the APSyFI has not issued any statement on the association’s position towards trade and investment liberalization, it is highly unlikely that it would be open to such 22 Mitchell, Michelle Mendieta, “Country Profile: Indonesia,” Textile World Asia, November/December 2006. 23 The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, websites, media sources, and government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations, where available, via email and/or phone contact. In the research of these Indonesian associations, it was found to be very difficult to find primary sources willing to discuss details pertaining to the organizations. 24 The APSyFI does not have an active website. Contact: Asosiasi Produsen Synthetic Fiber Indonesia (APSyFI). Dana Pensiun Bank Exim Building, 3rd Floor, Jalan Tanjung Karang No. 3-4A, Jakarta Pusat. 10230. Indonesia. Tel: 62 21 314 8352. Fax: 62 21 314 8358. E-mail: [email protected] 25 “Synthetic Fiber Production Increasingly Declines,” Indotextiles, October 21, 2009. 26 “ASEAN-China FTA Bisa Menciutkan Jumlah Perusahaan Serat Sintetis,” Translation. Kontan, December 14, 2009, and “DPR Desak FTA Asean-China Ditunda 2 Tahun,” Translation. Viva News, January 18, 2010. 41 policies, given its call for trade remedy measures. The APSyFI has not recently released any data or statements on their opinions or activities. b) The Indonesian Textile Association27 The Indonesian Textile Association (Asosiasi Pertekstilan Indonesia (API)) was established on June 17, 1974 by Indonesian textile businessmen to serve as an independent, non-governmental, nonprofit organization committed to the interests, needs and growth of the textile industry. Role and Function The API is committed to developing and improving the performance of Indonesia’s textile industry and trade. The API provides a venue for members to channel their views regarding the textile industry. Its main activity focuses on serving the interests of its members through acting as the industry’s voice to the government, textile employers, textile machinery manufacturers, other related associations, academia, the press and other stakeholders in the industry. The API provides its members with general information on the textile industry, actual data and statistics, including trade performance and export growth, and research and development for the benefit of the entire industry. The API publishes a subscription-based monthly magazine called the Indonesian Textile Magazine, 28 which provides news and information on both the domestic and international textile industry. Organizational Structure The national governing body of API is located in Jakarta. It is in charge of 14 provincial committees and 4 regional committees located across the country. Each provincial committee has its own focus with nine committees dedicated to SMEs that produce a range of hand woven goods as well as local products (batik, embroidery, needlework) and handicrafts. The remaining five provincial committees focus on large-scale textile industries related to spinning, weaving, knitting, dying, printing, finishing, and garment industries. The current chairman of API is Mr. Ade Sudrajat, Membership The API has 1,070 members comprising both large-scale textile and textile product companies, and roughly 500 SMEs. API’s membership consists of businesses from the fiber sector, spinning sector, weaving sector, knitting/embroidery sector, dyeing/printing/finishing sector, batik sector, and garment sector. Membership is governing the API’s statutes and rules of association. Ordinary membership is open to companies, state enterprises and private enterprises that are legal entities involved in at least one of the following activities: fiber and filament production, manufacture of textured yarn, spinning, weaving, knitting and embroidery, printing/dyeing, batik, manufacture of other finished textiles, and trade in textile products. Details regarding membership dues are not publicly available. General Position on Trade and Investment Liberalization According to research, the API’s position on trade liberalization depends on the particular trade issue and the sentiment in the country. As inferred from local media reports in the past two years, the API appears to support free trade agreements (FTA) in terms of market access of the negotiating partner country, but is wary of liberalizing its own market. For example, synthetic fiber and textile producers initially voiced their opposition to the full implementation in Indonesia of the ASEAN-China Trade in Goods Agreement on January 1, 2010, specifically over the perceived undervalued Chinese currency and fear of increased imports into Indonesia. The industry was ready to request the imposition of safeguards. The API was highly critical of the ASEAN-China FTA and the government’s “slow and 27 The API does not have an active website. Contact: Asosiasi Pertekstilan Indonesia (APSyFI). Adigraha Building 16th Floor, Gatot Subroto Kav 56, Jakarta. Indonesia. Tel: 62 21 527 2171. Fax: 62 21 527 2166. E-mail: [email protected] 28 See: http://magazines.fibre2fashion.com/1070/Indonesian-Textile-Magazine.htm 42 apparently confused” response regarding the private sectors’ backlash to the FTA’s implementation.29 Over one year later, however, the tone towards the ASEAN-China FTA has changed considerably. According to API Chairman Ade Sudrajat, Indonesia’s textile exports to China witnessed a 70 percent rise from 2009 figures. The Indonesian Trade Minister stated that textile and textile product exports to China comprised 60 percent garments and 3 percent fiber and yarn. 30 The textile industry now considers China a major export market and is a consistent source of importing raw materials for China’s own textile industry. With respect to the ASEAN-India Trade in Goods Agreement, the position appears more nuanced as many manufacturers feel that they can better compete with Indian producers as their products, such as men’s shirts and women’s clothing, are of a superior quality than those produced in India.31 API Chairman Ade Sudrajat sees the ASEAN-India Agreement as both a threat and opportunity for the Indonesian textile industry in the years to come. Regarding the Indonesia-India Comprehensive Economic Cooperation Agreement (II-CECA), the first round of negotiations took place in December 2010 in India. According to the Director General of International Trade Cooperation at the Ministry of Trade Gusmardi Bustami, several outstanding issues concerning import duty and non-tariff barriers remain key issues and the two sides have yet to exchange initial offers. A spokesman from the Chamber of Commerce and Industry, Mintardjo Halim, believes that textiles and textile products should be protected under the II-CECA.32 The API has offered no official position on this agreement at this time. While it has not issued any recent statements on free trade, the API presented its longstanding concerns in a presentation to UNESCAP in 2007. 33 To increase its competiveness, it called for improved national competitiveness and sectoral competitiveness by increasing productivity, restructuring, expansion, and adapting to market structural changes. To improve industry competitiveness, it calls for (i) machinery restructuring and capacity expansion, (ii) cost reduction, and (iii) government support via financial support, business policies and trade agreements. 34 These themes frequently occur in their media statements. Most recently in February 2011, it cited poor infrastructure and lack of government incentives as investment barriers in the textile industry.35 To increase competitiveness in the international market, the API stated in the UNESCAP presentation that the industry needed more government-to-government negotiations to enhance competitiveness via preferential treatment, FTAs or GSPs.36 The API has been voicing concern about the upgrading of outdated machinery since 2005. In 2009, it stated that 60 percent of the installed textile and garment machines are over 15 years old and that about 800 out of 4,000 textile companies need to replace their old machinery.37 29 Latul, Janeman and Dion Bisara, “Indonesia Vows to Protect Domestic Market,” The Jakarta Globe, January 24, 2010. 30 “Boost in Indonesia’s Textile Exports to China,” Fiber2Fashion, February 18, 2011. 31 Raharjo, Budi. “Textile Industry Not Worried about Free Trade with India,” Translation. Republika Online. April 28, 2010. See: http://www.republika.co.id/berita/breaking-news/ekonomi/10/04/27/113208-industri-tekstil-tak-cemaskan-perdaganganbebas-dengan-india 32 Karina, Sandra. “Indonesia and India Negotiate II-CECA,” Translation. Okezone.com. Economy. December 9, 2010. See: http://economy.okezone.com/read/2010/12/09/320/401833/320/ri-india-sepakat-runding-ii-ceca 33 “The Indonesian Textile and Clothing Outlook: Prospect & Challenge on Global Competition Era,” Indonesian Textile Association, May 3, 2007 (presented to UNESCAP Trade and Investment Division.) 34 Ibid. 35 “Lack of incentives stalls investment in textile industries,” The Jakarta Post, August 8, 2010. 36 “The Indonesian Textile and Clothing Outlook: Prospect & Challenge on Global Competition Era,” Indonesian Textile Association, May 3, 2007 (presented to UNESCAP Trade and Investment Division.) 37 Siwage Dharma Negara, “Chapter 5: Fragmentation Of Electronics And Textile Industries From Indonesia To CLMV Countries” from Upgrading Industrial Structure in CLMV Countries, ERIA Research Project Report 2009 No. 7-3, Ed. Ruth Banomyong and Masami Ishida, March 2010. 43 2. Production Data and Trade Statistics As of 2010, Indonesia is the fourth largest textile exporter after China, Vietnam and India, with its most significant export markets being the United States, Korea, and Turkey, in that order. 38 Indonesia’s exports grew by 21 percent from USD 9.3 billion in 200939 to USD 11.3 billion in 2010.40 Exports for man-made filaments (HS 54) and man-made staple fibers (HS 55) were USD 1.2 billion and USD 2.1 billion, respectively for 2010, which are a 20 percent and 40 percent increase from USD 1.0 billion and 1.5 billion in 2009.41 Exports in 2009 had dropped from USD 10.4 billion in 2008 due to the global economic crisis.42 According to APSyFI, the exports of synthetic fibers shrunk by 9 percent from 460,000 tons in 2008 to 420,000 tons in 2009 due to antidumping duties ranging from 15 to 30 percent imposed by Argentina, Brazil, Pakistan, and Turkey.43 The Indonesian government expects textile exports to reach USD 11.2 billion in 2011.44 Indonesia and India also have antidumping (AD) orders on each others synthetic fiber products. Indonesia issued an AD order on Indian polyester staple fiber (HS 5503.20) with respect to India, China and Taiwan on November 23, 2010, which will expire in five years or in 2015. The dumping margin is 16.67 percent for India, zero percent and 11.94 percent for China, and 28.47 percent for Taiwan.45 Indonesia’s imports of synthetic fibers for those countries in 2009 were 11,000 tons from India, 7,000 tons from China, and 2,000 tons from Taiwan.46 In 2010, India also issued AD orders on viscose staple fibers (excluding bamboo fibers)47 and nylon filament yarn48 from Indonesia. Indian companies have invested significantly in the raw material processing subsector of the Indonesian textile industry, particularly synthetic fibers.49 Indian or Indian-affiliated companies with textile investments in Indonesia include Lohia Group (Indorama Synthetics); Ispat Group (Indo Ispat); Aditya Birla Group (Indo Bharat, Elegant Textile Industry, Sunrise Bumi Textiles, and Indo Liberty Textiles);50 Tolaram Group; Jaykay Files Indonesia; Gokak Indonesia; and Kewalram Group.51 According to APSyFI, Indonesia’s production capacity for synthetic fibers has steadily declined with the number of synthetic fiber companies falling from 18 companies in 2003 to 12 companies in 2009 with an annual production capacity of 1.25 million tons. The association also expected synthetic fibers to produce only 800,000 tons in 2009.52 It subsequently reported in October 2010 production figures of 900,000 tons, marking a 70 percent capacity utilization rate, of which 540,000 tons or 60 percent was consumed in the domestic market.53 For synthetic fiber and yarn, the API in a 2008 38 “Lack of incentives stalls investment in textile industries,” The Jakarta Post, August 8, 2010. 39 “Lack of incentives stalls investment in textile industries,” The Jakarta Post, August 8, 2010. 40 Gita, Redma, “Indonesia Textiles and Clothing 2010; Exports soared, Industry Stagnant,” Indotextiles, January 6, 2011. 41 “Main Non-Oil And Gas Exports By Comodity Per: Jan-Des,” Indonesia Ministry of Trade. See: http://www.kemendag.go.id/statistik_perkembangan_ekspor_nonmigas_(komoditi)/ 42 “Lack of incentives stalls investment in textile industries,” The Jakarta Post, August 8, 2010. 43 “Lonjakan Impor Serat Sintetis Belum Terlihat,” Translation. Kontan, June 1, 2010. 44 “Boost in Indonesia’s textile exports to China,” Fibre2fashion, February 16, 2011. 45 Indonesian Ministry of Finance Decree No. 196/PMK.011/2010. See: http://www.tarif.depkeu.go.id/Data/?type=reg&file=PMK1960112010.pdf 46 “Lonjakan Impor Serat Sintetis Belum Terlihat,” Translation. Kontan, June 1, 2010. 47 Indian Customs Notification No.76/2010. See: http://www.eximguru.com/notifications/Regarding-anti-dumping-duty-on22461.aspx 48 Indian Customs Notification No 47/2010. See: http://www.eximguru.com/notifications/Regarding-anti-dumping-duty-on22050.aspx 49 Usman Ade Sudradjat, “III. Indonesia” from Unveiling Protectionism: Regional Responses to Remaining Barriers in the Textiles and Clothing Trade, UNESCAP Colombo Plan Secretariat, 2008. 50 See: http://www.adityabirla.com/our_companies/our_companies.htm 51 “Business Guide on Indonesia,” Embassy of India in Jakarta, November 24, 2009. 52 “Synthetic Fiber Production Increasingly Declines,” Indotextiles, October 21, 2009. 53 “Penerapan Bmad Akan Serap Banyak Serat Sintetis Lokal,” Translation. Bataviase, October 5, 2010. 44 UNESCAP report stated that Indonesia has 26 polyester fiber and filament yarn producers and two rayon-viscose fiber producers with an annual capacity of 1.1 million tons of fiber and yarn.54 The Italian Trade Commission in Jakarta has compiled various data for man-made fiber yarn, cotton yarn, wool yarn, and silk yarn for production in 2007 and exports in 2009. For man-made fiber yarn, production was USD 2.3 billion (9.0 billion kg) in 2007 and exports were USD 744.1 million (357 million kg) in 2009. For cotton yarns, production was USD 1.1 billion (484.7 million kg) in 2007 and exports were USD 828.8 million (151.0 million kg) in 2009. For wool yarns, production was USD 4.0 million (774,211 kg) in 2007 and exports were USD 3.0 million (628,451 kg) in 2009. For silk yarns, production was USD 15.7 million (2.1 million kg) in 2007 and exports were none in 2009.55 According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Indonesia is a net exporter of synthetic fibers and textile products to India. For the FY 2009/10, Indonesia imported USD 38.0 million and exported USD 55.6 million in synthetic fibers and textile products to India. These figures reflect a 1 percent decrease in imports from USD 38.3 million and 48 percent decrease in exports from USD 106.3 million from FY 2008/09. As a result, Indonesia’s net exports in synthetic fibers and textile products with India significantly dropped by 74 percent from USD 68.0 million in FY 2008/09 to USD 17.6 million in FY 2009/10. India sold in the domestic market only 0.48 percent and 0.25 percent 56 of the synthetic fibers and textile products imported from Indonesia for the FY 2008/09 and FY 2009/10, respectively. 3. Trade and Investment Activities of the Synthetic Fiber and Textile Industry in India This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. PT. Mutu Gading Tekstil 57 Founded in 1997, PT. Mutu Gading Tekstil has become one of the fastest growing yarn manufacturing companies in Indonesia. With an annual production capacity of 36,000 tons of polyester textured yarn (PTY), Mutu Gading supplies PTY products to apparels, home furnishing, automotives, and carpet application industries, among others. Its PTY products include specialty micro filament yarns, cationic yarns, bright yarns, dope dyed black and color yarns, ready for dyeing packs on plastic perforated tubes, and bi-shrinkage yarns. It exports more than 60 percent of these products to the world markets including European countries, Middle East countries, Australia, and India. PT Indorama Synthetics Tbk58 Established in 1967, PT Indorama Synthetics Tbk is now the largest polyester producer in Indonesia and one of Indonesia’s largest exporters. Currently, its annual polyester production capacity stands at 280,000 tons. PT Indorama is involved in four businesses namely: (i) polyester, (ii) spun yarns, (iii) fabrics, and (iv) captive power plant. Polyester and spun yarns account for 69 percent and 25 percent revenue contribution of the company’s total revenue, respectively. Fabrics and Captive Power Plant account for the remaining 6 percent. PT Indorama exports more than half of its products to other 54 Usman Ade Sudradjat, “III. Indonesia” from Unveiling Protectionism: Regional Responses to Remaining Barriers in the Textiles and Clothing Trade, UNESCAP Colombo Plan Secretariat, 2008. 55 st “Indonesian Textile Industry and Machinery Market Report and Statistics 2009 and 1 Semester of 2010,” Italian Trade Commission in Jakarta, December 2010 56 The market share of synthetic fiber and textile imports from Indonesia into India calculated by dividing (a) the synthetic fiber products and textiles imported from Indonesia into India (“imports”) by (b) the total annual consumption of synthetic fiber products and textiles in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 57 See: http://www.mutugading.com/index.php 58 See: http://www.indorama.com/index.html 45 countries, including the United States, Canada, and Europe. The fast growing markets include India, Australia, and the Middle East countries. Asia Pacific Fibers59 Established in 1984, Asia Pacific Fibers was previously known as Polysindo Eka Perkasa. It is one of Indonesia’s largest polyester manufacturers with an annual production capacity of 300,000 tons. Its products include purified terephthalic acid, specialty polyester filament yarns, and polyester fibers. Asia Pacific Fibers caters its products to the changing demands in apparel, furnishings, and industrial textiles. The company exports these products to several parts of the world, including India. Sulindafin (Susila Indah Synthetic Fibers Industries)60 Established in 1984, Sulindafin (formerly known as Susila Indah Synthetic Fibers Industries) pioneered the manufacture of polyester polymer in Indonesia. To date, it produces up to 80,000 tons of a wide range of polyester polymer annually. Its products include micro-filament yarns, bi-shrinkage yarns, nep yarns, cationic yarns, mixed yarns, traditionally polyester yarns, polyester staple fiber, and polyester textile grade chips, among others. Sulindafin’s export markets cover several countries from all parts of the world, including India. Panasia Indosyntec61 Founded in 1973, Panasia Indosyntec is a downstream manufacturer producing high quality polyester ladies fabric. It subsequently expanded to establish an upstream polymerization plant to produce polyester yarn and fiber. Currently, the upstream plant produces an aggregate yarns and fiber of 80,000 tons per year, while the downstream plant produces 60 million yards of polyester fabric. Panasia Indosyntec exports its products from both plants to several countries around the world, including India. 59 See: http://www.asiapacificfibers.com/index.html 60 See: http://www.shinta.co.id/yarn_sulindafin.html 61 See: http://www.indokordsa.com/aboutus/milestones.aspx 46 第 III 章 MALAYSIA A. Automotive Parts Industry According to the Malaysian Industrial Development Authority (MIDA) figures as of August 2010, the Malaysian automotive industry 62 comprises 28 manufacturing and assembly plants to produce passenger and commercial vehicles, composite body sports cars, and motorcycles with a total capacity to produce approximately 963,300 passenger and commercial vehicles and about 1 million motorcycles per year. Malaysia produces about half of its production capacity.63 It also has 690 automotive component manufacturers that produce body panels, brake parts, engine parts, transmission and steering parts, rubber parts, electrical and electronic parts, and trim and upholstery.64 Malaysia also has a number of engineering supporting sectors that serve the automotive industry.65 Automotive components play a significant role in supporting the domestic automotive vehicle industry given that (i) the two largest automotive manufacturers and sellers of vehicles, namely the domestic Proton and Perodua, have a high local content ratio, and (ii) most automotive companies are assemblers, which rely on automotive parts. The local content ratio for domestically-manufactured Proton and Perodua vehicles is about 80 percent and for domestically-assembled, but foreignmanufactured vehicles, is about 35 to 40 percent. Most of the domestically produced automotive components are relatively low-value parts, and only a few engine types are produced in Malaysia.66 Major foreign component manufacturers include Bosch, Continental, Delphi Automotive Systems, Denso, Nippon Wiper Blade, TRW Automotive, and ZF. Major local companies include APM Automotive, Delloyd, Ingress, and Sapura. 67 Proton expects to start exporting automotive components in 2011 to Mitsubishi for Thailand and other countries.68 The two largest automotive manufacturers in Malaysia are the national car brands, Proton and Perodua. Proton is 43 percent owned by the Malaysian government’s investment arm, Khazanah Nasional.69 Perodua is a joint venture between Malaysia’s UMW Corporation (38 percent share), MBM Resources (20 percent), Daihatsu and its Malaysian affiliate (25 percent), Mitsui & Co and its regional affiliate (7 percent), and PNB Equity Resource Corporation (10 percent). 70 While the 62 The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, a review of trade association websites, chambers of commerce, media sources, government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations via email and/or phone contact. However, such information is limited due in some cases to a lack of responsiveness, or concern regarding information dissemination, from the trade associations contacted. 63 “Malaysia’s Automotive Industry,” Malaysian Industry Development Authority-Transport Industry Division, August 2010. 64 “Malaysia components: Proton plans to export auto components next year,” Economist Intelligence Unit-Views Wire, November 11, 2010. 65 According to an industry report from the Malaysian Industry Development Authority’s Transport Industry Division, published in August 2010, notable engineering supporting sectors serving the automotive industry comprise (i) mould and dies (about 20 companies), (ii) metal casting (about 18 companies), (iii) machining (over 50 companies and over 100 workshops), (iv) metal stamping (over 300 companies), (v) metal surface treatment and finishing (over 40 companies), and (vi) heat treatment (over 20 companies). The metal casting companies work on front and rear wheel hub, front and rear brake panel, and alternator housing and engine parts, such as crank case, crank case cover and cylinder head cover. The machining companies have facilities to machine minute precision gears and shafts for engine and transmission parts. The metal stamping companies provide electroplating or spray painting and surface finishing treatment of stamped parts and components. The metal surface companies provide batch and continuous electroplating, precision electroplating, electroless plating, functional electroplating, cathodic electrodeposit, dacrotised treatment, phosphating, passivation, anodizing and chromating. The heat treatment companies provide continuous mesh-belt heat treatment, vacuum hardening, carburizing, carbonitriding, nitriding, annealing, and tempering. 66 “Malaysia: Automotive Report,” Economist Intelligence Unit, December 22, 2010. 67 “Malaysia’s Automotive Industry,” Malaysian Industry Development Authority-Transport Industry Division, August 2010. 68 “Malaysia components: Proton plans to export auto components next year,” Economist Intelligence Unit-Views Wire, November 11, 2010. 69 “Shareholders,” Proton website, accessed March 25, 2011. See: http://www.proton.com/Corporate/About-Proton/CorporateInformation/Shareholders.aspx 70 “Corporate Information,” Perodua website, accessed March 25, 2011. See http://www.perodua.com.my/index.php?section=corporate&id=12 47 Malaysian government has pushed for a merger between Proton and Perodua, it has recently expressed that it will not force the two companies to consolidate. 71 Notably, neither Proton nor Perodua are active in the trade associations in Malaysia, likely due to their protectionist stance on trade liberalization. Other domestic manufacturers include (i) Inokom, which is a joint venture between Malaysia’s Berjaya Group, Korea’s Hyundai, and France’s Renault; (ii) Malaysia Truck and Bus (MTB), which a joint venture between Malaysia’s DRB-HICOM conglomerate and Isuzu, and (iii) Malaysia’s Naza Group. Assemblers include (i) Asia Automobile Industries, which assembles for Daimler, Mazda and Kia; (ii) Naza, which assembles for Kia and Peugeot; (iii) DRB-HICOM, which assembles for Mercedes, Suzuki, and Isuzu and will assemble for Volkswagen in late 201172; (iv) UMW Toyota Motor, (v) Associated Motor Industries, which assembles for BMW and Ford; and (vi) Volvo Car Malaysia.73 The Malaysian market is protected given the government support for Proton and Perdua with excise duties on imported cars ranging from 60 to 125 percent. According to MIDA, Malaysia’s automotive production capacity primarily serves the domestic market,74 which is reflected in statistics from the MAA for 2010. According to MAA data, Malaysia’s automotive companies produced 567,715 units and sold 605,156 units in 2010. The top two automotive sellers by brand were the national car manufacturers, Perodua at 188,641 units (31 percent of total market share) and Proton at 157,274 units (26 percent of total market share). The remaining sellers in the top ten for 2010 include Toyota (91,559 units sold, 15 percent market share), Honda (44,483 units sold, 7 percent market share), Nissan (34,701 units sold, 6 percent market share), Mitsubishi (11,899 units sold, 2 percent market share), Naza (9,362 units sold, 2 percent market share), Suzuki (6,748 units sold, 1 percent market share), Isuzu (6,144 units sold, 1 percent market share), and Inokom (5,573 units sold, 1 percent market share). The sales figure for 2010 surpassed the industry’s previous record of 552,316 units in 2005. The MAA’s sales projections are 618,000 units in 2011; 624,000 units in 2012; 631,000 units in 2013; 639,000 units in 2014; and 647,000 units in 2015.75 1. Trade Associations The main industry associations for the automotive and automotive parts include the Malaysian Automotive Component Parts Manufacturers (MACPMA) and the Malaysian Automotive Association (MAA). Another association is the Malaysia Automotive Institute (MAI),76 established in April 2010, which aims to serve as a focal point and coordination center for the development of the automotive industry and to further the Ministry of International Trade and Industry (MITI)’s support in developing the industry. Another automotive association is the Motorcycle and Scooter Assemblers and Distributors Association of Malaysia (MASAAM), which focuses on the two-wheeler industry in Malaysia.77 As the MAI is a government agency under MITI78 and the MAA is the significantly larger 71 Sidhu, Jagdey Singh. “Proton, Perodua roadmaps sought,” The Star, February 25, 2011. 72 Malingam, Eugene. “DRB-HICOM and VW ink production pact worth RM1bil,” The Star, Business Section, December 22, 2010. 73 “Malaysia: Automotive Report,” Economist Intelligence Unit, December 22, 2010. 74 “Malaysia’s Automotive Industry,” Malaysian Industry Development Authority-Transport Industry Division, August 2010. 75 “Market Review for 2010 and Outlook for 2011,” Malaysian Automotive Association, Press Conference Materials, January 19, 2011. 76 See: www.mai.org.my/ver1/ Contact: Malaysia Automotive Institute (MAI), Block 3517, Jalan Teknokrat 5, Cyberjaya, 63000, Selangor, Malaysia. Tel: 603 8315 7888. Fax: 603 8312 0300. Email: [email protected] 77 See: www.masaam.com/ Contact: Motorcycle and Scooter Assemblers and Distributors Association of Malaysia (MASAAM), No.1412, Plot No. 281, Prai Industrial Complex, Prai, Province Wellesley, 13600, Penang, Malaysia. Tel: 604 390 8237. Fax: 604 398 8422. 78 On June 10, 2010, the Ministry of International Trade and Industry (MITI) launched an independent non-profit organization called Malaysian Automotive Institute (MAI) to serve as a focal point and coordination center for the development of the local automotive industry. The establishment of the MAI was based on the recommendations outlined in the Third Industrial Master Plan (IMP) 2006-2020 to assist and further enhance MITI’s support in developing the local industry. The MAI is essentially a coordination center for all matters related to automotive industry, including formulating national automotive policy, managing man power development program, coordinating automotive related research and development. The MAI’s role is also to mobilize collective efforts among the automotive stakeholders including through the MAA in the planning and implementation of industrial strategy towards a common direction at national level. 48 and more active association, this report focuses on the MACPMA and MAA. The Federation of Malaysian Manufacturers (FMM) 79 operates the FMM Malaysian Automotive Tyres Manufacturers Industry Group (FMM MATMIG). a) Malaysian Automotive Component Parts Manufacturers (MACPMA)80 The Malaysian Automotive Component Parts Manufacturers (MACPMA) is an association of manufacturers engaged in the production of automotive parts. As an umbrella organization for the industry, it serves to provide an official communications channel with the Malaysian government, which consults with the MACPMA on general industrial and automotive policies. It was originally established in 1978 to push for higher local content requirements.81 Role and Function The MACPMA is committed to achieving a number of objectives for its members and is actively involved in encouraging and supporting government polices that are in the interest of component parts manufacturers in the country. One of the primary roles of the MACPMA is to establish and promote connections between automotive assemblers and manufacturers and the component parts manufacturers. Communication with other industrial or trade associations, chambers of commerce and other commercial, industrial or public bodies, whether local or foreign, is another role of the organization. The MACPMA provides dialogues on a regular basis with other associations in the industry, such as the MAA and the MASAAM. Dialogues are also held with MACPMA's counterparts overseas, such as the Japanese Automotive Parts Industry Association (JAPIA) and Association of Component Manufacturers of India (ACMA), among others. The MACPMA aims to promote measures to facilitate trade and commerce among firms engaged in automotive component parts manufacturing. Finally, the MACPMA acts as an information repository and collects, collates, analyzes and disseminates information pertaining to the automotive and automotive parts industry. The MACPMA achieves these objectives by providing its members with a number of services, including representation of the industry's problems and concerns to the government, provision of upto-date information on government policies, incentives, legislation and procedures, guidance and advice on matters pertaining to trade and industry, and trade and business contacts through the trade enquiries received by the MACPMA through in-coming and out-going trade missions and through the MACPMA's links with other organizations. The MACPMA publishes industry news, some auto statistics, and information on events on its website.82 It also publishes the MACPMA News on a monthly basis. The newsletter provides updates on the automotive industry in Malaysia and other parts of the world. The newsletter is circulated not only to members, but also to government departments. Some foreign organizations subscribe as well. Finally, special market reports on the status of the automotive and component parts industry of other countries and their market potential are compiled by MACPMA for circulation to members and other organizations. 79 See: www.fmm.org.my Contact: Federation of Malaysian Manufacturers, No 3 Persiaran Dagang, PJU 9, Bandar Sri Damansara, 5220 Kuala Lumpur, Malaysia. Tel: 603 6286 7200. Fax: 603 6274 1266. Email: [email protected] The FMM was established on July 2, 1968 as an organization representing more than 2,000 leading manufacturing and industry service companies. The FMM represents the Malaysian manufacturing sector at the international, regional, national, state, local authority and industry sub-sector levels. It also endorses certificates of origin and offers a wide range of services and activities to facilitate business operations. The FMM has branches in the Malaysia states of Northern, Perak, Selangor, Negeri Sembilan, Malacca, Johore, and Eastern. It also has representative offices in Sarawak, Sabah and Kedah. The FMM supports the Malaysian government’s engagement in FTA negotiations and has welcomed Malaysia’s participation in the negotiations of the Trans Pacific Partnership Agreement (TPP). It also supports the government’s decision to enter into FTA negotiations with the European Union. 80 See: www.macpma.org.my/index.asp Contact: The Secretariat, Malaysian Automotive Component Parts Manufacturers (MACPMA), Wisma FMM, No. 3, Persiaran Dagang, PJU 9, Bandar Sri Damansara, 52200, Kuala Lumpur, Malaysia. Tel: 603 6286 7200. Fax: 603 6277 6714. Email: [email protected] 81 Doner, Richard F. Driving a Bargain: Automobile Industrialization and Japanese Firms in Southeast Asia, University of California Press, 1991, p. 98. 82 While the website is copyrighted as of 2000, the information is up to date as confirmed by telephone with a MACPMA representative on March 25, 2011. The MACPMA does not publish annual reports. 49 Organizational Structure The MACPMA is led by an Executive Committee comprising a president, two vice presidents, honorary treasurer, honorary secretary, and six other committee members. While MACPMA is an independent entity, it uses the Industry Groups Management Services from the FMM, which includes secretarial, administration, financial control, and information support from the FMM. The current president is Mr Peter Lim Yoke Cheong. Membership According to the online directory83 on its website, the MACPMA has 91 members of which 50 to 60 members are engaged in exports according to information from 2008.84 The MACPMA has three membership categories: (i) ordinary; (ii) subsidiary; and (iii) associate. Ordinary members include all companies admitted to the organization that do not fall under the definition of one of the other two categories as accorded by the Memorandum of Association. Companies that are subsidiaries of holding companies which are already members of the MACPMA may join as subsidiary members at the discretion of the Executive Committee. Membership fees include an entrance fee of RM 500 and subscription fee of RM 900. Prospective members are required to enclose a photocopy of the company’s manufacturing licenses for verification by the MACPMA. General Position on Trade and Investment Liberalization The MACPMA is actively involved in a number of areas that generally support trade and investment liberalization policies on both the regional and international levels. On the regional level, the MACPMA participates in meetings and discussions of the ASEAN Automotive Federation (AAF) on the promotion of the automotive industry in ASEAN and advises government delegates at such meetings on matters relating to the Malaysian automotive industry. The association also provides advisory services to members on matters pertaining to customs issues and tariffs, and publicizes the automotive parts industry at export promotion events as well as organizes trade missions for its members to meet their counterparts in other countries and also to potential markets. The MACPMA is involved in discussions and consultations with the government on the formulation and administration of the local content policy. It holds regular dialogues with government bodies and other private organizations on matters pertaining to vehicle safety, emissions and transport regulations. With respect to trade with India, the MACPMA has signed a Memoranda of Understanding (MOU) with its Indian counterpart, the Association of Component Manufacturers of India (ACMA), on the exchange of information and cooperation in trade matters.85 As of March 25, 2011, the MACPMA has stated that its members have not expressed any real interest regarding any FTAs in general or with India in response to the information disseminated from MITI. Its members also have not communicated with the MACPMA any strong interest to expand trade or investment with India.86 83 The MACPMA’s directory is available at http://www.macpma.org.my/Members/results.asp?Search=A 84 Yusuf, Shahid and Kaoru Nabeshima. Tigers under Threat: The Search for a New Growth Strategy by Malaysia and its Southeast Asian Neighbors, World Bank, October 15, 2009, p. 104. 85 “Profile,” ACMA, accessed March 18, 2011. See: http://www.acmainfo.com/profile.htm No further information on the MOU has been released. 86 Phone interview with a MACPMA representative on March 25, 2011. 50 b) Malaysian Automotive Association (MAA)87 The MAA was established in November 1960. First known as the Federation of Malaysian Motor Traders Association (FMMTA), it started with 10 founding members namely Ampang Motors, Asia Motors, Borneo Motors, Champion Motors, Cycle & Carriage, Anglo-American Corporation, Orchard Motors, Tan Chong& Son Motor, Wearne Brothers, and the East Asiatic Company. The original objectives were to discuss issues relating to the Motor Industry among members. In 1966, the Malaysian Motor Vehicle Assemblers Association (MMVAA) was established. The FMMTA was renamed to the Malaysian Motor Traders Association (MMTA) in 1970. The MMTA was part of the Malaysian government’s decision to promote the motor vehicle assembly industry, and acquired its own premises and established a permanent Secretariat. Following the government’s call for associations and agencies involved in a common or similar industry to merge, the MMTA and the MMVAA became the Malaysian Automotive Association in 2000. The MAA was officially launched on January 26, 2000. Role and Function The MAA’s scope of responsibilities include making common representation to government agencies on issues affecting the automotive industry, communicating with the public on industry issues, position, and objectives, and developing and protecting the interests of members. Besides serving as a liaison with government agencies, the MAA also communicates industry positions and objectives to the media. The MMA considers, supports (or opposes) proposed legislation or other measures affecting the interests of its members and acts as a communication bridge between the government and members. The MAA also disseminates a wealth of information, trade statistics, production and sales data, details on tariff duty structure, and other information on matters of interest to or affecting members. It also promotes and encourages the formulation of trade tests and standards in skilled and semi-skilled occupations in the automotive industry and assists in trainings to enable workers to achieve such standards. Finally, the MAA assists and advises Members in regard to any matter connected with industrial relations and generally promotes, fosters and protects the interests of members. Organizational Structure The MAA Council comprises a president, vice president for trade, vice president for policy & regulation, vice president for manufacturing, an honorary secretary/treasurer, and six other council Members. Each council member is a representative from an automotive company. The current acting president is Datuk Aishah Ahmad. Membership The MAA maintains three types of memberships for ordinary members, associate members and subscriber members. 88 Ordinary membership, which has voting rights, is open to any company engaged in the Malaysian automotive industry, such as automotive vehicle manufacturers, assemblers, franchise holders, or sole distributers engaged in completely knocked-down (CKD) or completely built-up (CBU) operations. Associate members, which do not have voting rights, apply to companies that meet the requirements as ordinary members or become members at the discretion of a Council Member, regardless of whether the company meets the requirements as ordinary members. Subscriber membership is open to any company directly or indirectly related to the automotive industry and entitles the member to access MAA statistics and newsletters. To date, MAA has 244 members, comprising 45 full ordinary members who are franchise holders and assemblers, 4 associate members nominated by franchise holders, and 195 subscriber members from various institutions and associations (banks, stock, brokers, etc) who have an interest in the local 87 See: www.maa.org.my/index.htm Contact: Malaysian Automotive Association (MAA), F-1-47, Block F, Jalan PJU 1A/3, Taipan Damansara 2, Parcel 1, Ara Damansara, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia. Tel: 603 7843 9947. Fax: 603 7955 0954. Email: [email protected] 88 The MAA’s directory is available at http://www.maa.org.my/listing_ordinary.htm for ordinary members and at http://www.maa.org.my/listing_associates.htm for associate members. The MAA also provides a list of manufacturing plants at http://www.maa.org.my/listing_map.htm 51 automotive industry. Notably, Proton and Perodua, which are Malaysian car manufacturers, are not ordinary members, but only associate members. Annual membership fees vary according to the class of membership as follows: RM 3,000 for ordinary membership; RM 2,000 for associate membership; and RM 1,000 for subscriber membership. An entrance fee of RM 1,000 is applicable to all three membership categories. General Position on Trade and Investment Liberalization The Malaysian automotive industry has been heavily protected since the establishment of Proton as the national car. The government imposed several measures such as import taxes, import taxes on car parts, excise taxes, Open Approval Permits (APs) and quotas, special rates for the national car loans, and free road tax to ensure growth of its domestic industry. The MAA’s stance on the government’s protective policies has been mixed. While members representing local carmakers continue to support the government protective measures to help maintain their competitiveness, foreign members have encouraged the government to liberalize its domestic industry to meet the demands of a global competitive environment. On March 22, 2006, the Malaysian International Trade and Industry Ministry (MITI) introduced the National Automotive Policy (NAP) in an effort to integrate the local automotive industry into regional and global industry networks. The NAP came after the government held a series of consultations with the MAA and domestic players. In October 2009, the government reviewed the NAP with an aim to ensure long term competitiveness in light of market liberalization. A summary of the NAP review and MAA’s respective stance on each measure is highlighted in the following paragraphs. On tariff reduction and elimination under preferential trade agreements, MAA President Aishah Ahamad expects trade liberalization within ASEAN and other FTAs to which Malaysia is a party to provide export opportunities for automotive and component manufacturing companies. Local companies began to realize that heavy dependence on local car manufacturers is a limited factor to their growth.89 The implementation of the ASEAN Free Trade Area (AFTA) agreement appears to provide a major opportunity for domestic manufacturers to exploit regional demand for automotive parts. However, with the high level of excise taxes, car manufacturers cannot reduce prices to make car more affordable. In this regard, the MAA is now lobbying the government to lower excise duties in line with other ASEAN countries.90 Under the NAP, the MITI reiterated Malaysia’s commitments to honor its international obligations by reducing and eliminating tariffs under existing preferential trade arrangements. However, it decided to maintain excise tax for CBU and CKD vehicles at rates ranging from 60-125 percent. The MAA welcomed the new manufacturing license (ML), which allow 100 percent foreign equity ownership. The ML will grant market access for foreign carmakers to enter into the domestic market.91 Under the NAP, the MITI decided to re-introduce the issuance of the ML for selected segments, which are viewed as strategic, including: (i) luxury passenger vehicles with engine capacity of 1,800cc and above with the minimum price of RM 150,000; (ii) hybrid and electric vehicles; (iii) pick-up trucks; (iv) commercial vehicles; and (v) motorcycles with engine capacity of 200cc and above. The MITI does not impose any equity conditions on the new ML. However, it still maintains the current policy on the freeze of ML for reconditioning and reassembling activities as well as the policy on contract assembly to encourage utilization of existing excess capacity. Previously, the MITI froze on new ML for all automotive segments due to excess capacity in the domestic market. Vehicle assemblers were only allowed to produce excess capacity to third-party contract assemblers who produce the models which do not directly compete with those produced by national car manufacturers. 89 Francis, Isabelle. “MAA: Vendors must change “Proton-centric” mindset,” Autoworld. June 9, 2005. 90 “MAA Lobbying for Lower Car Excise tax,” accessed on March 16, 2011. See: http://www.islamiclearningcentre.com/public_html/v1/index.php?option=com_content&view=article&id=376%3Amaalobbying-for-lower-car-excise-tax&catid=34%3Apengumuman&Itemid=62&lang=en, 91 “Auto Players Pleased with Revised NAP,” See: http://www.smecorp.gov.my/ms/node/446 52 With respect to hybrid vehicles, the MAA welcomed the government’s decision to promote the hybrid car segment under the NAP. In particular, MAA President Aishah Ahmad highlighted that the removal of excise duties for hybrid cars means that the price for vehicles such as Honda Malaysia Sdn Bhd’s Honda Civic Hybrid and UMW Toyota Motor Sdn Bhd’s Toyota Prius could be slashed drastically.92 The MAA estimated that the Honda Civic Hybrid and Toyota Prius, now costing RM 129,000 and RM 175,000 respectively, would have a new price tag of RM 100,980 and RM 128,046 correspondingly following the excise duty exemption. With the announcement of import and excise duty exemptions for hybrid cars, the MAA hopes that its members would showcase their eco-friendly vehicles from “green” prototypes to hybrid innovation moving forward. In line with the government’s sustainable energy policy, the NAP review addresses the need to develop and promote the hybrid and electric vehicle industry. In this regard, the NAP introduces comprehensive tax incentives, duty exemptions, as well as customized training and research and development (R&D) grants to ensure the maximization of return on investment. The new measures target: Investment in the assembly or manufacture of hybrid and electric vehicles which will be eligible for (i) 100 percent PS or ITA for a period of ten years; (ii) customized training and R&D grants; and (iii) 50 percent exemption on excise duty for locally assembled vehicles or provision of grant under the Industrial Adjustment Fund (IAF). Investment in the manufacture of selected automotive components for the production of hybrid and electric vehicles such as electric motors, electric batteries, battery management system, inverters, electric air conditioning, and air compressors will be eligible for 100 percent PS for ten years or 100 percent ITA for five years. The MITI may grant additional incentives based on proposed activities. The MAA also welcomed the phase-out of imported used parts and components from June 2011 under the NAP.93 This will remove the threat of substitutes from foreign companies, boost the sale of local players, and should benefit automotive parts companies. To address safety and environmental concerns arising from imported used automotive parts and components without any restrictions or mandatory tests, the NAP review introduced a measure to prohibit imports of used parts and components, effective from June 2011. In addition, imports of used commercial vehicles will also be prohibited effective from January 1, 2016 in line with the gradual phase out of imports of used parts and components, and the termination of AP system for used vehicles. The MITI will terminate the open AP system by December 31, 2015, while the Franchise AP will be phased out by December 31, 2020. Effective January 1, 2010, the MTI began to charge RM 10,000 for each unit of open AP issued. The revenue from the AP issuance will be used for the establishment of a fund to assist Bumiputera (Malay) companies venturing into the automotive and other related businesses. Industry players offered mixed reaction. While some companies welcomed the decision as they claimed that the AP system only benefits a few group of people.94 Some fear that the termination of AP in 2015 may create a dramatic increase of foreign car imports into Malaysia. The NAP Review also announced the government’s plan to set up a strategic partnership between Proton and a globally established Original Equipment Manufacturer (OEM) to enhance Proton’s competitiveness in the global market and its long term viability. In January 2011, Proton and Perodua are reportedly in some type of merger discussions, but no concrete outcome has been announced. The MAA supported the government’s policy to protect Proton and Perodua in their formative years. The national car projects have significantly contributed to the growth of the local automotive part industry as indicated by the presence of more than 600 manufacturers in Malaysia. However, the MAA highlighted that the government cannot protect the national car manufacturers forever and 92 “Attractive Prices for Hybrid Cars Next Year, Says MAA,” The Star. Business News, October 22, 2010. See: http://biz.thestar.com.my/news/story.asp?file=/2010/10/22/business/7273431&sec=business 93 Sidhu, Jagdey Singh, Hong Boon How and Eugene Mahalingam. “Auto Players Pleased with Revised NAP,” The Star, October 29, 2009. See: http://www.smecorp.gov.my/ms/node/446 94 Sidhu and Mahalingam. “Mixed Views on RM 10,000 Fee for Open APs,” The Star, October 28, 2009. See: http://www.smecorp.gov.my/node/438 53 encouraged the government to establish strategic partnerships with global OEMs to enhance the competiveness and to ensure long-term viability of national brands.95 2. Production Data and Trade Statistics In 2009, the automotive component sector earned RM 5.8 billion in sales revenue for both domestic and export markets, imported RM 4.4 billion, and exported RM 2 billion mainly to China and Thailand.96 Around 70 percent of production is for the original-equipment market and the remaining 30 percent is for export and the local parts replacement market. According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Malaysia is a net importer of automotive parts 97 from India. For the FY 2009/10, Malaysia imported USD 12.1 million and exported USD 3.8 million in automotive parts to India. These figures reflect a 10 percent decrease in imports from USD 13.5 million and 11 percent increase in exports from USD 3.4 million from FY 2008/09. As a result, Malaysia’s net imports in automotive parts with India declined by 17 percent from USD 10.0 million in FY 2008/09 to USD 8.3 million in FY 2009/10. India sold in the domestic market only 0.018 percent and 0.016 percent98 of the automotive parts imported from Malaysia for the FY 2008/09 and FY 2009/10, respectively. 3. Trade and Investment Activities in the Automotive Parts Industry in India This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. Proton99 On January 4, 2011, Proton Group Managing Director Syed Zainal Abidin Syed Mohamed Tahir revealed that the national car company Proton Holdings Bhd expects to finalize strategies to expand its business in India's motor vehicle market by the first half of 2011. Proton has identified a local OEM company and plans to have a contract assembly and joint ventures. Proton has identified its models to enter the Indian market such as the multi-purpose Exora, Persona, and its first global car, Emas. MITI Industry Deputy Minister Mukhriz Tun Mahathir has supported Proton’s decision to enter into the Indian market. He commented that if Proton can penetrate the Indian competitive market, then it will be able to succeed anywhere. According to local new reports, Proton is in discussions with Hindustan Motors (HM), an India car manufacturer, to assemble the Exora and Mitsubishi Lancer for the Indian market in HM’s plant in Chennai and possibly other HM sites in Indore and Uttarpara. Proton representatives have visited HM’s plant in Chennai over the past three years. Proton is also reportedly interested in sourcing transmission systems and powertrains from HM’s Avec. A director on Proton’s board, BVR Subbu, has confirmed that Proton is in discussions with HM, but also stated that it is in talks with other Indian companies. HM Managing Director Manoj Jha denies of any talks with Proton. In the past decade, 95 Abdullah, Mohd Faizal. “Your 10 Questions for Datuk Aishah Ahmad,” The Star, Business Section, May 15, 2010. See: http://biz.thestar.com.my/news/story.asp?file=/2010/5/15/business/6230584&sec=business 96 “Malaysia’s Automotive Industry,” Malaysian Industry Development Authority-Transport Industry Division, August 2010. 97 This data is based upon statistics for products falling under HS 8708. 98 The market share of automotive parts imports from Indonesia into India calculated by dividing (a) the automotive parts imported from Indonesia into India (“imports”) by (b) the total annual consumption of automotive parts in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 99 See: http://www.proton.com/#1 54 Proton has unsuccessfully approached various Indian companies, including Argentum Motors, Hero, Mahindra & Mahindra, and Tata.100 In March 2011, Malaysian Deputy Prime Minister Tan Sri Muhyiddin Yassin reportedly stated that Proton is in talks with Tata Motors to bring in Tata’s cars to the Malaysian market.101 UMW/Perodua102 UMW Holdings Berhad, which includes automotive operations for Toyota and Perodua, has joint ventures for automotive component manufacturing operations in India under its Manufacturing & Engineering division. As of end-2009, these investments include (i) Sathya Auto, which manufactures mechanical jacks, radiator caps and sheet metal (51 percent ownership); (ii) Castwel Autoparts, which manufactures die casting, aluminum alloys, water pump body, cover, and brackets (51 percent ownership); and (iii) UMW Dongshin Motech, which is and original equipment manufacturer of stamped automotive body parts for Korean car manufacturers, including Hyundai, in India (33 percent ownership). 103 As stated in the UMW Holdings’ 2009 Annual Report, the group expects its investments in India to broaden its income base given the industry and export growth in India’s automotive market. It views that its joint ventures have “immense potential for further expansion” as India aims to become a global hub for small car manufacturing. UMW controls the majority share of Perodua at 38 percent of total shares.104 Naza105 The Naza Group, which has affiliations with Brabus, Ferrari, Kia, Mazda, Maserati, Mercedes-Benz, Perodua, Peugeot, and Porsche, announced its intention to establish an assembly plant in Chennai, India in 2006. The assembly plant would then assemble CKD parts imported from Malaysia to produce cars for the Indian market.106 However, no mention of the plant is available in the media or the Naza Group’s website since then. The Naza Group is a manufacturer of Kia and Peugeot. It is a privately held conglomerate107 and does not publish its annual statements. Wheels Electronics Manufacturing108 Wheels Electronics Manufacturing formed a joint venture with another Indian company to form Crosslink Wheels Electronics to establish a manufacturing facility in Baddi, Himachal Pradesh in June 2006.109 It is a manufacturer of automotive security systems, including alarms, central locking, power windows, and auto sunshade, amongst others. The Indian manufacturing facility is for smart card immobilizers and other security products for four-wheeled vehicles. Crosslink also includes sales and export operations for the South Asia region. 100 “Proton considering HM plant to assemble cars in India,” Car Dekho, January 8, 2011. 101 “Tata keen to work with Proton, says DPM Muhyiddin,” Danny Tan, March 20, 2011. 102 See: http://www.umw.com.my/Pages/default.aspx 103 Annual Report 2009 for UMW Holdings, “Malaysia Equity: Nusajaya-Failure Not an Option and UMW-Piping Success,” MIDF Research, July 2009. 104 “Corporate Information,” Perodua, copyrighted 2011. See: http://www.perodua.com.my/index.php?section=corporate&id=12 105 See: http://www.naza.com.my/ 106 MIDA summary as adapted from Business Times and Star Biz, August 17, 2006. See: http://support.mida.gov.my/beta/print.php?cat=55&scat=1212 107 Fernandez, Francis. “Naza aborts pact to build Matrade Centre,” New Strait Times, September 4, 2010. 108 See: http://www.wheels.net.my/ 109 “Smart immobilsers from Crosslink,” February 2006. See http://www.automotiveproductsfinder.com/News/NewsArchive_Feb06.asp and “Malaysia's Wheels Electronic to Manufacture In Himal Pradesh,” Asia Pulse News, January 17, 2006. 55 SAF-Holland110 The Malaysian subsidiary of SAF-Holland, a German MNC, deals with fifthwheels, parking brakes, susie air hoses, trailer axles, and trailers. Notably, SAF-Holland also has production facilities in India, amongst other countries. As it exports to many foreign countries, it plans to export to India in the future. Automotive Industries Sendirian Berhad111 Automotive Industries Sendirian Berhad manufactures exhaust systems, automotive stamping parts, catalytic converter canning assembly, exhaust manifold and pipe tubing for automotive, reinforcement instrument panels, seat frames for automotive, and thermostat pipes. It is controlled by UMW, which holds a 51 percent ownership stake. The remaining stakes are controlled by Toyota. It plans to export to India in the future. B. Palm Oil Industry Malaysia is one of the world’s largest producers and exporters of palm oil and palm oil products and derivatives. The industry112 forms the backbone of Malaysia’s commodities market and according to the Ministry of Plantation Industries and Commodities it contributed an export revenue of RM 49.6 billion in 2009.113 Key importers of Malaysian palm oil include China, India, the European Union, and Pakistan. Malaysian palm oil and palm oil products, such as edible fats, crude palm oil, stearin, biofuel and other derivatives, are utilized by over 150 countries. Edible palm oil-based specialty fats are primary elements in processed food products such as margarine, vanaspati or vegetable ghee, shortening and non-dairy creamers, while palm oil specialty fats may serve as a cocoa butter substitute in confectionery and chocolates. Palm oil is also used as an industrial lubricant and biofuel. Its versatility, combined with a yield far in excess of any other oilseed, has fueled its rapid expansion across Southeast Asia. A total of 41 palm oil plantation companies are listed on the country’s stock exchange (Bursa Malaysia). The success of the country’s production and trade can be attributed to a number of government supported export oriented initiatives and interventions, including the deliberate export shift from crude palm oil to refined products, motivated product development, and the encouragement of competition and market efficiency. The Malaysian government supports the development of the industry. In May 200, it established the Malaysian Palm Oil Board (MPOB)114 under the Ministry of Plantation Industries and Commodities to promote and develop the country’s palm oil industry. Another government-led body is the Malaysian Palm Oil Council (MPOC), which aims to promote the market expansion of Malaysian palm oil. The MPOC has a number of offices established in countries around the world, including India.115 110 See: http://corporate.safholland.com/en.html 111 See: http://www.aisb.com.my/aisb.htm 112 The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, a review of trade association websites, chambers of commerce, media sources, government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations via email and/or phone contact. However, such information is limited due in some cases to a lack of responsiveness, or concern regarding information dissemination, from the trade associations contacted. 113 See: http://www.palmoilhq.com/PalmOilNews/malaysias-palm-oil-industry-contributed-export-revenue-of-rm49-6-billion-lastyear/ 114 See: www.mpob.gov.my/ Contact: Malaysian Plam Oil Board, No. 6 Persiaran Institusi, Bandar Baru Bangi, 43000 Kajang, Selangor, Malaysia. Tel: 603 8769 4400. Fax: 603 8925 9446. Email: no general email; depends on division. 115 See: www.mpoc.org.in Contact: Malaysian Palm Oil Council, S-4, New Mahavir Building-grd. flr, Cumballa Hill Road, Behind Shalimar Hotel, Kemps Corner, Mumbai, India. 400036. Tel: 91 22 66550758/56/55. Email: [email protected] 56 1. Trade Associations There are a number of industry and trade associations that represent the diverse interests of plantation owners and upstream and downstream producers of palm oil and its derivatives, including refiners, edible oil manufacturers and oleochemical manufacturers. These include the Malaysian Palm Oil Association (MPOA), the East Malaysia Planters Association (EMPA), the Incorporated Society of Planters (ISP), the Palm Oil Millers Association (POMA), the Palm Oil Refiners Association of Malaysia (PORAM), the Malaysian Edible Oil Manufacturers Group (MEOMA), and the Malaysian Oleochemical Manufacturers Group (MOMG). Many of these associations have a domestic mandate or industry-specific objectives for their members, such as the conduct of professional development programs, the promotion of mutual cooperation and goodwill among players in the industry, the maintenance of fair prices, and a coordination role with government bodies at the local and national level. However, two of the associations, namely MPOA and PORAM, also support trade and investment liberalization and represent their members’ interests on the regional and international level. a) The Malaysian Palm Oil Association (MPOA)116 The MPOA was established in 1999 with support from the Malaysian government in bid to integrate four major industry associations that had been involved in the palm oil industry for nearly 100 years and to merge them into a single body. These included the Rubber Growers’ Association (RGA), the United Planters’ Association of Malaysia (UPAM), the Malaysian Estate Owners’ Association (MEOA), and the Malaysian Oil Palm Growers’ Council (MOPGC). The mandate of the MPOA is to represent the palm oil industry as a single voice and to meet the complex needs of the plantation industry more effectively. Role and Function One of the MPOA’s primary important functions is to balance the needs and interests of the various related sectors for synergy and development of the plantation industry as a whole. While MPOA’s mission is to ensure the long-term profitability and growth of the Malaysian palm oil industry, it also serve the interests of other plantation crops such as rubber, cocoa, tea, and non-crop issues relating to land, labor, trade, and pricing. According to the official website, the MPOA’s scope of responsibilities includes: Providing representation for the industry at both the domestic and international levels Lobbying the special interests and needs of the industry Providing long term strategic thinking and direction Developing R&D policies and priorities Supporting national marketing and promotion efforts Disseminating industry information to members The MPOA also addresses a number of micro level issues of priority to its members, including among others, labor shortage, yield improvement, pricing, taxation and duty structure, pest control, plantation security, and environment concerns. Organizational Structure 116 See: www.mpoa.org.my Contact: Malaysian Palm Oil Association, 12th Floor, Bangunan Getah Asli(Menara), 148, Jalan Ampang, 50450 Kuala Lumpur, Malaysia. Tel: 603 2710 5680. Fax: 603 2710 5679. Email: [email protected] 57 The Council, which consists of a Chairman, Vice Chairman, Secretary, Treasurer and 13 members, is the main policy and decision making body in the MPOA. The current chairman is Dato’ Azhar Abdul Hamid of the Sime Darby Plantation S/B. The Council is responsible for control of budgeting and financial policies, debates and discussions on policy recommendations, and evaluation of all decisions in relation to mission and industry-wide strategy. The Council is supported by an Executive Committee with three Standing Committees, namely the Government Affairs, Research and Development, and Marketing and Promotion Committees. The Government Affairs Committee’s primary responsibilities are to review federal or state laws and regulations, prepare papers and proposals for presentation to federal and state legislative and regulatory bodies, and assist the National Economic Council on the economic impacts of foreign workers. The Research and Development Committee’s scope of responsibilities includes maintaining a close relationship and represent industry views on statutory research body, facilitating the sharing of technical knowledge and experience among members, and guiding and supporting the industry R&D efforts. The Marketing and Promotion Committee’s scope of responsibilities involves developing promotional initiatives to enhance marketing and image of Malaysian palm oil and other commodities. Each of these committees has their respective working committees. There main functions are to undertake indepth studies of relevant issues, develop policy recommendations to the Council, and respond to requests from members during Council meetings and annual general meetings. The Council is also supported by the Secretariat, which takes charge of day-to-day affairs and serves to execute approved policies by developing clear action plans and timelines for resolutions. The MPOA has ten branches set up across the country that play an important role in lobbying and liaising with state and district government bodies on issues of interest and priority to members. Membership The MPOA currently has 128 members.117 All individuals or corporate bodies involved in plantation tree crop agriculture, which own a minimum of 40 hectares of a plantation crop, can become members of MPOA. There is no mention of membership fees on the MPOA’s website. General Position on Trade and Investment Liberalization While the MPOA has not issued any concrete official statements on trade and investment liberalization, it appears supportive of trade and investment liberalization given that Malaysia is the world’s second largest producer and exporter of crude palm oil. According to the 2008 MPOA Annual Report, the three largest markets for Malaysian palm oil include China, India and Pakistan, which accounted for 39 percent of the total exporter with their total intake of 6.02 million tons.118 India’s imports of Malaysian palm oil products nearly doubled in 2008. This spike can likely be attributed to reduced MFN import duties for palm oil and the efforts of the Indian government to distribute vegetable oils throughout the country, particularly to low-income households.119 The MPOA supports a number of export oriented interventions, such as encouraging a shift in export from crude palm oil (CPO) to refined products, motivating product development, and encouraging competition and market efficiency.120 The MPOA also keeps members current on developments taking place in a number of bilateral and regional groups concerned with trade issues. For example, the Sub-Working Group on Palm Oil under the Malaysia-Indonesia Bilateral Cooperation on Commodities deals with a number of bilateral issues ranging from collaboration on improving the palm oil market position, joint investment in Indonesian and Malaysian palm oil industries, and engaging major palm oil importing countries in addressing non-tariff barriers. Also on March 5, 2010, six bodies representing palm oil and exporters from Malaysia and Indonesia signed a memorandum of cooperation on palm oil. The document is aimed to jointly tackle issues related to palm oil, particularly those raised by the European Union, the United States, and non-governmental organizations. The issues include those on sustainability, 117 A full listing of MPOA’s members can be found at www.mpoa.org.my 118 MPOA 2008 Annual Report. See: http://www.mpoa.org.my/pdf/AR2008.pdf 119 Ibid. 120 “Palm Oil Industry in Malaysia,” Presentation on Skills & Knowledge for Sustained Development in Africa, June 24, 2009. 58 biodiversity, greenhouse gas emission, and carbon stock in forests. According to MPOA Chief Executive Officer Datuk Mamat Salleh, Malaysia and Indonesia should work together in overcoming the challenges from the trade regulations of the European Union and the United States.121 They also target to explore new issues which might arise such as border carbon tax and water source. Mr. Mamat highlighted that as Malaysia and Indonesia contribute 85 percent of the total CPO production in the global market, they should determine the commodity price in the international market. Currently, the CPO price is determined in Rotterdam. Another group includes the ASEAN Vegetable Oils Club (AVOC), which addresses regional ASEAN issues related to labeling, standards adherence, and industry and country data. The MPOA collaborates closely on certain trade and investment promotion related activities with the MPOC. With respect to trade with India, Malaysia’s palm oil exports to India accounted for 1.16 million tons in 2010 compared with 1.35 million tons in 2009 according to the MPOA. On February 18, 2011, Malaysia and India signed the Comprehensive Economic Cooperation Agreement (CECA). Under the CECA, India has offered better concessions for palm oil and palm oil products and derivatives than those concessions offered under the ASEAN-India Trade in Goods Agreement. Specifically, India will bind tariffs on refined palm oil at 45 percent by December 31, 2018 (one year earlier than India’s committed timeline under AIFTA). India will also bind tariffs on three palm products at 45 percent by December 31, 2018. 122 These three products were excluded from tariff concessions under the ASEAN-wide agreement. Indian High Commissioner Vijai Gokhale expects India’s demand for Malaysia’s palm oil to significantly increase once the CECA takes effect, likely by July 1, 2011.123 He highlighted that India essentially depends on Malaysia and Indonesia for imports of palm oil and palm oil derivatives. As India will reduce import duties on palm oil as part of the CECA, Malaysian palm oil producers, including many members of MPOA, stand to benefit from greater access to India. b) The Palm Oil Refiners Association of Malaysia (PORAM)124 Formed in 1975, the PORAM (Persatuan Penapis Minyak Sawit Malaysia) was established to represent the interest of member companies involved in the palm oil refining industry. It does not have a stated vision or mission statement. The PORAM works closely with the MPOA, the MEOMA, the MOMG, and the POMA as well as a number of government bodies such as the Ministry of International Trade and Industry (MITI), the Ministry of Plantation Industries and Commodities (KPPK), the Malaysian Palm Oil Board (MPOB), and the MPOC. Role and Function The PORAM aims to provide its palm oil refiner members with an organization that collectively supports and enhances both the status and interests of palm oil refiners in Malaysia. It also serves to promote refining, fractionation and production processes and to project an international image of reliability and sophistication. The PORAM also advocates on behalf of its members in the interest of the community and the government’s overall socio-economic policies. According to the official website, the PORAM provides various forms of assistance to its members, such as dissemination of market information, establishing business contacts, promotion of palm oil exports, guidance on problems arising from government regulations and procedures, arbitration and resolution of common problems, publications and organizing seminars, workshops and training programs. 121 Yahya, Ahmad Fuad. “Malaysia and Indonesia in Pact to Tackle Palm Oil Issues,” Bernama, March 6, 2010. See http://www.mpoa.org.my/v2/index.php?option=com_content&view=article&id=242:malaysia-and-indonesia-in-pact-totackle-palm-oil-issues&catid=42:mpoa-news&Itemid=50 122 Seong, Lee Jian. “India expects to buy more palm oil from Malaysia,” The Star (Business Section), February 19, 2011. See http://biz.thestar.com.my/news/story.asp?sec=business&file=/2011/2/19/business/8096217 123 “India to buy more Sabah palm oil products,” Borneo Post, February 11, 2011. See http://www.theborneopost.com/?p=92716 124 See: www.poram.org.my Contact: Palm Oil Refiners Association of Malaysia, 801C/802A, Block B, Executive, Kelana Business Center, 97 Jalan SS7/2, Kelana Jaya, 47301, Selangor Darul Ehsan, Malaysia. Tel: 603 7492 0006. Email: [email protected] 59 Organizational Structure The Management Board, comprised of a Chairman, Vice-Chairman, Treasurer and seven Board members, is responsible for the operations. The Management Board also leads the association’s five committees, including the Commercial & Contracts Committee, the Technical Committee, the Training and Education Committee, the Price Settlement Committee, and the Associate Members Committee. The day-to-day operations of the association are the responsibility of the Secretariat. The current acting PORAM Chairman is En. Wan Mohd Zain Wan Ismail from Felda Vegetable Oils Products Sdn. Bhd, while the CEO of the Secretariat is En. Mohammad Jaaffar Ahmad. Membership As of April 2010, the PORAM had 21 full members and 79 associate members.125 Full members, which account for approximately more than 75 percent of the total export of processed palm oil from Malaysia, include companies involved in the business of processing, refining and fractionation of palm oil. Membership includes national plantation companies, such as Golden Hope Plantations Bhd., and Sime Darby Bhd., independent palm oil refining companies, and subsidiaries of multinational companies such as Cargill. Associate members are those involved in the oils and fats trade, but who are not directly connected with the business of processing, refining and fractionation of palm oil. General Position on Trade and Investment Liberalization Like the MPOA, PORAM is generally supportive of trade liberalization. Its members regularly consult with government bodies on a number of issues related to trade and investment liberalization. On July 14, 2009, PORAM members participated in meetings convened by KPPK on the export of palm oil products under the Malaysia-Pakistan Trade Agreement and the duty-free CPO export quota. 126 PORAM members also met with a number of local and international organizations and local palm oil associations to discuss common issues related to palm oil, such as free trade agreements and trade contracts. The Commercial and Technical Committee meetings, which are also attended by representatives of MPOC and MPOB, deal with a number of trade and investment issues and include discussion of developments at the World Trade Organization (WTO) as well as FTA negotiations to which Malaysia is a party. 2. Production Data and Trade Statistics Malaysia currently accounts for 39 percent of world palm oil production and 44 percent of world exports. If taken into account of other oils and fats produced in the country, Malaysia accounts for 12 percent and 27 percent of the world's total production and exports of oils and fats.127 Malaysia has over 3.9 million hectares of mature oil palm areas128 with over half located in peninsular Malaysia the remaining in the two states of Sabah and Sarawak. The palm oil industry was the second largest contributor to external trade in 2008 after electronics and electrical products and directly employed over half a million people. The downturn in the world economy also affected the Malaysian palm oil industry. According to figures from the MPOB as of February 2010, the revenue from the export of palm oil and derived products was RM 65.194 billion in the January to December 2008 period, while the revenue for the same period in 2009 was down to RM 49.590 billion; a 23 percent negative change in export revenue. However, palm oil exports to selected destinations actually increased year-on-year during the same period, notably for Pakistan, India, Egypt and ASEAN. In the case of India, total palm oil exports (in tons) from Malaysia grew by 38.70 percent from 970,734 tons in 2008 to 1,346,430 tons in 2009. This 125 A full listing of PORAM’s members can be found at www.poram.org.my 126 PORAM 2009 Annual Report. See http://www.poram.org.my/v1/poram/annual_report_10.pdf 127 See: http://econ.mpob.gov.my/economy/EID_web.htm 128 “Palm Oil Industry in Malaysia,” presentation by Sime Darby Plantation, June 24, 2009. 60 was due to a combination of lower duties, poor monsoon rainfall and a decline in domestic oilseed production. According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Malaysia is a net exporter of palm oil 129 to India. For the FY 2009/10, Malaysia exported USD 787.1 million in palm oil to India, which reflects a 60 percent increase from USD 492.5 million from FY 2008/09. India did not export any palm oil for the FY 2008/09 and FY 2009/10 periods. India sold in the domestic market 18.7 percent and 18.5 percent130 of the palm oil products imported from Malaysia for the FY 2008/09 and FY 2009/10, respectively. 3. Trade and Investment Activities in the Palm Oil Industry This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. IJM Plantations Berhad131 IJM Plantations Berhad (IJMPB), which is Malaysia’s ninth-largest plantation group, is part of the IJM Group and owns eleven oil palm estates, four palm mills and one palm kernel crushing plant in Sabah, Malaysia. It is a major manufacturer of crude palm oil and palm kernel. In February 2008, IJMPB entered into a joint venture with Godrej-IJM Plam Oil Ltd (GIPOL), part of Godrej Agrovet Limited (GAL), to actively promote oil palm cultivation among growers in the Goa and Karnataka in India.132 On November 24, 2010, however, IJMPB sold its majority shares in the Indian company and terminated the joint venture.133 Sime Darby Berhad134 Sime Darby Berhad is a Malaysia-based investment holding company. It has six business segments, including plantation, property, industrial, motors, energy and utilities, and others. The company’s plantation segment is engaged in the production and marketing of fresh fruit bunches, crude palm oil, palm kernel, rubber and refining and marketing of palm oil related products. On March 25, 2010, Sime Darby Berhad announced the incorporation of a wholly owned subsidiary in India called Sime Darby Edible Products Private Limited (SDEPI). The main activities of SDEPI include manufacturing, importing, exporting, selling, and buying palm oils, edible oils and fats and other products of palm plantations. IOI Oleochemical Industries Berhad135 IOI Oleochemical Industries Berhad is engaged in the cultivation of oil palm and processing of palm oil. The company operates in five segments, including plantations, which is engaged in the cultivation of oil palm and rubber and processing of palm oil; and resource-based manufacturing, which is engaged in the manufacturing of oleochemicals, specialty oils and fats, palm oil refinery and palm kernel crushing, and other operations. During the fiscal year ended June 30, 2010, the Company produced 732,275 tons and 170,876 tons of crude palm oils and palm kernels, respectively. It exports these products to a number of export markets, including India. 129 This data is based upon statistics for products falling under HS 1511, 1513.21 and 1513.29. 130 The market share of palm oil imports from Indonesia into India is calculated by dividing (a) the palm oil imported from Indonesia into India (“imports”) by (b) the total annual consumption of palm oil in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 131 See: www.ijm.com/plantation/aboutUs.html 132 “IJM Plantations eyes downstream activities in India venture,” Biz. The Star, September 7, 2009. 133 See: www.ijm.com/v2/ijmplt/announ_101124.htm 134 See: www.simedarby.com 135 See: www.ioioleo.com 61 C. Rubber & Plastics Industry Malaysia’s rubber industry136 is comprised of four main industry sector classifications: (i) the latex industry, which includes a number of products for the health sector; (ii) the foam industry, which focuses on the general consumer market and includes mattresses, toys, and products for domestic use; (iii) the rubber thread industry, which consists of personal clothing, sports equipment, and consumer rubber products; and (iv) the dry rubber industry, which includes tires, industrial rubber products, and general molded products. Total trade in rubber products was valued at more than RM 15.75 billion (USD 5.19 billion) in 2009.137 According to the Malaysia External Trade Development Corporation (MATRADE), the largest export destinations in 2009 for Malaysian rubber products in order of size included China, the United States, Germany, Japan, and the United Kingdom. Malaysia’s plastics industry138 is comprised of seven sector classifications: (i) packaging, which is the largest market for the industry and includes plastic bags, films, plates, boxes, etc.; (ii) electrical and electronics, which is the second largest consumer market in the country and includes casings for home appliances, computers and accessories; (iii) household items, which include plastic chairs, tables, and toiletries; (iv) automotive items, which include auto parts and components, such as dashboards, bumpers, and motorcycle parts; (v) construction items, which include pipes and valves, cables and plastic fittings; (vi) agricultural items, which include nursery trays, flower pots, rain shields, hoses, etc.; and (vii) other plastic products, such as certain medical bags, toys, gifts, and plastic furniture. Total trade in plastics products was valued at more than RM 13.27 billion in 2009. 139 According to the MATRADE, the largest export destinations in 2009 for Malaysian plastics products in order of size included Singapore, Japan, the United Kingdom, the United States, and Thailand. 1. Trade Associations There are four main industry associations in Malaysia that represent the interests of the rubber industry. These include: (i) the Malaysian Rubber Export Promotion Council (MREPC), which aims to promote the export of rubber in global markets; (ii) the Malaysian Rubber Glove Manufacturers’ Association (MARGMA), which represents the interests of domestic glove manufacturers; (iii) the Malaysian Rubber Products Manufacturers' Association (MRPMA), which provides a forum for Malaysian manufacturers to interact together and communicate with the government; and (iv) the Federation of the Rubber Trade Associations of Malaysia (FRTAM), which represents the rubber industry together with the Malaysian Rubber Board (MRB) at the ASEAN Rubber Business Council. The MRB, which is technically a government body, is tasked with assisting the development and modernization of the Malaysian rubber industry from cultivation, processing, manufacture, and market promotion of rubber products. The industry associations fall under the purview of the MRB. As such this report also includes a summary of the MRB’s functions, structure and position on international trade and investment liberalization. The Malaysian Plastics Manufacturers Association (MPMA) is the only trade association for plastics products. The MPMA is a large organization and highly active covering most aspects of the plastics industry. For certain raw materials, Malaysia has the Malaysian Petrochemicals Association,140 which covers plastic resins, petrochemicals, and services required by the petrochemical industry; however, the focus of this report is on the MPMA. 136 The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, a review of trade association websites, chambers of commerce, media sources, government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations via email and/or phone contact. However, such information is limited due in some cases to a lack of responsiveness, or concern regarding information dissemination, from the trade associations contacted. 137 See: www.matrade.gov.my 138 The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, a review of trade association websites, chambers of commerce, media sources, government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations via email and/or phone contact. However, such information is limited due in some cases to a lack of responsiveness, or concern regarding information dissemination, from the trade associations contacted. 139 See: www.matrade.gov.my 140 See: http://www.mpa.org.my/index.htm 62 a) (1) Rubber Associations Malaysian Rubber Export Promotion Council (MREPC)141 The Malaysian Rubber Export Promotion Council (MREPC), which was incorporated on April 14, 2000 by the Malaysian government under the Companies Act, aims to facilitate and promote the export of quality rubber and rubber manufactured products, particularly in support of small- and medium-sized enterprises (SMEs). The MREPC established branches in the United States and the United Kingdom as an information center on Malaysian rubber in 2001 and 2007, respectively. Role and Function The mission statement of the MREPC is to facilitate and promote the export of quality rubber products, identify market opportunities and enhance market access. Its key function is to facilitate trade and promote Malaysian rubber and manufactured rubber products in the global market. To achieve these goals, the MREPC concentrates its efforts toward implementation of appropriate international marketing activities, such as trade shows, trade missions, conferences, workshops, and seminars for its members, as well as providing a financial incentive program to assist exporters to promote their products in the international marketplace. The MREPC also serves to provide its members with current prices for natural rubber/latex, petroleum, chemicals, and freight rates 142 and updates its website on a daily basis. The MREPC’s website includes a membership only section that provides its members with information on general import and export statistics, technical and scientific reports, standards information, non-preferential and preferential tariff rates for rubber and rubber products, and a database of country and product profiles. Organizational Structure The MREPC is governed by a Board of Trustees, which is appointed by the Malaysian Ministry of Plantation Industries and Commodities. It is led by the Chairman of the Board of Trustees and is supported by a Chief Executive Officer and Deputy Chief Executive Officer. It has divisions on Industry Relations and Public Affairs, Marketing and Development, Corporate Planning and Research, Finance and Administration, Information Technology, US Office, European Office, and Marketing Advisor. The current chairman is YB Datuk Billy Abit Joo. Membership The MREPC maintains a directory of over 500 members across the Malaysian rubber industry. Only Malaysian companies can sign up for membership to the MREPC’s website, which is a free service. Its directory is divided into three categories, manufacturers, registered glove exporters, and suppliers. It includes manufacturers of latex goods, industrial rubber goods, general rubber goods, automotive components, inner tubes and tires, footwear, and retread materials. The directory covers suppliers of raw rubber, equipment and chemicals.143 As part of its trade facilitation services, the MREPC will assist buyers of SMR grades of rubber, specialty rubber or latex concentrate for manufacturing, and rubber products used in the medical, automotive, engineering, mining, construction or consumer sector. It will help set-up meetings for buyers with raw rubber processors or rubber product manufacturers in its directory. The MREPC will also facilitate companies looking to invest in establishing rubber product manufacturing plants in Malaysia or looking for strategic joint-venture partners in Malaysia. The MREPC also positions Malaysia as a base to penetrate other markets in ASEAN, the South-South region and the Middle East. 141 See: www.mrepc.com Contact: Malaysian Rubber Export Promotion Council, Block 2A, Level 13A-1, Plaza Sentral, Jalan Stesen Sentral 5, 50470 Kuala Lumpur, Malaysia. Tel: 603 2780 5888. Fax: 603 2780 5088. Email: [email protected] 142 These are based upon the current listings provided by the MRB. 143 MREPC’s directory is available at http://www.mrepc.com/trade/ 63 General Position on Trade and Investment Liberalization As the mission of the MREPC is to promote the export of rubber and rubber products, it supports trade and investment liberalization at both the regional and international level. This stance is substantiated through various means. For instance, the MREPC organizes and/or supports a number of activities and events, seminars, trade shows, and trade missions. These are announced to members through the association’s website as well as disseminated in MREPC’s quarterly newsletter entitled Stretch. The quarterly newsletter also features regular sections on doing business in a specific country where there is a potential export market for rubber manufacturers (e.g., Brazil, China, Russia, Turkey, the United Arab Emirates, and the United States) as well as a feature section on a particular leading rubber manufacturer and exporter. For example, in October 2010, the MREPC conducted a seminar on doing business with China, 144 where speakers discussed how the implementation of the ASEAN-China Free Trade Area (ACFTA) has helped increase Malaysia’s rubber exports to China by an average of 23.4 percent annually. The speakers noted the challenges to entering into the Chinese rubber market and rubber auto parts market. Rubber products namely tubes, pipes, hoses, new pneumatic tires, beltings, latex threads, and gloves provide vast opportunities for Malaysian rubber manufacturers to expand their export markets. Under ACFTA, all import duties for rubber products in China were reduced to zero percent in 2010, except for natural rubber products (HS 4001), styrene butadiene rubber products (HS 4002), new pneumatic tires (HS 4011), and used tires (HS 401220).145 The speakers also shared ways in which MREPC members could develop new strategies of doing business in China, leveraging trade agreements as well as developing potential partnerships with counterparts in China. The MREPC also keeps its members abreast of regional trade developments in its quarterly newsletter and discusses how the ASEAN regional market has help cushioned Malaysia from the impact of the global economic crisis. The MREPC believes that the AFTA holds great potential for the Malaysian rubber product industry.146 According to the rubber product trade statistics featured on a quarterly basis in the Stretch Newsletters, India is not a major destination of Malaysia’s rubber product exports. However, the MREPC and other Malaysian rubber industry associations are looking forward to expanding their rubber related products into India. They note higher growth in the industry on the back of rising healthcare awareness in emerging markets, especially in India and China, where healthcare spending per capital is still very low.147 For example, in January 2007, the MREPC along with the Malaysian Consortium of Rubber Products (MALCORP), a one-stop rubber products sourcing center comprised of 14 companies, represented the Malaysian rubber industry at the India Rubber Expo 2007. During this trade show, a number of Indian companies signaled their interest in forming joint-ventures or technical collaboration with Malaysian manufacturers, particularly latex glove manufacturers, and establishing business linkages for sourcing to the Middle East.148 One of the largest challenges facing the rubber industry has been changes in regulations and tightening specifications across the world. In this regard, the MREPC, the MARGMA, and the MRB jointly develop industry standards and conduct extensive research and development activities in order to remain the top player in the world’s rubber glove industry.149 144 “Seminar on ‘China Series: Doing Business in China,’” Stretch, Vol. 4, Fourth Quarter 2010, Page 18. See: http://www.mrepc.com/stretch/pdf/2011_V4I4.pdf 145 Ibid. 146 “Leveraging on AFTA,’” Stretch, Vol. 4, First Quarter 2010, Page 6. See: http://www.mrepc.com/stretch/pdf/2010_V4I1.pdf 147 Ibid. 148 “Malaysian Rubber Product Manufacturers Head for Global Exhibitions,’” Stretch, Vol. 1, Second Quarter 2007, Page 5. See: http://www.mrepc.com/stretch/pdf/2008_V1I1.pdf 149 “MARGMA Chief: Malaysia will Retain No.1 Slot in Rubber Gloves,” Rubber Asia. See: http://rubberasia.com/v2/index.php?option=com_content&view=article&id=209:margma-chiefmalaysia-will-retain-no1-slotin-rubber-gloves&catid=5:best-from-rubber-asia 64 (2) Malaysian Rubber Glove Manufacturers’ Association (MARGMA)150 The Malaysian Rubber Glove Manufacturers’ Association (MARGMA) is a trade association representing rubber latex glove manufacturers in Malaysia, and other suppliers and supporting companies related to the industry both locally and internationally. Established in 1989, the MARGMA has been the voice and advocate for the industry in Malaysia, dealing with government lead agencies and other related trade associations in the promotion and protection of the interests of the manufacturers, the industry, and the supporting industries. Members account for over 60 percent of global demand for rubber latex gloves. The MARGMA is a member of ASEAN Rubber Glove Manufacturers' Association (ARGMA). Role and Function The MARGMA's mission is to promote the interests of all stakeholders in the rubber latex glove manufacturing industry whether through educating end-users, cooperating with regulatory and technical bodies or reaching out to government bodies for institutional support. Its objectives include: (i) fostering a common understanding among members, (ii) working to improve and standardize a “Malaysian Rubber Glove,” (iii) representing the interests of all members; and (iv) disseminating the latest information in technological advancements in the industry. The MARGMA’s functions include (i) promoting the interests of stakeholders in the rubber latex glove manufacturing industry in Malaysia, (ii) liaising with government and technical bodies in developing and maintaining standards, (iii) promoting the rubber latex glove manufacturing industry in Malaysia by organizing conferences, exhibitions and seminars, (iv) arranging R&D, marketing and other services for the stakeholders of the industry, and (v) functioning as a resource center.151 Organizational Structure The MARGMA Management Committee comprises of nine elected members, the immediate past president, and two other members. It is led by the president and vice president. Other supporting positions to the committee include advisors, consultants, auditors, and an executive director. Each committee serves for a three year period. The current committee is for the 2009-2011 period and the current president is Mr Lee Kim Meow. MARGMA categorizes its services into the following five categories: (i) Advocacy and Voice, which includes representation to government and other bodies; (ii) Industry Development & Enhancement, which covers research and development, marketing, automation, and other relevant matters; (iii) Event Management, which includes seminars, lectures, conferences, and exhibitions; (iv) Publications and Resource Center Services, which includes newsletters, directories, and other publications and resources; and (v) Fellowship and Social Activities. Membership The MARGMA has two membership categories: (i) ordinary membership, which has voting rights and open to all bona fide rubber glove manufacturers in Malaysia; and (ii) associate membership, which does not have voting rights and open to all companies directly associated with the glove manufacturing industry. According to the association’s website, there are 48 ordinary and 95 associate members. The annual dues are RM 1,000 and RM 1,500 for ordinary and associate membership, respectively, as well as a one-off entrance fee of RM 500 for both membership categories. General Position on Trade and Investment Liberalization 150 See: www.margma.com.my/ Contact: Malaysian Rubber Glove Manufacturers’ Association (MARGMA), Unit 1605, 16th Floor, Block A, Damansara Intan, 1 Jalan SS 20/27, 47400 Petaling Jaya, Selangor, Malaysia. Tel: 603 7727 3197. Fax: 603 7727 3191. Email: [email protected] 151 ANRPC Directory of Rubber Organizations 2008, Association of Natural Rubber Producing Countries, October 2008. 65 While the MARGMA’s official website does not directly advocate for trade and investment liberalization, two representatives152 from MARGMA sit on the MRB’s Board. As active participants of the MRB, it is very likely that MARGMA supports similar trade issues supported and promoted by the MRB. The MARGMA also collaborates with the MREPC. However, information outlined on the MARGMA’s website indicates its primary concerns as follows: (i) monitoring the fluctuating price of natural rubber latex; (ii) supporting protective properties and enhancement of natural latex gloves; (iii) ensuring regulatory compliance with European regulations, FDA regulations and glove standards, and waste management; and (iv) supporting industry needs, including latex supply, labor, and energy. (3) Malaysian Rubber Products Manufacturers' Association (MRPMA)153 The Malaysian Rubber Products Manufacturers' Association (MRPMA) was established in 1977 to provide a forum in which Malaysian manufacturers of rubber products could interact. Role and Function The MRPMA serves to provide input to the government in formulating trade and investment policies. It aims to support rubber product manufacturing in terms of technology upgrades, quality improvement, productivity improvement, and exports.154 Organizational Structure Following a call with the MRPMA Director Mr. Kong, this information is not publicly available. Membership The MRPMA has 110 members. General Position on Trade and Investment Liberalization The MRPMA has not recently released any data or statements on their opinions or activities. However, in a phone conversation with the current director, Mr. Kong, members of the MRPMA share many of the same positive stances and viewpoints on trade and investment liberalization for the rubber industry as members of the MREPC and the MRB. (4) Federation of the Rubber Trade Associations of Malaysia (FTRAM)155 Role and Function The FTRAM represents the Malaysian rubber industry together with the MRB at the ASEAN Rubber Business Council. Its primary purpose is to assist rubber traders and to facilitate meetings for its members with government agencies and industry associations. 152 Mr. Lee Kim Meow and Mr. Ng Ching Eng. See: http://www.lgm.gov.my/general/Board.aspx 153 See: www.mrpma.com.my (Note: While this is the official website, the website is currently unavailable as of March 16, 2011.) Contact: Malaysian Rubber Products Manufacturers' Association (MRPMA), Address: No. 1 Jalan Ulu Subang Jaya, 11/1J Taman Seafield Jaya, 47620, Petaling Jaya Selangor, Malaysia. Tel: 603 5631 6150. Fax: 603 56316152. Email: [email protected] 154 ANRPC Directory of Rubber Organizations 2008, Association of Natural Rubber Producing Countries, October 2008. 155 Contact: Federation of the Rubber Trade Associations of Malaysia (FRTAM), 4th Floor, 138, Jalan H.S. Lee, Kuala Lumpur, Malaysia, 50000. Tel: 603 2078 8114. Fax: 603 2070 0640. Email: [email protected] 66 Organizational Structure According to an officer at FTRAM, the association is a shell organization whose primary role is to work with the MRB on issues of mutual concern. The organization does not produce an annual report and does not have a website. The current president is Dato’ Seri Hwang Sing Lue. Membership The FTRAM has 17 members representing different states in Malaysia. General Position on Trade and Investment Liberalization The contact person at the FTRAM, Mr. Lim, would not provide any information by phone regarding the stance of the association on trade and investment liberalization. However, he did mention that the FTRAM supports the mission of the MRB, which is generally supportive of trade promotion and expansion for the Malaysian rubber industry. (5) Malaysian Rubber Board (MRB)156 The Malaysian Rubber Board (Lembaga Getah Malaysia) was established on January 1, 1998, following the merger of three governmental agencies, the Rubber Research Institute of Malaysia (RRIM), the Malaysian Rubber Research and Development Board (MRRDB) and the Malaysian Rubber Exchange and Licensing Board (MRELB), to serve as the custodian of the rubber industry in Malaysia. The Malaysian Rubber Exchange (MRE) is the sole regulatory and supervisory body empowered by the MRB to advocate on behalf of its members to promote, develop and market rubber and rubber products in Malaysia. Role and Function The MRB’s primary role is to promote and develop the Malaysian rubber industry and to develop national objectives, priorities and policies in support of the industry. The MRB’s mission is to “be a leading organization in all areas of the rubber industry for the benefit of society.” According to its website, the MRB has five primary objectives as follows: 1. Elevate the competitiveness of Malaysian rubber industry through research and development. 2. Advise the Government on the best policies to ensure continuous growth of the Malaysian rubber industry. 3. Ensure an orderly implementation of progress and development of the rubber industry. 4. Provide quality, precise and efficient service including information to all sectors in the rubber industry. 5. Provide effective and prompt transfer of technology to the rubber industry. The functions and role of the MRE include making enforcing by-laws and contract terms for MRE members, acting as an arbitration center for the settlement of disputes, and providing facilities for cooperation on all matters affecting trade. These facilities include providing rubber price determination information, regulating physical trade and contract dealings of its members, and providing a number of periodicals free-of-charge to members, such as the Malaysian Rubber Board 156 See: www.lgm.gov.my/ Contact: Malaysian Rubber Board, Head Office, 148 Jalan Ampang, 50450, Kuala Lumpur, Malaysia. Tel: 603 9206 2000. Fax: 603 2163 4492. Email: [email protected] 67 Digest, the Malaysian Rubber Board Review, the Malaysian Rubber Exchange Weekly Rubber Market Newsletter, and official daily price information. Organizational Structure The MRB's Board is composed of representatives from the rubber planting sector (estates and smallholdings), rubber processors and exporters, rubber products manufacturers and government agencies. The Chairman and members of the Board are appointed or reappointed on a two-year term by the Minister of Plantation Industries and Commodities. The Director General who also sits on the Board is the Chief Executive officer responsible for the day-to-day running of the MRB. The Director General is assisted by two Deputy Director Generals who together oversee the following five operating and research divisions: (i) Technology & Engineering Division; (ii) Production Development Division; (iii) Extension & Development Division; (iv) Economics & Rubber Exchange Division; and (v) Support Services Division. The current director-general is Datuk Dr. Salmiah Ahmad. She also heads the MRE. The MRB has regional offices157 in a number of Malaysian states to address the local needs of the industry. The MRE is a member of a number of international rubber associations, such as the Management Committee of the International Rubber Association. The MRE also is the Permanent Secretariat of the ASEAN Rubber Business Council. The MRE works closely with the FTRAM to coordinate activities with counterpart organizations in Laos, Indonesia, Singapore, Thailand, and Vietnam. Membership The MRB broadly represents the interests of Malaysia’s rubber industry and does not require membership at the MRB level. The MRE, on the other hand, is membership driven. The MRE has two membership categories: (i) ordinary membership, which comprises of individuals resident in Malaysia and corporations incorporated in and registered under any written law of Malaysia; and (ii) associate membership, which comprises those outside Malaysia, who are members of recognized rubber trade associations, rubber or commodity exchanges or other associations connected with the rubber trade. Ordinary membership is further broken down according to the following categories: (i) producers; (ii) brokers; (iii) dealers; and (iv) users. According to the association’s 2011 Membership Directory, there are 158 ordinary and 16 associate members. The one-time entrance fee and subsequent annual dues are RM 500 and RM 750 for ordinary and associate membership, respectively. General Position on Trade and Investment Liberalization According to internal publications and the website, it appears that MRB generally supports trade and investment liberalization of the rubber industry. The website has a number of sections dedicated to the dissemination of information with respect to regional and international business activities. The website has a page about free trade agreements, which provides information on four FTAs to which Malaysia is a party: the AFTA, the ASEAN-China FTA, the Malaysia-Pakistan FTA and the JapanMalaysia Economic Partnership Agreement. Only the section on the ACFTA was working as of March 25, 2011.158 Its pages detail the tariff reduction and elimination modalities for rubber and rubber products under each agreement as well as provide background information and a number of useful links. Online versions159 of the Malaysian Rubber Digest provide readers with information on the latest trends, prices, news briefs and trade statistics relevant for the industry. The results of detailed research did not result in any information pertaining to the MRB or MRE’s stance towards trade with India. 157 See: http://www.lgm.gov.my/general/tel.aspx 158 See: http://www.lgm.gov.my/FTA/FTAs.aspx 159 See: http://www.lgm.gov.my/PublicationsNJournals/latestpub.aspx 68 b) (1) Plastics Associations Malaysian Plastics Manufacturers Association (MPMA)160 The Malaysian Plastics Manufacturers Association (MPMA) was formally established in 1967 as a representative body of plastics manufacturers in Malaysia. The MPMA is the official voice of the Malaysian plastics industry and represents its member in interacting with the government. It liaises with the government, forms strategic alliances, and provides industry studies and specialized training for its members so as to promote the sustainable use of plastic for the benefit of the environment and community. Role and Function The MPMA’s mission is to transform the plastics industry in Malaysia into a global player, and into an industry that balances growth with due environmental care to the community. It aims to achieve these goals through collective efforts to promote the use, manufacture, and processing of plastics, while protecting, assisting and enhancing the interest of plastics manufacturers. The MPMA organizes and provides various means of training to help upgrade the technological level of the plastics industry, and encourages cooperation among manufacturers of plastic products both within and outside Malaysia. The MPMA works closely with the Malaysian government to collaborate on the promotion of the plastics industry and cooperates with other trade associations, non-governmental organizations, and other bodies of common interest. Another role of the MPMA includes the gathering and analyzing of statistical and technical data for its members. The MPMA undertakes a number of activities for its members, including: Setting up a plastics technology center to provide training courses. Drafting industry standards for plastics to upgrade the industry’s technology and competitiveness. Undertaking the responsibility of plastics waste management and carrying out various work programs to reduce, reuse, and recycle plastics. Organizing seminars, forums, trade missions, and trade exhibitions. Participating in regional plastics industry activities, including the ASEAN Federation of Plastics Industries and the Asia Plastics Forum. Organizational Structure The MPMA is led by the Central Committee, which is headed by the MPMA President and supported by the Executive Director and Secretariat. The MPMA has seven working committees, which comprise (i) design and branding, including responsibility of the Malaysian Plastics Design Center (MPDC); (ii) human resources management and development; (iii) standards development broken into six working groups for different processes/products; (iv) environment, recycling, safety and health; (v) raw materials; (vi) membership; and (vii) publications. The MPMA has branches in the Malaysia regions of Northern, Perak, Johor, Sabah, and Sarawak. The current president is Mr. Lim Kok Boon. Membership The MPMA currently has over 900 members, which represents about 60 percent of plastics manufacturers in the country and accounts for 80 percent of Malaysia’s total production of plastics 160 See: www.mpma.org.my/ Contact: Malaysian Plastics Manufacturers Association (MPMA), 37 Jalan 20/14, Paramount Garden, 46300 Petaling Jaya, Selangor Darul Ehsan, Malaysia. Tel: 603 7876 3027. Email: [email protected] 69 products.161 There are two categories of membership: (i) ordinary membership and (ii) associate membership. Ordinary membership is open to any person, firm or company involved in the plastics business in Malaysia as a manufacturer of plastic articles. The entrance fees and subscription fees are determined according to the number of employees and range from RM 300 to RM 1,000. Associate membership is open to any person, firm or company involved in the supply of machinery or goods or services or in the sale of products of any plastics manufacturer. The annual subscription fees are RM 1,200. General Position on Trade and Investment Liberalization The MPMA has collective stances on trade and investment liberalization. In light of the downturn of plastics industry in the last few years, the MPMA’s stance is not in favor of tariff liberalization.162 The association focuses more on developing industry standards, which are designed to address social and environmental concerns over plastics products. The MPMA was the first trade association to be appointed as a Standards Committee under SIRIM Berhad163 to undertake the task of developing industry standards on intermediate and plastic finished products. 164 There are various Working Groups established under ASC, which represent the major product sub-sectors within the plastics industry. These Working Groups are responsible for the development of the Malaysian Plastic Industry Standards, which would be endorsed as Malaysian Standards. The MPMA voiced its concern that it did not agree with the MITI’s proposal to remove import duties of finished plastic products, while the raw materials for producing similar products in Malaysia are still subject to import duties.165 The MPMA believed that such practice would adversely affect MPMA members. As a result of the MPMA’s appeal, the MITI decided to maintain the import duties for both finished products and raw materials as status quo. One of the largest challenges facing the plastics industry has been the issue of the impact of plastics on the environment, safety, and health.166 In this regard, the MPMA has organized a compilation of facts and information related to the safety and heath of plastics, and the impact of plastics on the environment. It distributes such information to address the misconception of plastics. 2. Production Data and Trade Statistics Malaysia is the world’s third largest producer of natural rubber and exported a total of 9,390 tons in 2009 according to data from the Department of Statistics.167 Export of rubber products by value has been increasing since 2001. In 2008, Malaysia recorded its highest ever export values reaching RM 11.24 billion. Exports declined marginally, by 5.7 percent, in 2009 as demand was affected by the global recession. The largest component of rubber products is rubber gloves, which accounted for 57.2 percent of the value of the industry in 2009. Malaysia is also the world’s largest supplier of foley rubber catheters and condoms. Malaysia’s largest export markets in 2009 for rubber and rubber products included China, the United States, Germany, Japan, and the United Kingdom in that order.168 161 MPMA’s membership directory is available at http://www.mpma.org.my/members/directory.asp?SearchString=A&SearchType=alphalist&Action=Go! 162 MPMA Annual Report 2009, Page 5. See: http://www.mpma.org.my/SharedImages/Library/pdf/F_797.pdf 163 See: http://www.sirim.my/ 164 “Standards Developments,” MPMA, Accessed March 16, 2011. See: http://www.mpma.org.my/p_ho.asp?ThemeID=194 165 MPMA Annual Report 2009, Page 31. See: http://www.mpma.org.my/SharedImages/Library/pdf/F_797.pdf 166 MPMA Annual Report 2009, Page 6. See: http://www.mpma.org.my/SharedImages/Library/pdf/F_797.pdf 167 See: http://www.mrepc.com/industry/industry.php 168 “Rubber,” MATRADE, Last Accessed March 25, 2011. See: http://www.matrade.gov.my/en/foriegn-buyers-section/69industry-write-up--products/623-rubber 70 The plastics industry is one of the most dynamic growth sectors within the Malaysian manufacturing sector with more than 1,550 plastics products manufacturers in the country, employing more than 96,100 in 2008.169 Malaysia exported 56 percent of the total production of plastic products in 2009, which was RM 14.7 billion. The three largest plastic products that contributed to 88 percent of exports comprised (i) plates, sheets, film, foil and strip of plastics at 36 percent with a values of RM 3 billion; (ii) containers of plastics including stoppers, lids and caps at 32 percent with a value of RM 2.9 billion; and (iii) articles of plastics such as plastic pipe sealing tape, plastic medical and surgical, welding protective mask, frames and handle at 17 percent with a value of RM 1.4 billion. Malaysia’s largest export markets in 2009 for plastics were Singapore, Japan, the United Kingdom, the United States, and Thailand in that order.170 According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Malaysia is a net exporter of plastic and rubber products171 to India. For the FY 2009/10, Malaysia imported USD 46.3 million and exported USD 150.2 million in plastic and rubber products to India. These figures reflect an 18 percent decrease in imports from USD 56.4 million and 9 percent increase in exports from USD 137.7 million from FY 2008/09. As a result, Malaysia’s net exports in plastic and rubber products with India increased by 28 percent from USD 81.3 million in FY 2008/09 to USD 104.0 million in FY 2009/10. India sold in the domestic market 3.3 percent and 2.8 percent 172 of the plastic and rubber products imported from Malaysia for the FY 2008/09 and FY 2009/10, respectively. 3. Trade and Investment Activities of the Rubber & Plastics Industry in India This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. a) Rubber Industry According to research, the Malaysian rubber industry is not actively involved at present in trade and investment activities in India. This is likely due to the relative size, strength and presence of India’s own rubber industry. However, there are a few industry players that export their rubber products to the Indian market, and there are a few that have set up joint ventures with Indian companies. MARDEC Berhad173 MARDEC, which was formerly known as the Malaysian Rubber Development Corporation (MRDC), is an investment holding company involved in processing and trading of rubber as well as manufacturing of value-added rubber and polymer products. MARDEC is a fully-owned government company and was established to upgrade the quality of small rubber manufacturers in Malaysia to meet international requirements. MARDEC is currently the largest producer and exporter of all premium and volume grade Standard Malaysian Rubbers (SMR) in Malaysia. In 1998, the company invested abroad to handle the processing and export of rubber and latex in neighboring countries as well as in China and India. In India, MRK Latex was established in 2000 with RK Latex of India as a joint venture partner. Based in Kerala, MRK Latex174 produces latex concentrate, PV latex and the Indian Standard Natural Rubber grades ISNR 10 and ISNR 20. According to the website, the labs attached to the units are considered to be one of the best in India. 169 “The Plastic Sector in Malaysia,” Market Watch 2010, Malaysian-German Chamber of Commerce and Industry, 2010. 170 “Plastic,” MATRADE, Last Accessed March 18, 2011. http://www.matrade.gov.my/en/foriegn-buyers-section/69-industrywrite-up--products/521-plastic 171 This data is based upon statistics for products falling under HS Chapters 39 and 40. 172 The market share of rubber and plastics imports from Indonesia into India is calculated by dividing (a) the rubber and plastics imported from Indonesia into India (“imports”) by (b) the total annual consumption of rubber and plastics in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 173 See: http://www.mardec.com.my/index.html 174 See: http://www.rklatex.com 71 Top Glove Corporation Berhad175 Top Glove is the world’s largest rubber glove manufacturer. It was established in Malaysia in 1991 with one factory and three production lines. Today, the company has 20 factories and 379 production lines spread across China, Malaysia, Germany, Thailand, and the United States. The Chairman of Top Glove served as the president of the MARGMA from 1997-1999 and also served as a board member of the MRB. According to press announcements, Top Glove’s focus in 2010 was on emerging markets, such as Argentina and Brazil, but also China and India, particularly as rubber gloves remain as a necessity in the healthcare industry as a form of protection.176 Richter Rubber Technology177 Richter Rubber Technology, a German company, is a major latex condom manufacturer based in Kedah, Malaysia. It has rubber plantations in Malaysia and uses the latest European technology sourced from its European base in Hannover, Germany. The company produces, tests, seals, packs and exports the product to third party markets and global destinations. The company has an affiliate, Kailash Richter Rubber Tech Private Limited, in Calcutta, India for distribution in India. R1 International178 R1 International is a global rubber trading company specializing in rubber commodities, such as technical rubber, latex, smoked sheets, and rubber related products, such as tires and rubber woods. Headquartered in Singapore, it has locations in Malaysia, India, China, Japan, Thailand, and Vietnam. It operates a joint venture between Cargill Incorporated and Mardec Berhad. Its India arm, R1 International (India) Pvt Ltd, is based in Kochi and deals primarily with trading. Kossan Rubber Industries Berhad179 Kossan Rubber Industries Bhd. is a Malaysia-based company engaged in investment holding and manufacturing and sales of rubber products. The Company offers molded rubber products, extruded rubber products, engineered rubber products, colored ethylene propylene diene Monomer (EPDM), rollers, ethylene vinyl acetate (EVA), polyurethane (PU) products and gloves. It has 49 production lines with an annual production capacity of 3.9 billion pieces of gloves. India is an export market for the company. b) Plastics Industry Kumpulan Jebco180 Kumpulan Jebco manufactures anti-vibration rubber, plastic and polyurethanes products used in the automotive, rail and agricultural industries. Its automotive products include bushes, engine mounting, hydro mounting, pillow ball bushing, bush assembly strut mount, exhaust hangers, bushing suspension arm, cushion strut bar, mounting rubber, bump rubber, and rubber moulded products in general. Its current export markets include a number of foreign markets, including India. 175 See: http://www.topglove.com.my/index.htm 176 “Demand for Gloves Still Positive,” Briefing Note on Top Glove Corporation: Corporate Highlights, RHB Research Institute, June 25, 2010. 177 See: http://www.richterhi-tech.com/rht/?q=content/welcome-rrt 178 See: http://www.r1international.com/index.htm 179 See: http://www.kossan.com/ 180 See: http://www.kumpulanjebco.com/main/ 72 Polyplastics Asia Pacific Sdn Bhd181 Established in March 1997 as a wholly owned subsidiary of Polyplastics Co. Ltd., the company manufactures and sells various types of engineering plastics and resins, such as acetal copolymer, fiberglass reinforced polyethylene terephthalate, and liquid crystal polymer. It sells its products to a number of other subsidiaries, including India-based Polyplastics Marketing (India) Private Ltd. MK Plastic Machinery Sdn Bhd182 This company manufactures cutting-edge plastic machination technology, including injection-molding machines and high-precision presses of different requirements and specifications. It has developed a strong global network since incorporation over 12 years ago. The company exports its products to a number of foreign markets, including India. BASF (M) Sdn Bhd183 BASF (M) Sdn Bhd and its wholly owned subsidiary BASF Polyurethanes (Malaysia) Sdn Bhd offer a wide range of products and tailor-made solutions to customers in the automotive, appliances, construction, and furniture and footwear sectors both domestically and internationally. The parent company, BASF, is the world’s leading chemical company. Its portfolio ranges from chemicals, plastics and performance products to agricultural products, fine chemicals and oil and gas. On November 30, 2010 BASF SE announced its intent to form Styrenics Joint Venture with INEOS ABS (India) Ltd for the INEOS ABS and styrene businesses, the INEOS NOVA polystyrene and styrene monomer businesses, and the BASF styrene, ABS and polystyrene businesses. The deal is expected to complete in the forth quarter of 2011. When completed, the new company will be a producer of styrene, ABS and polystyrene with positions in North America, Asia and Europe. S.E. Printing (M) Sdn Bhd184 S.E. Printing manufactures air conditioning plastic parts, back lights for LCDs, decals for audio/video/home appliances, overlays for audio/video/home appliances, plastic insulators, plastic parts electrical appliances, plastic parts for equipment/automotive/computers, plastic parts for watches and clocks, plastic silkscreen labels, silkscreen plastic stickers, rubber insulators, screen printing (plastic parts for AV equipment, silkscreen name plates, and silkscreen printed name plates. It exports to a number of foreign markets, including India. D. White Electric Home Appliance/Electrical and Electronic Industry The Malaysian white electric home appliance or electrical and electronic industry185 is based on lowervalue added activities of the industries, such as assembly, as opposed to the higher value-added activities, such as research & development and design, in Taiwan, Korea and Singapore. Malaysia groups white electric home appliances within its electrical and electronic (E&E) industry. The E&E industry is divided into two sectors, namely the electronic sector and electrical sector, which is in turn subdivided into three sub-sectors. The electronic sector comprises electronic components, consumer electronics and industrial electronics. The electrical sector comprises electrical components, 181 See: http://www.polyplastics.com/en/company/gp/pap/index.html 182 See: http://www.mkplas.com.my/index.html 183 See: http://www.asiapacific.basf.com/apex/AP/AsiaPacific/en_GB/ 184 See: www.seprinting.com.my 185 The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, a review of trade association websites, chambers of commerce, media sources, government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations via email and/or phone contact. However, such information is limited due in some cases to a lack of responsiveness, or concern regarding information dissemination, from the trade associations contacted. 73 industrial electrical and electrical consumer sub-sectors.186 So-called “white household” appliances are part of the electrical consumer sub-sector. For the electronics sector, electronic components include semiconductor devices (fabricated wafers, integrated circuits (IC) and IC design), passive components (capacitors, inductors and resistors), printed circuits and other electronic components (storage media, disk drive parts, printed circuit boards, substrates, and connectors). The semi-conductor industry is the most significant in terms of production and exports in this sub-sector. Semi-conductor products produced in Malaysia include linear and digital integrated circuits, memories and microprocessors, opto-electronics, discrete devices, hybrids and arrays. Consumer electronics include color television receivers, audio visual products (digital versatile disc (DVD) players/recorders), home theater systems, blu-ray, mini disc, electronics games consoles, and digital cameras. Industrial electronics covers information communication technology (ICT) products, including computer and computer peripherals, telecommunications, optics, and other industrial electronic products, such as industrial controllers and office equipment (copier machines, fax machines, typewriters, automatic data processing machines). For the electrical sector, the electrical component sub-sector includes cables, wires, conductors, industrial components and parts and solar cells and modules. The industrial electrical segment includes conventional and intelligent electrical equipment for switching, signaling, monitoring, power distribution and circuit protection; illumination and lighting products; uninterruptible power supplies; and energy saving devices for domestic and industrial use. The consumer electrical segment covers household appliance, which includes washing machines, air-conditioners, vacuum cleaners and microwave ovens.187 The total market for electrical home appliances was worth RM 3.6 billion as of 2009, registering a 7.1 percent growth from 2004 to 2009.188 As of 2008, Malaysia had 381 companies in the electrical sector. Major companies in the consumer electrical segment include Pensonic (Malaysian), Khind (Malaysian), Panasonic (Japanese), OYL Group (a member of the Daikin, Japanese), Samsung (Korean), and Dyson (British).189 Other Malaysian home appliance manufacturers include Joven and Alpha. 1. Trade Associations The main trade association for electrical and electronic products is The Electrical and Electronics Association of Malaysia (TEEAM). Another trade association is the Federation of Malaysian Electrical Appliances Dealers Association (FOMEDA),190 which focuses on retailers concerns. The FOMEDA is not very active in the public media and last voiced concerns on music copyrights and e-commerce. Very little public information is available on the FOMEDA. a) The Electrical and Electronics Association of Malaysia (TEEAM)191 TEEAM was established in 1952 as a representative body of the electrical and electronic industries in Malaysia. TEEAM works closely with government agencies, statutory bodies, and the private sector to ensure growth and development of the electrical and electronic industries. TEEAM also has representatives in the relevant government bodies such as the National Vocation Training Council, the Electricity and Gas Supply Department, and Technical Committee of SIRIM Berhad. In addition, 186 “Industrial Profile: Electrical & Electronics,” Malaysia External Trade Development Corporation. See: http://www.matrade.gov.my/en/foriegn-buyers-section/69-industry-write-up--products/557-electrical-a-electronics 187 “Malaysia Performance of the Manufacturing and Services Sectors 2008,” Malaysia Industrial Development Authority. 188 Chapter 11 on Revitalizing the Electronics and Electrical Sector from “Economic Transformation Programme: A Roadmap for Malaysia,” Performance Management and Delivery Unit, October 2010. 189 “Malaysia Performance of the Manufacturing and Services Sectors 2009,” Malaysia Industrial Development Authority. 190 See: http://www.fomeda.com.my/index.htm 191 See: www.teeam.com/ Contact: The Electrical and Electronics Association of Malaysia, 5-B Jalan Gelugor, Off Jalan Kenanga, 55200 Kuala Lumpur, Malaysia. Tel: 603 9221 4417/2091. Email: [email protected] or [email protected] 74 TEEAM is an appointed Standard Writing Organization (SWO) for electrical and electronics product and services. Role and Function TEEAM’s roles and activities include providing representation of members' common concerns to government and private organizations to help solve, where possible, business problems on regulations, approvals and standards. It is also involved in providing trade and business opportunities through contact with local and overseas organizations and trade missions and in organizing meetings and seminars for members. The association also provides training programs at its office to help meet the country’s need for skilled technical personnel especially trained in the electrical field. Examples include wiremen training and programmable logic controller courses. TEEAM provides an informative website for visitors and members. It also publishes the TEEAM Issue, which is the association’s periodic publication that summarizes the association’s activities, industry news and issues, and other articles of member interest. The website includes, among others: (i) information about the association; (ii) upcoming and past events; (iii) training courses, conferences, seminars and meetings; (iv) publications, mainly its periodic TEEAM Issues; (v) a resources library, which mainly contains excerpts of reports from the TEEAM Issues; (vi) member and meeting information on the Asean Federation of Electrical Engineering Contractors; (ix) TEEAM’s position on trade issues, include trade negotiations and standards; and (x) statistics. Organizational Structure TEEAM is led by a President, followed by a Deputy President and Secretariat. It has three Vice Presidents, which serve as the Chairman of it three groups, which are categorized by business activities: (i) the Engineering Construction & Services Group, (ii) the Trading Group, and (iii) the Manufacturing Group. The president for the 2009/2011 period is Mr. Engr Fu Wing Hoong. Membership Membership of TEEAM is drawn from companies, individuals, and state associations engaged in the electrical and electronics industries in Malaysia. To date, TEEAM has approximately 1,600 members.192 Membership is divided into four broad categories as follows: (i) ordinary membership, which is subdivided into company, individual and state association memberships; (ii) associate membership; (iii) foreign associate membership; and (iv) youth membership. The entrance fees for company and individual membership are RM 400 and RM 200, respectively. There are no entrance fees for the other membership categories. Regarding annual subscription fees, these fees vary by class of membership and range from RM 100 for youth members to RM 500 for state association and associate members. The association also provides a member directory according to the categorization of products manufactured by TEEAM manufacturing members. This listing provides the email point of contact for each manufacturing member.193 The website also tracks new members joining TEEAM on a monthly basis and provides full member contact details and type of business. General Position on Trade and Investment Liberalization TEEAM has a positive stance on government trade and investment liberalization policies. 194 It supports the government to engage in FTA negotiations with trading partners and realizes the benefit of reduced import duties when exporting E&E products to FTA partner markets. TEEAM notes that the 192 A directory of its members in alphabetical order is available at http://www.teeam.com/pg_list1a.htm A listing of its members including product categories is available at http://www.teeam.org.my/products_manufactured.pdf 193 See: http://www.teeam.com/products_manufactured.pdf 194 “TEEAM’s Stand on the Issue of EE Sector Negotiations,” TEEAM website, accessed March 16, 2011. See http://www.teeam.com/p_stand_1.htm 75 nature of E&E manufacturing businesses requires outsourcing of intermediate products and parts.195 Under FTAs, Malaysian E&E manufacturing companies benefit from lower import duties for parts, which help reduce the cost of production for the Malaysian finished products. TEEAM is also willing to take part in the negotiating process especially on the mutual recognition agreements (MRAs). Notably, TEEAM published the benefits of Malaysia’s FTAs in its 55th TEEAM Issue.196 In a statement on harmonized standards, 197 TEEAM called on the MITI to harmonize standards adopted by respective FTA partners. It highlighted the problem when Malaysia adopts one standard, while other countries adopt different standards for the same E&E products. This troubles the manufacturers to obtain different sets of standards for each export market. In this regard, TEEAM suggested that the government establish MRAs, similar to those under AFTA.198 In addition, TEEAM supports the concept of one standard established by a national body, i.e. SIRIM. The system requires one set of tests conducted by certified and accredited laboratories, and one approval granted by an authorized body. It also urged the government to develop standards to cover all E&E products. TEEAM highlighted that the lack of enforcement on non-compliant products has made these products easily available in the local market. Hence post market surveillance with a proper framework must be established to monitor products to ensure compliance with standards and regulations. The post market surveillance system will help raise product safety and quality. TEEAM has urged the government to provide funding to establish post market surveillance involving the participation of industry players. It seeks RM 1 million per year for the next five years to finance post market surveillance. TEEAM believes members can play an active role to ensure good market surveillance and hence enforcement. TEEAM also supports the government’s move to emphasize green technology.199 In June 2010, PM Najib Razak announced that that the Feed-in Tariff (FiT) program would be implemented under the 10th Malaysia Plan. The feed-in tariff is a mechanism that allows electricity that is produced from renewable energy sources to be sold to power utilities at a fixed price for a specific term. Under the FiT, different tariff structures would be set for different renewable energy technologies. Malaysia will start implementing renewable energy resources in 2011. The government indicated that the tariff for connected solar photovoltaic generation will be between RM1.25 – RM1.75 per kWh for 21 years, and is now subject to the finalization process. However, due to high cost of initial investment such as the grid connected solar photovoltaic generation, TEEAM seeks the government’s support in providing incentives to the private sector to encourage participation. It is ready to work together with the government to achieve this national agenda. The Malaysian unemployment rate is below 4 percent, which is the international benchmark for full employment. This has created a high demand for workers across the whole spectrum, from laborers to engineers and at the managerial level. The government has allowed companies to employ foreign workers earning above RM 8,000 but has placed various restrictions for low cost workers. TEEAM has claimed that this policy hinders opportunities for Malaysians to improve their earning capability as they are forced to continue at their current position as companies are not expanding their operations due to shortage of labor.200 The weakness of government policy in this area has also resulted in an increasing number of illegal foreign workers, and the government is loosing income tax revenue, which could be used to improve the lives of Malaysians in general. Sectors where TEEAM members operate that need foreign workers comprise (i) E&E equipment factories like lighting, cables, and ballast; (ii) panel builders; and (iii) electrical contractors. TEEAM 195 “TEEAM’s Stand on the Issue of EE Sector Negotiations,” TEEAM website, accessed March 16, 2011. See http://www.teeam.com/p_stand_1.htm 196 TEEAM staff writers, “Malaysia’s Free Trade Agreements (FTAs): A guide book published by MATRADE,” TEEAM, 55th Issue, Part 3, Page 12-16, December 2009. 197 Ibid. 198 Under AFTA, electrical and electronics standards are harmonized under the Electrical and Electronic Mutual Recognition Agreement, which entered into effect since 2002. 199 Ir Chew, Shee Fuee. “Challenges and Opportunities in the Electrical Industry,” TEEAM, 57th Issue, Part 2, Page 31, March 2011. 200 TEEAM staff writers. Press conference. TEEAM, 57th Issue, Part 1, Page 17, March 2011. 76 has stressed that the industry is in need of foreign workers for manufacturing and services companies. Without foreign workers, the industry is unable to maintain stable output, while some may even have to stop operations. Hence, TEEAM calls on the government to come out with clear policy to manage foreign workers in an orderly manner across the whole spectrum of the industry and not just selected sectors. TEEAM notes that there are many well trained foreign workers who have been working here for many years, but who are forced to return to their countries after their permits have expired. 2. Production and Trade Statistics E&E products account for 39 percent of Malaysia’s total exports in 2010 amounting to RM 249.8 billion. The largest contributor to E&E exports was electronic integrated circuits, which accounted for RM 66.7 billion or 27 percent of E&E exports in 2010. 201 Five product groups accounted for 82 percent of total E&E exports, which amounted to RM 227.8 billion in 2009. These five product groups comprise (i) semiconductor devices, ICs, transistors, and valves totaling 41 percent of E&E exports, (ii) automatic data processing (ADP) machines totaling 15 percent of exports, (iii) parts and accessories for office machines and ADP machines totaling 14 percent of exports, (iv) telecommunications equipment and parts totaling 7 percent of exports, and (v) electrical apparatus for electrical circuits and printed circuits totaling 5 percent of exports. The top five export destinations in 2009 accounted for 64 percent of Malaysia’s total E&E exports and included the United States (17 percent), China (16 percent), Singapore (14 percent), Hong Kong (10 percent), and Japan (7 percent).202 Malaysia’s exports to India in 2010 were MYR 21 billion203 of which 23 percent was E&E products.204 According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Malaysia is a net exporter of white electric home appliance products205 to India. For the FY 2009/10, Malaysia imported USD 1.6 million and exported USD 41.6 million in white electric home appliance products to India. These figures reflect a 26 percent decrease in imports from USD 2.1 million and an aligned 25 percent decrease in exports from USD 55.7 million from FY 2008/09. As a result, Malaysia’s net exports in white electric home appliance with India weakened by 25 percent from USD 53.5 million in FY 2008/09 to USD 39.9 million in FY 2009/10. India sold in the domestic market only 0.9 percent and 0.6 percent206 of the white electric home appliances imported from Malaysia for the FY 2008/09 and FY 2009/10, respectively. 3. Trade and Investment Activities of the Electrical and Electronics Industry in India This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. According to research, Malaysian and foreign consumer electrical and electronics manufacturers have not publicly voiced significant interest in trade and investment in India. 201 “Malaysia External Trade Statistics – December 2010,” Malaysia Department of Statistics, February 11, 2011. 202 “Industrial Profile: Electrical & Electronics,” Malaysia External Trade Development Corporation. See: http://www.matrade.gov.my/en/foriegn-buyers-section/69-industry-write-up--products/557-electrical-a-electronics 203 “Malaysia External Trade Statistics – December 2010,” Malaysia Department of Statistics, February 11, 2011 204 “Malaysia Put-Up A Big Show At The India-ASEAN Business Fair,” Malaysia Trade Commission, March 4, 2011. 205 This data is based upon statistics for certain products in HS Chapters 84 and 85. These tariff lines include in HS 8414 51, 8415, 8419 11 10, 8419 19 20, 8422 11 00, 8422 90 20, 8423 10 00, 8450 11 00, 8450 12 00, 8450 19 00, 8450 20 00, 8451 30 10, 8452 10, 8471 30 10, 8508, 8509, 8510, 8516, 8521, 8418 21, 8418 29, 8418 30, 8525 50 10, 8525 50 20, 8525 80, 8516 10 00, 8516 31 00, 8516 33 00, 8516 40 00, 8516 50 00, 8516 60 00, 8516 71, and 8516 72 00. 206 The market share of white electric home appliance imports from Indonesia into India is calculated by dividing (a) the white electric home appliances imported from Indonesia into India (“imports”) by (b) the total annual consumption of white electric home appliances in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 77 Dyson207 This British appliance manufacturer, which specializes in bag-less vacuum cleaners and electric fans, established its manufacturing hub in Johor Bahru, Malaysia in 2003. While it currently does not have a presence in India, in 2009, Dyson Industrial Design Director, Alex Knox reportedly stated that it expects to market its products in India, China and Malaysia over the next two to three year period.208 Dyson products were sold in Malaysia only for the first time in the latter half of 2010. Dyson’s main markets include the United Kingdom, the United States, Canada, Spain, and Switzerland.209 There is no further mention of Dyson in recent media sources or its company website. Pensonic210 Pensonic is the largest of the domestic home appliance manufacturers with a valuation of RM 300 million and controlling 10 percent of the market share in 2009.211 Of its sales, 90 percent is for the domestic market while the remaining 10 percent is exported to a number of developing countries, including India.212 Malaysia’s Economic Transformation Programme (ETP), released in October 2010, calls for an entry point project (EPP) to build an electrical home appliance manufacturing hub and international distribution network, which will be led by Pensonic. The EPP would consolidate the industry. Under the project, Pensonic will expand by partnering with Malaysian sovereign funds to merge or acquire smaller home appliance companies. In its first stage, the project will first use a multi-brand marketing strategy in targeting fast-growing ASEAN and Middle Eastern markets to establish a strong international market. The Malaysian government expects the export sales to spur the growth of Malaysian SME supply chains and further skills in the industry. In the second stage, the project will establish a manufacturing hub to support the supply chain and sales growth. The ETP aims for the new entity to have an annual turnover of RM 2.2 billion in sales and a 50 percent local content by 2020.213 Ban Seng Lee Industries Sdn Bhd214 Ban Seng Lee Industries manufacturers metal stamping dies, assembly of electrical and electronic products, assembly of solenoids, metal stamping jigs and fixtures, wire netting for gas cooker trays, printed circuit board assembly activities, precision metal stamping for mechanism (MD, CD, DVD, VCR, camcorder), precision metal stamping for stainless steel camera parts, precision metal stamping for DVD-ROM and CD-ROM, metal stamping for audio-video, metal stamping for air-conditioners, metal stamping for home appliances, precision metal stamping for aluminum anodized cosmetic parts, precision cold forging for logos, wire netting for air-conditioner grills, and wire netting for microwave oven trays. Its current export markets include a number of foreign markets, including India. 207 See: http://www.dyson.my/ 208 “Dyson to make Malaysia its R&D centre,” The Star Biz, October 8, 2009. 209 Lian, Lee Wei. “Malaysian-made hit vacuum cleaners finally hit our shores,” The Malaysian Insider, June 17, 2010. 210 See: http://www.pensonic.com/main.htm 211 Chapter 11 on Revitalizing the Electronics and Electrical Sector from “Economic Transformation Programme: A Roadmap for Malaysia,” Performance Management and Delivery Unit, October 2010. 212 “Listing: Pensonic Industries Sdn Bhd,” Federation of Malaysian Manufacturers. See: http://www.fmm.org.my/Members/p_listings.asp?ThemeID=&CompanyID=1846&ListingType=Profile 213 Chapter 11 on Revitalizing the Electronics and Electrical Sector from “Economic Transformation Programme: A Roadmap for Malaysia,” Performance Management and Delivery Unit, October 2010. 214 See: www.bsli.com.my 78 第 IV 章 PHILIPPINES A. Electric Device Industry The Philippines does not have a separate, single industry for electric devices. However, the electronics industry215 is a key sector of the Philippine export market accounting for 53.7 percent of total exports in 2010. 216 This industry is composed of electronic suppliers, subcontractors, and service providers covering semiconductors and electronic parts and components. According to the Philippine National Statistics Office, the electronics industry is divided into the following nine subsectors: (i) Components and Devices (semiconductors), which include 84 items and covers commodities used to make integrated circuits such as printed circuit boards (PCB), converters, ballasts, inductors, resistors, switches, valves and tubes, transistors, diodes, capacitors, and other semiconductor devices; (ii) Electronic Data Processing, which includes 16 items such as input/output (I/O) units, magnetic or optical readers, hard disk drives, CD ROMs, motherboards, and software development; (iii) Office Equipment, which includes 20 items, such as automatic typewriters, word processing machines, cash registers, and electrostatic photocopying apparatus; (iv) Consumer Electronics, which includes 94 items such as video monitors, projectors and cameras, and sound reproducing machines; (v) Telecommunications, which include 49 items such as telephone sets and components, fax machines, and communication cables; (vi) Communication and Radar, which includes 20 items, including transmission apparatus, cellular phones, television cameras, radar apparatus, remote control apparatus, antennas; (vii) Control and Instrumentation, which includes 39 items, such as microscopes, optical radiation instruments, cathodes rays, and oscilloscopes; (viii) Medical/Industrial Instrumentation, covering 30 items including electrocardiographs, ultrasonic scanning apparatus, ultraviolet apparatus used/based on x-rays, and other x-ray high tension generators; and (ix) Automotive Electronics, covering 7 items such as horns, sirens and global positioning systems (GPS). 1. Trade Associations There are a number of industry and trade associations that represent the diverse interests of electric and electronic device manufacturers and suppliers in the Philippines. These include: (i) the Semiconductor and Electronics Industries in the Philippines Inc (SEIPI); (ii) the Federation of Electrical & Electronics Suppliers & Manufacturers of the Philippines, Inc. (FEESMI); (iii) the Electronics Industries Association of the Philippines (EIAPI); and (iv) the Philippine Exporters Confederation, Inc. (Philexport), an umbrella organization representing the interests of several trade associations, including the EIAPI and SEIPI, as well as a number of domestic electric and electronic device manufacturing companies. The FEESMI and the EIAPI have a domestic mandate and industry-specific objectives for their members, such as (i) organizing product promotion and trade exhibits, business matching and opportunities, technical conferences and training, skills development seminars; (ii) organizing trade missions for members to visit neighboring countries; (iii) liaising with government agencies such as the Bureau of Product Standards and the Department of Trade and Industry for the establishment of proper product standards to protect the industry; and (iv) engaging in socio-civic activities, such as charitable missions and donations for school construction, among others. Philexport and the SEIPI on the other hand, represent their members’ interests on the regional and international level. These two associations are described in more detail below. 215 The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, a review of trade association websites, chambers of commerce, media sources, government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations via email and/or phone contact. However, such information is limited due in some cases to a lack of responsiveness, or concern regarding information dissemination, from the trade associations contacted. 216 See National Statistics Office (NSO): http://www.census.gov.ph/data/sectordata/2011/ex110101.htm 79 a) The Philippine Exporters Confederation, Inc. (Philexport)217 Philexport is a government supported non-profit organization. It is an umbrella organization of Philippine exporters, which was established in October 1991 through merging the Philippine Exporters Foundation and the Confederation of Philippine Exporters. The organization, accredited under the Export Development Act (EDA) of 1994, aims to strengthen the Philippine export industry through its export promotion and development programs. Philexport is regionally dispersed through 20 chapters across the country218 and is affiliated with 52 trade associations, including the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP), the SEIPI and the EIAPI, among others.219 Role and Function Philexport represents the complex needs of various industries in the Philippines. responsibilities includes: Its scope of Providing export and trade facilitation advisory services, including consultancy services covering such areas as export and import procedures and regulations, documentation requirements, and financing sources, and connecting members and clients with relevant government and non-government bodies to facilitate trade complaints and address other basic promotion services such as buyer-seller matching, investment matching, trade fairs and exhibitions, and selling missions. Undertaking special trade promotion programs. Identifying specialized training programs, seminars, and workshops and collaborating with appropriate groups. Collecting and disseminating relevant trade information to its members through regular publications, such as the Market Update, Policy Advisories and Activities Bulletin. Providing technical support to Regional and Provincial Chapters and Export Industry Associations. Facilitating the processing of export documents through the One-Stop Export Documentation Center (OSEDC), including housing representatives in a number of trade related government agencies such as the Bureau of Customs (BOC), the Bureau of Plant Industry (BPI) and the National Statistics Office (NSO). Operating a common customs bonded warehouse called the CCBW 1045 (Miscellaneous) in which exporters can import raw materials and certain equipment free of duty or tax. Supporting trade and investment policy analysis and advocacy working closely with the Export Development Council (EDC) and other local and international government agencies. Philexport maintains an informative website for members and non-members, and highlights updated news alerts pertaining to the various industries of its members. For example, its latest news update features updates on government programs for SMEs and proposed legislation, such as proposed tax measures and initiatives for customs, employment, and agricultural programs. The website also has a section for updating its events and activities; however, the section provides no information. 217 See: www.philexport.ph Contact: Philexport. ITC Complex, Roxas Blvd. cor Sen. Gil Puyat Ave.,1300 Pasay City, Philippines. Tel: 632 833 2531/34. Fax: 632 831 3707. Email: [email protected] 218 These include: Baguio, Region 1 – Pangasinan, Region 2 – Cagayan Valley, Region 3 – Pampanga, Region 4A – Calabarzon, Region 4B – MIMAROPA, Region 4C – Cavite, Region 5 – Bicol, Region 6A – Iloilo, Region 6B - Negros Occidental, Region 6C - Kalibo Aklan, Region 7 – Cebu, Region 8 – Leyte, Region 9 – Zamboanga, Region 10 A – Cagayan De Oro, Region 10B – Iligan, Region 11 – Davao, Region 12 – Socsargen, Region 13 – Caraga, and the Autonomous Region in Muslim Mindanao (ARMM). 219 See Philexport Association Affiliation list: http://www.philexport.ph/chapters2.html 80 Organizational Structure Philexport is comprised of a Board of Trustees, Executive Officers and Managers. The Board of Trustees, which oversees the activities of Philexport, is composed of representatives from the Department of Trade & Industry (DTI), the Department of Finance, the Department of Environment and Natural Resources, the Department of Agriculture, and representatives from different sectors of the economy. The executive officers and managers are composed of heads of domestic companies, and representatives from the EDC. Philexport’s current president and chief economic officer is Mr. Sergio R. Ortiz-Luis, Jr. Membership Philexport has approximately 3,000 members, spanning a number of industry sectors in the country, including auto parts and components, chemicals, electronics, fine jewelry and fashion, food, furniture, garments, housewares, information technology, leather goods, decor and giftwares, metal, non-metal, resource-based, and textiles and yarn industries. There are three categories of membership: (i) Regular Membership, (ii) Provisional Membership, and (iii) Associate Membership. To qualify for Regular Membership, potential members must be a registered exporter of goods and/or services; in operation for at least one year; sponsored by any member of the Board of Trustees; and have no serious derogatory information about them supplied by reliable sources. To qualify for Provisional Membership, potential members must adhere to the aforementioned criteria and further be a registered producer/manufacturer/subcontractor/supplier. To qualify for Associate Membership, potential members must be companies other than direct exporters that contribute to Philippine exports such as banks, shipping companies, foreign buyers, airline companies, trading companies, and chambers of commerce. They must also be registered in the Philippines; be in operation for at least one year; be sponsored by any member of the Board of Trustees; and have no serious derogatory information about them supplied by reliable sources. The annual membership fee for all three types of membership is PHP 2,000, with a one-time entrance fee of PHP 700, which is payable on the date of application approval. Membership applications are available online. General Position on Trade and Investment Liberalization Philexport has a favorable stance on trade and investment liberalization, and views such liberalization as a way of increasing market access and facilitating the imports of competitively-priced raw and intermediate materials for export production. For example, in 2009, Philexport’s President Ortiz-Luis urged domestic companies to take full advantage of the preferential tariff rates provided in free trade agreements to which the Philippines is a party. In particular, the Trade in Goods Agreement under the ASEAN-India FTA, which the Philippine Senate has yet to approve at the time of writing of this report, but which is widely expected before July 2011 220 and the Japan-Philippines Economic Partnership Agreement (JPEPA). According to a position paper published by the Philippine Chamber of Commerce and Industry (PCCI), Philexport supports sustained trade liberalization efforts as a way to gain increased market access for its members and to facilitate the importation of competitively-priced raw and intermediate materials for export production. 221 However, Philexport also opines that participation in any trade agreement should be complemented by policies that reduce the cost of doing business,222 so that market access gained from a specific agreement is more or less ineffective to a company’s bottom line.223 220 Belena, Abe P. “Exporters Called on to Take Full Advantage of Free Trade Pacts to Survive Slowdown,” Philexport New and Features, January 16, 2009. 221 Position Paper on the Full Implementation of the AFTA-CEPT by 2010, Philippine Chamber of Commerce and Industry (PCCI), May 2009. 222 223 “SEIPI, Philexport Support JPEPA,” Manila Bulletin, October 1, 2007. Ibid 5. 81 Philexport has a trade policy center to inform its members of trade policy issues and FTAs, among other trade and export promotion information. The Philippine private sector views Philexport as the lead source of trade support in the private sector, and considers the DTI as the primary source of assistance to achieve such goals. On its website, Philexport states that it advocates for a favorable export environment in close coordination with the Export Development Council (EDC). It further works with local and international government agencies, donors and other trade promotion organizations, including the United States Agency for International Development (USAID) and the Universal Access to Competitiveness and Trade (U-ACT) to improve trade and investment policy.224 For example, on December 14, 2009, Philexport Region 12 (Socsargen) signed a memorandum of understanding with U-ACT (the think-tank for the PCCI) and created the Institute for Export Development (IFED), which aims to provide trade policy modules to exporters and business stakeholders in the Mindanao region.225 The U-ACT has openly advocated for trade liberalization,226 stating in a 400-page paper entitled “Merits to Philippine Business of Having a Bilateral Philippines-EU Free Trade Agreement (FTA),” that pursuing a bilateral agreement with the European Union would be beneficial to Philippine industries. It further states that the Philippine business sector cannot continue to miss out on trade and investment opportunities, especially when projections indicate substantial Philippine gains from an FTA with the European Union are forthcoming. The elective and electronic device sector in particular would stand to benefit from the potential agreement. However, in a separate study conducted on the electronics industry in 2006,227 the U-ACT stated that complete tariff elimination in FTAs should be approached with caution “to prevent any possible vulnerability that the electronics industry might have that would lessen or mitigate past and current contributions to the Philippine economy.” It added that the Philippines must take advantage of “the flexibilities offered to developing countries, such as longer implementation periods for specific tariff lines.” Philexport has also been involved in advocating trade with India. In a seminar on “Doing Business with India” organized in collaboration with Philexport in 2009, Vichael Angelo D. Roaring, commercial attaché of the New Delhi-based Philippine Trade and Investment Center (PTIC), urged Philippine exporters to seize trade opportunities offered by the Indian market especially in untapped high-growth, high value sectors that include home, hotel, office furniture and processed food products.228 He also encouraged an increase in the Philippines’ top exports to India which include semi-conductor devices, vehicle parts, paper products, and machinery. He added that the ASEAN-India FTA could pave the way for a greater scope of trade between the Philippines and India. Upon entry into force of the Trade in Goods Agreement, tariffs would be reduced to zero within a nine-year period. Mr. Roaring further highlighted the importance of the Philippines in tapping into the Information technologybusiness process outsourcing industry. He noted that the Philippines must support “a major country and industry-specific promotional effort…to be on the map of India’s importers…”229 In other words, the AIFTA is an opportunity for foreign manufacturers based in India to invest in the Philippines. Philexport opines that the Philippines is emerging as a specific alternative to India, for outsource services, which include call centers, remote education, engineering and design, due to historical and cultural factors.230 224 Wignaraja, Ganeshan, Dorothea Lazaro and Genevieve DeGuzman. “FTAs and Philippine Business: Evidence from Transport, Food, and Electronics Firms: FTA Support Services,” Asian Development Bank Institute, January 13, 2010. 225 “U-ACT Inks Pact with Philexport Region 12 to Undertake Trade Policy Courses,” Universal Access to Competitiveness and Trade (U-ACT), December 14, 2009. 226 “RP-EU Free Trade Agreement Feasible,” Universal Access to Competitiveness and Trade (U-ACT), November 19, 2009: See: http://www.sourcephilfood.com/pdf.php?what=n&n=598. 227 “Assessment and Analysis on Industry Readiness for Further Trade Liberalization: The Finalization of the WTO Doha Development Agenda,” Universal Access to Competitiveness and Trade (U-ACT), July 2006. 228 Belena, Abe P. “Exporters Told to Explore Indian Market,” Philexport New and Features, August 28, 2009. 229 Belena, Abe. P. “Government to Step Up Efforts to Tap Indian Market for RP exports,” Philexport New and Features, July 31, 2009. 230 IT Services Philexport Report, 2010, www.philexport.ph/philippines/IT%20Services.doc 82 b) Semiconductor and Electronics Industries in the Philippines Inc (SEIPI)231 The SEIPI, formerly called the Semiconductor Electronics Industry Foundation, Inc. (SEIFI), is a nonprofit organization established on October 24, 1984. The SEIPI’s member companies, which include foreign and local manufacturing firms, electronics suppliers, sub-contractors, and service providers, are responsible for over 70 percent of total electronics exports. In September 1998, the association changed its name from SEIFI to SEIPI to establish its role as a representative body for all industries supporting the development of electronics in the Philippines. Role and Function The SEIPI’s original objectives were to conduct, promote and undertake technical training to meet the needs of the industry and accelerate the transfer of technology to Philippine workers. Its current objective is to enhance the global competitiveness of the semi-conductor and electronics industry in the country. The scope of SEIPI’s responsibilities includes: Networking with the academic community advancement of engineering courses. Ensuring that industry issues are elevated to the government. Managing the Automated Export Documentation System (AEDS), established to simplify documentation transactions with the BOC and appointed forwarders, and the SEIPI Traffic Managers Association (SETMA), which facilitates the movement of goods, to simplify export and import procedures in the BOC and Philippine Economic Zone Authority (PEZA). Providing meeting, training and seminar facilities for member companies; and offering members and other industry players the opportunity to discuss major issues and concerns. Liaising with companies seeking to enter the Philippine semiconductor and electronics industry. Providing updates on the industry’s performance and global business forecasts to members, government, and the media on a quarterly and annually basis. Providing certification/endorsement papers to its members regarding their business activities and transactions with the government. Promoting “doing business” in the Philippines, through collaborating on trade fairs, and trade and investment seminars. and advocating continuous curriculum The SEIPI has a comprehensive and informative website. It highlights up-to-date information on the latest trends in the electronics industry that could impact its members. For example, its latest news update features the impact of the Japanese earthquake on raw materials used in electronic chip production. The website also provides information on the latest electronics seminars and events. It currently features the Philippine Semiconductor and Electronics Convention, which will take place from June 1-3, 2011, at the SMX Convention Center, Mall of Asia, Pasay City. Organizational Structure The SEIPI’s organizational structure is comprised of a Board of Directors and Executive Directors. Its 15-member Board of Directors acts as the Strategic Direction Group (SDG) of the organization, 231 See: http://www.seipi.org.ph/seipi/index.asp Contact: Semiconductor and Electronics Industries in the Philippines (SEIPI). Unit 902 Tower 2, RCBC Plaza, Ayala Avenue corner Sen. Gil Puyat Avenue, Makati City, 1200, Philippines. Tel: 632 844 9028/29/30. Fax: 632 844 9037. Email: [email protected] 83 responsible for the policy creation and decision making duties of the organization. The Board of Directors is elected from Chief Executive Officers, Presidents, Managing Directors, and General Managers of companies in the electronics sector. The Board represents the diversity of the SEIPI member base, as it is a mix of foreign and Filipino electronics manufacturing companies. The SEIPI Board of Directors meets every quarter and is elected by the SEIPI Regular Members in April on an annual basis, with a two-year term. However, half of the Board of Directors is elected in the first year, while the other half are elected in the following year. The President is a permanent member of the Board of Directors and heads the Operations Management Group (OMG). He is responsible for managing the day-to-day operations of SEIPI, and he further manages the SEIPI’s professional staff and eight SEIPI Networking Committees, including: Association of Environment and Safety Semiconductor Engineers in the Philippines. Association of Semiconductor and Electronics Finance Executives, Association of Semiconductor and Electronics Manufacturing Engineers, Association of SEIPI Information Technology Executives and Professionals, Association of SEIPI Personnel Administrators, Association of SEIPI Purchasing Managers, SEIPI Traffic Managers Associations, SEIPI Security Managers Association, and the Association of SEIPI Associate Members. Mr. Ernie Santiago serves as the current president of SEIPI. Membership The SEIPI started with initially 13 semiconductor and electronics company members. It is now the largest organization of foreign and local semiconductor and electronics companies in the Philippines with 235 member companies. Members include small, medium and large domestic and international companies. Approximately 44 percent or 103 of SEIPI members are Filipino companies, Japanese companies account for 18 percent or 42 members, American companies account for 14.5 percent or 34 members, and German companies accounting for 5.1 percent or 12 members. The remaining 44 members represent a mix of other company nationalities.232 There are four categories of membership: (i) Regular Membership, (ii) Affiliate Membership, (iii) Associate Membership, and (iv) Honorary Membership. To qualify for Regular Membership, potential members must be engaged in manufacturing and assembly or direct and indirect suppliers of materials with manufacturing facilities in the Philippines essential to the semiconductor and electronics industry. To qualify for Associate Membership, potential members must be companies engaged in the distribution or supply of indirect materials, machinery, equipment and services for the semiconductor and electronics industry without manufacturing facilities in the Philippines. For example, importers, distributors, representative offices, and logistics providers linked with the semiconductor and electronics industry. To qualify for Affiliate Membership, potential members must be industry organizations or associations that support the interests of and have a direct link with the electronics Industry. Finally, to qualify for Honorary Membership, potential members include retired or foreignbased CEOs previously connected with SEIPI Member firms. The Board of Directors approves this membership. Membership dues vary according to the category of membership and also depend on the number of employees in the company. 233 Membership fees are paid on an annual basis, and for regular membership, membership fees are based on the number of employees on either a permanent or contractual basis. For this form of membership, an initial joining fee of PHP 20,000 is required, with annual fees ranging between PHP 30,000 and PHP 150,000 depending on the number of employees. For associate membership, the initial joining fee is also PHP 20,000, while annual fees are based on a company’s gross revenues with those earning less than PHP 50 million required to pay an annual fee of PHP 30,000, those earning between PHP 50-100 million required to pay an annual fee of PHP 60,000, while those earning above PHP 100 million required to pay an annual fee of PHP 90,000. On the contrary, for affiliate membership, potential members are required to pay a set up fee of PHP 15,000, but this fee is waived completely for educational institutions. Membership applications are available online. 232 See: http://www.seipi.org.ph/seipi/content2.asp?type=membership 233 See: http://www.seipi.org.ph/seipi/content2.asp?type=membersinfo 84 General Position on Trade and Investment Liberalization The SEIPI generally supports trade and investment liberalization for the industry. In 2007, SEIPI President Ernie Santiago stated that trade agreements would act as a vehicle for growth and job creation in the thriving semi-conductor and electronics sector in the Philippines. 234 Additionally, Philippine tariffs on nearly all imports from five other ASEAN members and China dropped to zero percent as of January 1, 2010, under the ASEAN China FTA, as did those levied on a number of products from Australia, New Zealand, Korea, and Japan. In light of the entry into force of the ASEAN FTAs, SEIPI Chairman Arthur Young indicated that the implementation of FTAs with ASEAN partners would allow the Philippine electronics industry to attract more foreign investors, particularly Japanese investors.235 Mr. Young expects these tariff cuts to boost consumer purchasing power and make imported raw materials cheaper for manufacturers and industry groups. On product quality safety standards, the SEIPI has expressed receptiveness to changes to safety standards, which results from greater trade liberalization. In 2007, the SEIPI (then called SEIFI), welcomed the revisions to the Philippines’ product certification safety procedures, stating that compliance of the electronics industry to the improvements will expand the domestic market. SEIPI members, including Alen Engineering Corporation (AEC), a manufacturer of air conditioners, and Matsushita Electric Philippines Corp. (MEPCO), a manufacturer of air conditioners, electric fans, electric irons, and dry cell batteries, acknowledged that the changes to the product certification program will promote better manufacturing and quality system practices across all industries.236 In terms of investment, the Philippines needs to build new power plants to handle 5,000 megawatts of new electric power in the next few years to avert severe power outages. 237 During a speech in November 2010 at the 12th SEIPI CEO Forum, President Benigno S. Aquino addressed this issue and highlighted the importance of investment from India and China in the Philippine power and electric industry.238 In June 2009, SEIPI Chairman Young urged electronic producers to offer cheaper and more competitive electricity rates to attract foreign direct investment. He emphasized that demand from China and India looks to be very robust. The SEIPI participates in a number of trade fairs and seminars. For instance, the SEIPI participated in the in the India-ASEAN Business Fair held in New Delhi, India from March 2-6, 2011, which according to the Philippines-India Business Council, included businesses from various sectors, such as the electronics, agriculture and food processing sectors.239 The aim of the exhibition was to enable Indian investors to learn more about Philippine investment priorities and incentives. Additionally, during the 16th World Electronics Forum (WEF) Interim Meeting held in Manila in July 2009, the SEIPI signed a Memorandum of Understanding with the Communications Multimedia & Infrastructure Association of India (CMAI) to maintain and promote cooperation and understanding, and to promote the development of bilateral trade and business relations in the fields of semiconductors, electronics, telecom & IT hardware. However, in an interview with a US electronics company240 based in the Philippines, the company’s CEO stated that although the SEIPI is considered the voice of the electronics industry and serves as a platform for training and trade seminars, the organization is not yet fully effective in providing industry advocacy on trade issues with the Philippine government. 234 Lopez, Edu. “SEIPI and Philexport Support JPEPA,” Manila Bulletin, October 1, 2007. 235 Hermosa, Jennifer Anne. “Trade Flow Boost Expected,” ABS CBN News, January 4, 2010. 236 “Modifications to Product Quality Certification Scheme in Philippines (1997)” ASEAN Report. See: http://www.aseansec.org/7049.htm. 237 Belena, Abe. P. “PCCI Calls for Building of 5,000 Megawatts Baseload Power Plants to Avert Shortages,” Philexport News and Updates, February 6, 2009. 238 President Benigno S. Aquino III's Speech during the 12th Semi-Conductor and Electronics Industries of the Philippines, Inc. (SEIPI) CEO Forum. See: http://www.pcoo.gov.ph/speeches2010/speech2010_nov05a.htm 239 Please see Philippines-India Business Council website for list of exhibitors: http://www.citem.gov.ph/iabf2011/index.php?page=exhibitors 240 The company information remains anonymous. The information was provided in a telephone interview, which took place in March 2011. 85 2. Production Data and Trade Statistics According to the Philippine National Statistics Office, in 2009, total electronic products export revenue for the Philippines reached USD 22.170 billion, amounting to 57.84 percent of total exports and a decline from USD 28.501 billion in 2008. In 2009, imports also declined, falling by 24.22 percent from USD 56 billion in 2008, to USD 43 billion in 2009. According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, the Philippines is a net exporter of electric devices241 to India. For the FY 2009/10, the Philippines imported USD 63.9 million and exported USD 159.3 million in electric devices to India. These figures reflect a 27 percent decrease in imports from USD 87.9 million and a 50 percent increase in exports from USD 106.3 million from FY 2008/09. As a result, the Philippines’s net exports in electric devices with India dramatically increased by 419 percent from USD 18.4 million in FY 2008/09 to USD 95.3 million in FY 2009/10. India sold in the domestic market only 0.3 percent and 0.4 percent242 of the electric devices imported from the Philippines for the FY 2008/09 and FY 2009/10, respectively. 3. Trade and Investment Activities of the Electric Device Industry in India This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. International electric device and electronics manufacturing companies based in the Philippines include a number of global analog chipmakers like Texas Instruments Inc., Fairchild Semiconductor, Analog Devices Inc., ON Semiconductor Corp., NXP, STMicroelectronics, and ROHM; storage device technology companies such as NEC and Lexmark, among others. The remaining players, which include storage devices and consumer electronics companies, include mostly Japanese manufacturers, such as Hitachi, Toshiba, Fujitsu, and Mitsumi. Major domestic players, such as Amkor Technologies, Laguna Electronics, and First Philec Solar, have no reference to trade or investment with India in their corporate websites or media sources as their primary market is domestic. Texas Instruments243 A US MNC, this electronic chip manufacturer has assembly plants in Baguio and Clark economic export zones, is a member of SEIPI, and has operated in the Philippines since 1979. It also operates manufacturing plants in India, and recently announced that it expects to buy companies, build plants, and increase its sales and engineering forces in China and India. It also projects revenue of USD 3.34-3.38 billion for 2011 in India.244 Additionally, the company’s India branch245 announced on March 8, 2011 that it intends to launch the industry’s smallest, most efficient step-down regulators with integrated field effect transistors (FETs) to support up to 25 A for telecommunications, networking and other applications.246 241 This data is based upon statistics for certain products in HS Chapters 84 and 85. These tariff lines include in HS 8415, 8417, 8418, 8419, 8421, 8422, 8428, 8438, 8443, 8444, 8445, 8446, 8447, 8448, 8449, 8450, 8451, 8452, 8454, 8455, 8456, 8457, 8458, 8459, 8460, 8461, 8462, 8465, 8467, 8468, 8469, 8470, 8471, 8472, 8474, 8475, 8476, 8477, 8479, 8486, 8501, 8504, 8505, 8506, 8508, 8509, 8510, 8511, 8512, 8513, 8514, 8515, 8516, 8517, 8518, 8519, 8520, 8521, 8525, 8526, 8527, 8528, 8530, 8531, 8532, 8533, 8534, 8535, 8536, 8537, 8538, 8539, 8540, 8541, 8542, 8543, 8544, 8545, 8546, and 8547. 242 The market share of electric device imports from Indonesia into India is calculated by dividing (a) the electric devices imported from Indonesia into India (“imports”) by (b) the total annual consumption of electric devices in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 243 See: http://www.ti.com/ 244 Tibken, Shara. “Texas Instruments Narrow Guidance,” Wall Street Journal, March 9, 2011. 245 See: http://www.ti.com/ww/in/?DCMP=TIHomeTracking&HQS=Other+OT+home_indiatop 246 “TI Launches New Step-Down Regulators,” Cyber Media News, March 8, 2011. 86 Texas Instruments launched its R&D facility in Bangalore in August 1985, becoming the first global technology company to establish a presence in India. It now has several offices across India to cater to customer service queries, sales and application support. Since 2006, Texas Instruments India has increased its focus on the Indian semiconductor market. Its work includes sectors such as industrial electronics such as inverters, energy meters, lighting; consumer, telecom and automotive electronics; medical electronics such as ultrasound scanners, x-ray machines, ECG machines, and MRI scanners. Texas Instruments India has also launched a third partner program, allowing it to partner with local Indian electronics companies. It currently partners with approximately 40 companies, which provide software and hardware design services among other designs services. It is unclear whether Texas Instruments imports parts from the Philippines; however, a majority of sales from export firms is sold back to the parent company, thus representing export sales. Fairchild Semiconductor247 Also a US MNC, Fairchild Semiconductor is a manufacturer of analogue electronics, has operated in the Philippines since 1976, and is a member of the SEIPI. It launched a design center in Pune, India in 2008, responsible for designing and developing the company’s new generation of power MetalOxide-Semiconductor Field-Effect Transistor (MOSFETs) and IGBT technology to support solar inverters, uninterruptible power supplies (UPS), automotive, lighting and ballast applications. Fairchild Semiconductor chose the Pune location because of its close proximity to several engineering schools in India. In addition, Pune has a very strong presence in the automobile sector. Fairchild Semiconductor also has a head office in Bangalore. Fairchild Semiconductor announced that it is expecting to make sales of USD 390-410 million in the first quarter of 2011 from its international affiliates.248 It is unclear whether the Philippine operations exports to India. NXP Semiconductors Philippines Inc.249 NXP is a member of the SEIPI and founded by Philips. The company has been based in the Philippines since 1981 and manufactures and markets semiconductors, electronics equipment, mobile communications, consumer electronics, and in-car entertainment, among others. The company was formerly known as Philips Semiconductors Philippines Inc, but changed its name in December 2006. The German electronics company has branches in India, with a head office in Bangalore and operations in Delhi and Mumbai. It has a total workforce of 700 R&D engineers and salesmen within the country. It further established a design center in Bangalore, which offers media technology solutions, as well as automotive and identification software, Digital TV (HDTV), mobile phones, cordless phones, and digital audio players. NXP India customers include developers of automotive electronics, consumer electronics companies, EMS companies, industrial product manufacturers, mobile phone manufacturers, Smart Card manufacturers and system integrators, among others. In 2011, NXP Semiconductors India announced its support for green energy initiatives, especially in the areas of green automotives and solar energy. It is unclear whether NXP Semiconductors India imports parts from the Philippines. ST Microelectronics250 A member of the SEIPI, ST Microelectronics operates an assembly and testing plant in Laguna, Calamba City in the Philippines. The Geneva-based MNC also operates a design center and sales office in Bangalore and Greater Noida. In February 2011, the Indian arm of the company announced that its business is expected to grow by 25 percent, driven by direct-to-home (DTH) and security segments in the Indian market, particularly in four growth areas: (i) energy management and energy savings, (ii) consumer devices, (iii) trust and data security, and (iv) healthcare and wellness. According to ST Microelectronics, the demand for electronics hardware in India is set to grow from USD 45 billion in 2009 to USD 400 billion. ST Microelectronics aim to take a leadership in integrated 247 See: http://www.fairchildsemi.com/ 248 “Fairchild International Inc. Key Developments,” Reuters.com/finance, March 30, 2011. 249 See: http://www.nxp.com/ 250 See: http://www.st.com/internet/com/home/home.jsp 87 circuit (IC) design, IC fabrication and, design and general manufacturing of electronics products. It is unclear whether ST Microelectronics exports from the Philippine assembly plant to India. Ionic EMS Philippines251 Ionic EMS has offices in the Philippines and China and is also part of an alliance of electronics companies across different countries all over the world, called Ems-Alliance, 252 an alliance-wide integrated platform for global component sourcing. Out of these companies, which are based in Canada, Brazil, China, and Sweden, it also forms an alliance with an Indian company called Rangsons Electronics, which manufacturers electronic components, and polymer parts as well as supplies to its all over Asia. B. Passenger Vehicle Industry The automotive industry253 represents a significant portion of global economic activity with extensive upstream and downstream linkages to many diverse industries and sectors. It has played an important role in the Philippine export market, growing 2.3 percent in the first half of 2009 and employs 77,000 workers.254 The synergy within the industry has strengthened the linkages between the motor vehicle assemblers and the motor vehicle parts and components manufacturers.255 However, unlike Malaysia and India, the Philippines does not have a national brand passenger vehicle, such as Tata (India), Mahindra (India) or Proton (Malaysia). Instead, the Philippine industry is comprised of two sectors: (i) the motor vehicle assembly sector and (ii) the motor vehicle parts and components manufacturing sector. The assembly sector is grouped based on the type of motor vehicles, such as passenger vehicles, commercial vehicles (utility vehicles, pick-ups, vans, trucks, buses, special purpose vehicles), and motorcycles. In July 2007, the Green Renewable Independent Power Producer Inc. (GRIPP), a Philippine initiative in collaboration with local manufacturers and international associations such as Greenpeace, began an e-vehicle pilot program for converted electric jeeps or “e-jeepneys” in Makati City. A year after the launch, the Department of Transportation and Communication (DOTC) issued guidelines for the classification of the e-jeepney as a "utility vehicle for private and public use" on April 30, 2008. Since then, the market for evehicles has expanded to include local producers of e-vehicles such as Eagle G-car, and foreign producers such as Honda and Mitsubishi. However, the e-jeepney remains in its early stages of implementation. 1. Trade Associations While there are number of industry and trade associations that represent the diverse interests of automotive parts and auto manufacturers in the Philippines, those that represent the passenger vehicle industry (i) the Philippine Automotive Federation, Inc. (PAFI), (iii) the Chamber of Automotive Manufacturers of the Philippines, Inc., (CAMPI), the Motor Vehicle Parts Manufacturers Association of the Philippines, Inc. (MVPMAP), and (iv) the Philippine Exporters Confederation (Philexport). Other associations include the Philippine Automotive Competitiveness Council, Inc. (Pacci) formed by CAMPI voting members Toyota, Honda, Isuzu and Mitsubishi together with Ford Group Philippines and the Motor Vehicle Parts Manufacturers Association, and Alliance (now Association) of Vehicle 251 See: http://www.ionics-ems.com/invest.html 252 See: www.emsalliance.com The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, a review of trade association websites, chambers of commerce, media sources, government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations via email and/or phone contact. However, such information is limited due in some cases to a lack of responsiveness, or concern regarding information dissemination, from the trade associations contacted. 253 254 “ASEAN Steel Industry: Before and After Impact of Global Economic Downturn,” South East Asia Iron & Steel Institute (SEAISI), February 3, 2009. 255 Motor Vehicle Parts and Components, Philippine Exporters Confederation (Philexport) Report, 2004. 88 Importers and Distributors (AVID) created in 2009 created by CAMPI members and other CBU importers.256 The PAFI, PACCI, and AVID have a domestic mandate, and they help pursue industry-specific interests such as promoting the MVDP, CBU activity and local production facilitation for their members. However, the CAMPI and the MVPMAP represent its members’ interests on the regional and international levels. a) The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI)257 The Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) was established on May 16, 1995. The CAMPI is widely recognized by government and private sector groups as the lead association in the Philippine automotive industry. Role and Function The CAMPI's main objective is to promote the interests of the automotive industry with the goal of developing a viable domestic industry in line with the objectives of the Motor Vehicle Development Program (MVDP). Participation under the MVDP for the assembly of motor vehicles and parts and components manufacturing is open to foreign and local investors. It requires USD 10 million (passenger cars), USD 8 million (commercial vehicles) and USD 2 million (motorcycles) in parts and components manufacturing for both foreign and local investors. Parts and components manufacturing are listed as an investment priority area and are entitled to incentives (e.g., income tax holiday) under the Omnibus Investments Code.258 The CAMPI’s scope of responsibilities includes providing representation for the industry at both domestic and international levels and supporting national marketing and promotion efforts. It contributes to government policies and programs, regulations and standards for the automotive industry, including the Executive Order No. 156, which bans or prohibits the importation of used auto parts and components. The CAMPI also monitors vehicle sales trends and publicizes industry developments.259 Organizational Structure The CAMPI's structure is comprised of a Board of Trustees, Executive Committee and the Secretariat. The Executive Committee is divided into four committees: (i) the Public Relations Committee, (ii) the Marketing Committee, (iii) the Adhoc Committee, and (iv) the Human Resources Committee. The Secretariat is in charge of day-to-day affairs and policy actions, and includes the Technical Committee and Auto Parts and Services Committee. The current President is Ms. Elizabeth H. Lee. Membership The CAMPI’s 16 active members represent global automotive brands, including: Asian Carmakers Corporation (BMW), Columbian Autocar Corporation (Kia), Columbian Manufacturing Corporation, CATS Motors, Inc. (Mercedes Benz), Focus Ventures, Inc. (Chana, FAW), The Covenant Car, Inc. (GM), Honda Cars Philippines, Inc. (Honda), Hyundai Asia Resources, Inc. (Hyundai), Isuzu Philippines Corporation (Isuzu), Mitsubishi Motors Philippines Corporation (Mitsubishi), Nissan Motor Philippines, Inc. (Nissan cars), PGA Cars, Inc. (Porsche, Audi), Scandinavian Motor Corporation (Volvo), Suzuki Philippines, Inc. (Suzuki), Toyota Motor Philippines Corporation (Toyota), and 256 Sevilla-Mendoza, Aida. “On the Road: A Rift Within the Auto Industry,” Philippine Daily Inquirer, August 3, 2010. 257 See http://www.campiauto.org/index.html Contact: Chamber of Automotive Manufacturers of the Philippines, Inc., Suite 1206, 12th/F Jollibee Center, San Miguel Ave. Pasig City, 1600 Philippines. Tel: 632 632 9733. Fax: 632 633 9941. Email: [email protected] or [email protected] 258 See Philexport, Automotive Industry Report 2004, and Tariff Commission Executive Order 877. 259 Mendoza, A.S. “Time to Reach Out to Our Parts Manufacturers, Business Mirror, June 25, 2010. 89 Universal Motors Corporation (Nissan LCVs).260 Information on membership, including membership dues, is not available on the CAMPI website as membership is considered on a case-by-case basis. Potential members are required to email CAMPI directly for consideration. General Position on Trade and Investment Liberalization The CAMPI plays a crucial role of advancing the growth of the automotive industry on both the domestic and international levels through sustained representation with the government. The CAMPI has demonstrated a protective stance towards trade liberalization. For instance, the CAMPI has called for some protection for car assemblers against exporters of finished vehicles. For example on AFTA, President of CAMPI Elizabeth Lee and Chief Operating Officer of Universal Motors Corporation, the Philippines' largest and oldest 100 percent Filipino-owned assembler and distributor of Nissan Light commercial vehicles, stated that ASEAN imports have taken over domestic market share since implementation of the agreement. She added that local assemblers are dependent on import bans on used vehicles and other measures favoring Philippine-made cars to cope.261 Additionally, Elizabeth Lee called for CBUs to be placed in the sensitive list of the AIFTA to help protect the domestic industry before full liberalization. She added that the AIFTA must have a similar tariff timeframe as that of other ASEAN Agreements.262 On the JPEPA, the CAMPI stated in 2010, that the Philippines could be subject to an unrestricted entry of vehicles from Japan if the government allows the tariff-elimination schedule to proceed as stated under the Agreement. They argued along with other automotive associations that removing such tariffs would put at risk the jobs of 75,000 industry workers, a PHP 100- billion investment in the auto industry that generates around PHP 12 billion in annual government revenue from duties, excise taxes and value-added taxes, and merchandise exports totaling USD 2 billion annually.263 Although certain members, particularly auto assemblers of the MVPMAP have expressed reluctance in government trade liberalization policies, some CAMPI members particularly CBU importers have called for lower tariffs through greater trade liberalization. For example, Korean automotive firm Hyundai Motor Co. has announced that it would invest in a vehicle assembly plant for CKD production in the Philippines, if the Philippines were to sign a bilateral trade agreement with Korea. It states that the Philippines is a very important market for Hyundai in terms of sales targets, but the current MFN tariff rate of 30 percent, places it at a disadvantage to automotive companies from ASEAN and Japan, since the existing ASEAN-Korea FTA includes several automotive products in the sensitive list.264 b) Motor Vehicle Parts Manufacturers Association of the Philippines, Inc. (MVPMAP)265 The MVPMAP was established in October 1996, as a non-profit organization. The aim was to cooperate in matters regarding deregulation and privatization, the Philippines' accession to GATTWTO, and trade liberalization and regional cooperation, such as ASEAN Common Effective Preferential Tariff (CEPT), the ASEAN Industrial Cooperation Scheme (AICO), and the Asia Pacific Economic Cooperation (APEC). MVPMAP further aims to ensure that the motor vehicle industry is prepared for the entry of products from other countries, and that the industry remains productive, costcompetitive and quality-conscious. 260 Please see the CAMPI Member Directory on: http://www.campiauto.org/organization.html 261 Hermosa, Jessica Anne. “Trade Flow Boost Expected,” Business World, January 4, 2010. 262 Hermosa, Jessica Anne. “ASEAN-India Pact Benefit RP,” Business World, February 9, 2008. 263 De Leon, Max. “Japan Hits RP for Auto Tariffs,” Business Mirror, April 20, 2010. 264 “Hyundai Looks Forward to Philippines-Korea Free Trade,” Business Insight. February 28, 2011. 265 See: www.mvpmap.com/index.php Contact: Motor Vehicle Parts Manufacturers Association of the Philippines, Inc (MVPMAP), 33/F Yazaki Torres Bldg., 1043 Zobel Roxas St.cor.Bautista St. Singalong Manila 1004. Philippines. Tel: 632 521 1621. Fax: 632 523 4692. Email: [email protected] 90 Role and Function The main objective of the MVPMAP is to actively promote the interests of the industry, strengthen the supporting industries that would complement automobile manufacturing in the Philippines, and encourage the development of viable automotive parts and components to sustain manufacturing activities in the Philippines. The MVPMAP’s scope of responsibilities is as follows: Provide representation for the industry at both domestic and international levels. Lobby the special interests and needs of the industry. Provide long term strategic thinking and direction. Disseminate industry information to members. The MVPMAP website provides its members with news updates on the latest trends in the automotive industry. It further provides analysis on various auto-related topics, for example providing advice on ways to boost the automotive industry. However, the information is not updated on a regular basis, and the last updates were made in 2006. Organizational Structure The structure of the MVPMAP is composed of directors, officers and the Secretariat. The Directors include a Chairman Eddie Jose and President Rafael Villarreal, as well as Vice Presidents and Executive Directors of Policy and Planning, Implementation, Market Development and Industry, Government and Customer Relations. The Officers and Committee Chairpersons responsibilities fall under the following committees: Membership Committee, Ways and Means Committee, Sports and Recreation Committee, Education and Training Committee, Exhibits and Missions Committee, and Special Projects Committee. The Secretariat is in charge of day-to-day affairs and policy actions, which the Executive Director Antonio Gimenez and the Secretariat staff implement. Membership At present, MVPMAP is composed of 101 small, medium and large domestic and international automotive parts and components manufacturing companies. Some examples include, Colombian Autos, Furukawa Autoparts, Goodyear Philippines Inc., Janus Engineering, Kia Motors, Philippines Auto Components Inc., Toyota, and Visteon Philippines, among others.266 There are three categories of membership: (i) Regular Membership, (ii) Associate Membership, and (iii) Provisional Membership. To qualify for Regular Membership, potential members must be a registered manufacturing company of locally produced automotive components, parts and assemblies; in operation for at least two years; and have no serious derogatory information supplied by reliable sources. To qualify for Associate Membership, potential members must be business establishments other than manufacturers of locally produced automotive industry. For example, trading companies, distributors, producers of packing materials, linked to the automotive industry. They must also be in operation for at least two years; and have no serious derogatory information supplied by reliable sources. To qualify for Provisional Membership are potential members in operation for less than two years, but who otherwise qualify for Regular or Associate membership. Membership fees for all three membership types are paid on an annual basis and based on the size and the gross sales of the company. An initial joining fee of PHP 1,500 is required, with PHP 6,000 annual fee for small companies, with annual sales of up to PHP 19 million; an initial fee of PHP 3,000 and a PHP 9,000 annual payment for medium-sized companies with annual sales of PHP20-49 million; and an initial joining fee of 4,000 PHP and an annual fee of PHP 12,000 for companies with annual sales of PHP 50 million and above. 266 See: http://www.mvpmap.com/directory.php 91 General Position on Trade and Investment Liberalization Although certain members, particularly auto assemblers of the MVPMAP have expressed reluctance in government trade liberalization policies, the MVPMAP is gradually becoming more open to bilateral trade. In 2009, it changed its five-year strategy of non-participation in overseas trade fairs by leading the Philippine automotive parts and accessories country trade participation in the 2009 Taiwan Automotive & Auto Parts Industry (AMPA) Show, the first overseas trade fair participation for MVPMAP in eight years. As a result of this trade fair, MVMAP members generated USD 15 million in initial sales and an estimated annual USD 50-80 million in new revenues for local auto parts makers starting 2010, using Taiwan as a platform for markets in China, the Middle East, the European Union and Africa.267 Additionally, in October 2010, the MVPMAP and PACCI held the Second Philippine Auto Manufacturing Summit tomorrow to strengthen the automotive industry, promote locallymanufactured vehicles, highlight regional trends from ASEAN and Australia impacting the local automotive manufacturing industry, and discuss automotive standards harmonization under the ASEAN region.268 The MVPMAP has collective stances on the government trade and investment liberalization policies. However, it has demonstrated a more protective stance towards trade liberalization than other associations. On June 10, 2009, the MVPMAP called for a delay in the implementation of the Philippines FTA commitments for several automotive parts, with industry groups, especially urging the government to retain tariffs on competing Japanese imports until 2013. In terms of existing FTAs, the MVPMAP requested that the government resume talks with Japanese officials to extend the deadline for eliminating the tariffs in the JPEPA. They pointed to an annex to the JPEPA, which specifically states that the schedule for lifting tariffs on those listed under Executive Order 262 issued on December 12, 2003, could be delayed until January 1, 2013. The issue is currently under review. As of November 2009, the MVPMAP, CAMPI together with other Philippine automotive manufacturers, called for the implementation of a 10 percent tariff protection on all automotive imports and a subsidy of PHP 10,000 per CBU production to make the local automotive industry competitive under a globally liberalized trading regime. The objective was to delay the country’s commitments to the ASEAN CEPT for a zero tariff regional trading area starting January 1, 2010; and that of the JPEPA. However, while CBU importers are not keen on raising the tariff further, as they argue that this may affect the competitiveness of their goods, local assemblers are seeking an upward revision to protect the domestic market. They called on the Department of Trade and Industry (DTI) to consider the high cost inputs of doing business In the Philippines, particularly for SMEs. The Philippines currently imposes MFN tariffs of 30 percent on CBU imports from countries where the Philippines has no FTA agreements, such as the United States and the European Union. CBU imports from ASEAN members are already at zero tariff rates as of January 2010. Under the ASEAN-China FTA, CBU tariffs will be reduced in 2018 and with Korea by 2016. The ASEAN-India FTA, which will likely be implemented in July 2011 by the Philippines, has an expected zero tariff implementation date in 2020. However, according to a contact at the Board of investments (BOI), the motor vehicle industry supports delaying the tariff reduction modality under the agreement, and is pushing to include motor vehicles under the highly sensitive/exclusion list. The EO to implement the tariff schedule under AIFTA is still to be issued and published.269 In the face of increased foreign competition, divisions over government policy towards the automotive industry have opened between importers of foreign-made CBU manufacturers and assemblers of CKD vehicle kits. Imports from ASEAN has advantage over imports from partner countries whose trade agreements with the Philippines are yet to enjoy zero tariff rates as well as countries where the Philippines has no FTA.270 Therefore, CBU importers of European and American cars that pay 30 percent tariff rates, such as PGA Cars, which distributes Audi motor vehicles, Asian Carmakers Corporation, distributors of BMWs and CATS Motors, Inc. distributors of Mercedes Benz, among others, have asked for lower MFN tariff rates. This tariff differential will further be aggravated when the ASEAN-Korea Free Trade Agreement comes into effect in 2016 and the ASEAN-China FTA in 267 Osorio, Elisa P. “Auto Part Makers Rejoin Taiwan Auto Parts Show,” Philippine Star, April 11, 2010. 268 Infante, Ayen. “Auto industry holds Unification Summit,” Daily Tribune, October 7, 2010. 269 Email response from the US-ASEAN Business Council. 270 Cahiles-Magkilat, Bernie. “Review of MFN Auto Tariff Sought,” Manila Bulletin, July 25, 2010. 92 2018. At present, importers of Japanese, American and European brands are competing with zero tariffs on vehicles coming from ASEAN countries Thailand, Malaysia, Indonesia.271 On product quality safety standards, MVPMAP members have expressed some reluctance to adopting changes to safety standards, which results from greater trade liberalization. For example, when the DTI announced the Department Administrative Order (DAO) No. 01 Series of 1997 entitled, "Revised Rules and Regulations concerning the Philippine Standard (PS) and/or Safety Certification Mark Scheme," certain members of the trade industry raised some concerns regarding its implementation. The DTI made the revised rules, to conform to the AFTA, improve trade competitiveness, and protect consumer interest. Companies such as Goodyear Philippines, a MVPMAP member, expressed some concern regarding the revised rules, citing that the revisions would create more obstacles for importers, including increasing paper work and import clearance issues, which would slow down the process of marketing automotive products.272 2. Production Data and Trade Statistics The Philippines has one of the smallest automotive industries in the ASEAN region in both sales and production. It is restricted to assembly operations, whereby local assemblers work under license from foreign carmakers. Philippine automotive production has declined over the long run from 131,000 units in 2006 to 66,000 units in 2008 for four-wheeled vehicles, excluding buses and trucks. As of 2008, the Philippine automotive industry had a production capacity of 230,000 units per annum with a 29 percent capacity utilization rate. These low figures273are attributable to low economies of scale and low levels of local content.274 The Philippine’s automotive production is based on assembly for foreign automotive companies. As of March 2011, the Philippines has 20 companies that assemble commercial vehicles and 170 manufacturers of automotive parts.275 In 2010, the Philippine motor vehicle and parts market was worth USD 6.9 billion, making it the smallest automotive market among the major ASEAN countries, behind Thailand (USD 49.6 billion), Malaysia (USD 14.4 billion), Indonesia (USD 13.7 billion), Singapore (USD 10 billion) and Vietnam (USD 8.5 billion).276 Analysts estimate that the Philippines exported a total of USD 3.1 billion, 67,951 units in 2010, a 20 percent increase from 2009.277 The auto parts and components exports consisted largely of wiring harness, transmissions, instrument clusters, aluminum wheels, tires, batteries, forgings, stampings and cast products. According to CAMPI, the largest companies selling passenger cars in the country, in order of sales, are Toyota and Honda (of Japan), Hyundai (of South Korea), Ford (of the US), Mitsubishi (of Japan), Renault-Nissan (of France and Japan) and Suzuki (of Japan). Overall, the Philippines’ automotive sales (which include both commercial and passenger vehicles) increased by 6.4 percent from FY 2008 to 2009, despite the economic crisis. Commercial vehicle sales increased by 67.2 percent and passenger vehicles sales increased by 32.8 percent in January 2009 from 2008.278 In 2010, sales reached 175,000 units, a 34 percent increase from 2009.279 271 272 273 Isip, Irma. “Car Assemblers, Pure Importers Headed for Clash,” Malaya Business Insight, July 26, 2010. Modifications to Product Quality Certification Scheme in Philippines, ASEAN, 1997: http://www.aseansec.org/7049.htm In contrast, Thailand had a production capacity of 1.6 million units and a capacity utilization rate of over 85 percent in 2006. 274 Ceferino S. Rodolfo, “The Philippine Automotive Industry and the Global Financial Crisis,” from the Global Recession and the Philippines Economy” Impact and Policy Response, Center for Research and Communication Foundation, Inc., USAID, March 2010. 275 “Philippines: Automotive Report,” Economist Intelligence Unit, March 4, 2011. 276 Economist Intelligence Unit (EIU), Philippines Automotive Report, 2010. 277 Cahiles-Magkilat, Bernie. “Auto, Parts Exports Reach $3.1B in 2010,” Manila Bulletin, March 4, 2011. 278 Data found on CITEM website: www.citem.gov.ph. China International Exhibition Center, Beijing, Industry Profile, September 25-27, 2010. 279 “RP Auto Lags Behind ASEAN,” October 19, 2010, Malaya Business Insight 93 According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, the Philippines is a net importer of passenger vehicles280 from India. For the FY 2009/10, the Philippines imported USD 14.0 million and exported USD 9,850 in passenger vehicles to India. These figures reflect a 23 percent decrease in imports from USD 18.2 million from FY 2008/09. As a result, the Philippines’s net imports in passenger vehicles with India also decreased by 23 percent from USD 18.2 million in FY 2008/09 to USD 14.0 million in FY 2009/10. India barely sold any passenger vehicles imported from the Philippines in the domestic market for the FY 2009/10, selling only 0.00004 percent281 of the aforementioned imports. It did not import any passenger vehicles from the Philippines for the FY 2008/09. 3. Trade and Investment Activities of the Passenger Vehicle Industry in India The Philippine passenger vehicle industry is principally dominated by Japanese automobile manufacturers, such as Toyota Motor Phils., Inc., Honda Cars Phils., Inc., Mitsubishi Motors Phils., Corp., Nissan Motor Phils., Inc. and Honda Phils., Inc. Other passenger vehicle manufacturers are Kia Motors, Ford Motor Co. Phils.; Columbian Autocar Corp., Pilipinas Hino Inc., Norkis Trading Company, and Universal Motors Corporation. The majority of these companies are joint ventures with Japanese automobile companies, or are distributors of foreign vehicles or parts and components, for example Asian Transmission, Universal Motors Corporation, among others. Japanese car manufacturers dominate the Philippine passenger-vehicle market. This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. Ford282 This American company and member of CAMPI has already established a subsidiary in India called Ford India, which manufacturers a variety of cars including the Ford Endeavor, Fiesta and Figo. It recently launched Ford Figo, which it expects to sell to Mexico as well as 50 markets worldwide in 2011. As of March 9, 2011, Ford sold 80,000 Ford Figos, which was manufactured in the Ford manufacturing facility in Chennai. Ford has invested over USD 500 million in the Chennai assembly plant to expand to production of Figo and other Ford cars by 200,000 units and 250,000 gasoline and diesel engines annually. Ford plans to introduce eight new models in Southeast Asia over the next five years in order to boost its market share from the 3 percent presently in the region.283 According to media sources, Ford considered launching the Ford Focus in India, but instead, manufactured the Ford Focus, Ford Escape and Mazda3 for export to ASEAN markets that include Thailand, Indonesia, and Malaysia since 2002. Additionally, a plant in Rayong, Thailand, the region’s automotive hub, is set to take over the manufacture of the Focus model by 2012.284 Media sources however report that although India does not come under ASEAN, the availability of CKD kits for the Focus could help it enter into the India market once the plant starts production in 2012. The plant has an initial capacity of 150,000 units of which Ford will retain 15 percent for the Philippines while the rest are meant for exports to Asia Pacific and Africa. The Santa Rosa, Laguna plant in the Philippines is among Ford’s 70 factories operating worldwide. In 2010, local sales for Ford Group Philippines grew by 8 percent to a record level of 6,063 units, while export sales of assembled models rose by 35 percent to 9,858 units.285 280 This data is based upon statistics for products falling under HS 8702 and 8703. 281 The market share of passenger vehicles imports from Indonesia into India is calculated by dividing (a) the passenger vehicles imported from Indonesia into India (“imports”) by (b) the total annual consumption of passenger vehicles in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 282 283 See: http://www.ford.com.ph/ “Ford Plans Expansion in Asia,” Zacks Equity Research. March 24, 2011. 284 “Ford Group Double Vehicle Sales in First Two Months,” Business World, March 8, 2011, Jennifer Anne Hermosa. 285 Hermosa, Jennifer Anne. “Ford Group Double Vehicle Sales in First Two Months,” Business World, March 8, 2011. 94 KIA Motors286 KIA Motors, a subsidiary of Korean Hyundai Motor Company, and a member of CAMPI, shelved its plans to start operations in India in March 2011. It has instead decided to concentrate on developed markets such as Europe, China and the United States where it has local production facilities. Kia had earlier worked with consultancy company Synovate to conduct a feasibility study on the Indian market. Despite a positive report, particularly for its type of cars, including hatchbacks like Picanto and smaller sedans like Cerato that forms the largest chunk of cars sold in India, Kia has decided not to enter the market. They however, aim to monitor the Indian market because they believe that it has potential for future investment and gains. Hyundai’s sales in India increased 17 percent year-on-year to 294,000 units of cars in April-January 2010. Domestic Players Local companies such as Albert Metalcraft Inc., AGC Automotive Philippines, Ambrose Industries, 888 MB Ortega Industrial Corporation, and Michel Motor Sport (members of MVPMAP) are too small to expand into the Indian market. 286 See: http://www.kia.ph/ 95 第 V 章 THAILAND A. Automotive Parts Industry The success of the Thai automotive parts industry287 over the past two decades can be attributed to attractive government policies and a liberal investment climate. These two factors have helped turn the once small domestic CKD assembly operations into the world’s leading automotive manufacturing hub. As Thailand is home to almost all of the global automotive manufacturers, many of their parts and component manufacturers have relocated to Thailand to meet the assemblers’ demand. According to the Thai Board of Investment (BOI),288 there are approximately 1,800 automotive parts suppliers in Thailand, 700 of which are original equipment manufacturers (OEM). According to the Japan Automobile Manufacturers Association (JAMA), Thai local part manufacturers are able to supply 100 percent of parts used in the assembly of motorcycles, 80 percent of parts used in the assembly of pickup trucks, and almost 50 percent of parts used in the assembly of passenger vehicles. Currently, the automotive and automotive parts industry is the third largest industry in Thailand contributing 10 percent to the national GDP. It has an estimated workforce of 500,000 workers across vast and integrated networks of OEMs, parts manufacturers, services providers, and dealers. Auto vehicles and automotive parts and accessories exports generate the second largest export revenues for Thailand. Thailand is named as the “Detroit of Asia” for being the second largest producer of oneton pick up trucks and the fifth largest automotive assembler in the Asia Pacific region. Vehicle production in Thailand is likely to increase from 1.2 million units in 2006 to surpass 2.1 million units in 2016 with forecasted growth of 6 percent. 1. Trade Associations There are three major industry associations that represent the interests of auto parts manufacturers in Thailand. These associations are (i) the Auto Industry Parts Club under the Federation of Thai Industries289 (AIPC-FTI), (ii) the Thailand Auto-Parts Manufacturers Association (TAPMA), and (iii) the Thailand Automotive Institute (TAI). 287 The majority of information gathered in this section is comprised of an in-depth review of secondary data available in the public domain, internet search engines, a review of trade association websites, chambers of commerce, media sources, government websites, among others. It also comprises of primary data sources derived from direct contact with the trade associations via email and/or phone contact. However, such information is limited due in some cases to a lack of responsiveness, or concern regarding information dissemination, from the trade associations contacted. 288 “Thailand Southeast Asia’s Automotive Hub,” Thailand Board of Investment, updated July 31, 2010. See: http://www.boi.go.th/english/why/auto_parts_summary.pdf 289 The Federation of Thai Industries (FTI), formerly known as the Association of Thai Industries, acts as the sole representative of all industrial enterprises in Thailand in coordinating the government authorities on both policy and operation matters. Supervised by the Ministry of Industry and established in 1967, the FTI has 39 industry clubs and approximately 7,000 members. See: http://www.fti.or.th/2008/eng/ftiindustryclub.aspx for a full list of the industry clubs. Those clubs relevant to the targeted industries are discussed in further detail in the report. The FTI is well recognized as the collective voice of the industrial community in addressing members’ opinions and concerns as well as in coordinating with the government. It is actively joining the Joint Public-Private Sectors Consultative Committee head by Thai Prime Minister to address the economic issues. FTI representatives also attend hundreds of subcommittees and working groups within the decision making mechanism among the government offices. Their representation play an important role in convincing lawmakers to adopt policies that are practical and commensurable and benefit the development of overall industrial economy. In addition, the FTI has been authorized by the Government to service members on issuing non-preferential certificate of origins for members. Its role is also to certify the operation of its members to ensure that they ethically follow national law, rules and regulations. The current FTI Chairman is Mr. Payungsak Chartsutipol. 96 a) The Auto Industry Parts Club under the Federation of Thai Industries (AIPC-FTI)290 The Auto Industry Parts Club is a subsidiary of the FTI. Supported by all major auto parts manufacturers in Thailand, the AIPC-FTI was established in 1976 to promote the development of the auto parts industry in Thailand. The AIPC-FTI works closely with TAPMA in representing members’ interests with respect to government policies as well as trade and investment liberalization. Role and Function The AIPC-FTI aims to act as a coordinating center for the industry under the FTI.291 Its primary roles are to represent members’ interests in negotiating with the government agencies, providing a forum for exchange of information and for discussion of industry developments and policies among members, and promoting coordination and collaboration among auto parts manufacturers, relevant government agencies, distributors, and consumers. The association also aims to increase the number of auto parts manufacturers and improve product capacity and efficiency in the country. This is achieved by coordinating with other industry groups under the FTI and expanding sales channels to the new markets worldwide. The AIPC-FTI participates in policy and strategic planning on automotive industrial developments and provides members with information services and regulatory issues. The association also represents members at industry-to-industry meetings at both the regional and international levels. Organizational Structure The AIPC-FTI is led by an executive committee comprising a president, 6 vice presidents, and 23 committee members.292 The AIPC-FTI also has seven sub-committees as follows: (i) research and development, (ii) SMEs clusters, (iii) management and planning, (iv) economic and tax, (v) export and exhibition, (vi) public relations, and (vii) human resource development. 293 The sub-committee on economic and tax is primarily in charge of reviewing government policies affecting the auto parts industry and reporting such policies to the executive committee and members. While the AIPC-FTI is an independent entity, it uses certain services from the FTI, including secretarial, administration, office space, and information support services. The current president is Mr. Yongkiat Kittipanach. Membership The AIPC-FTI has 182 members.294 Membership is divided into two membership categories: (i) ordinary members and (ii) associate members. There are 171 ordinary members, which include individuals or enterprises that operate business in the auto parts industry, and 11 associate members which include individuals and juristic persons whose work relates to industry and whose achievements contribute to the theoretical or technological advancement of the auto parts industry. Interested individuals or companies must first register as FTI members and are subject to registration fees of THB 2,000 and annual fees ranging from THB 1,000 to 20,000 depending on company total revenue. To become AIPC-FTI members, there is an enrollment fee of THB 2,000 in addition to the FTI fees.295 General Position on Trade and Investment Liberalization The AIPC-FTI does not provide as much information about trade and investment liberalization as other industry groups under the umbrella of the FTI. Its website only provides automotive industry 290 See: http://ftiweb.off.fti.or.th/industrialgroup/autopart/index.asp# Contact: Auto Parts Industry Club, Federation of Thai Industries, Sirikij Exhibition Hall, Ratchadapisek, Klongtoey, Bangkok 10110, Thailand. Tel: 66 2 3451163. Fax: 66 2 3451281-3. Email: [email protected] 291 Article 5 of the AIPC-FTI Code of Practice. 292 A full list of AIPC-FTI members can be found at http://ftiweb.off.fti.or.th/industrialgroup/autopart/about02.asp 293 See: http://ftiweb.off.fti.or.th/industrialgroup/autopart/about02.asp 294 See: http://internet1.off.fti.or.th/erp_member_search/_memberIndustrial_TH.aspx?indus_club=105 295 See: http://ftiweb.off.fti.or.th/industrialgroup/member_dl/feeclub.pdf 97 news296 and does not provide any information for its members concerning FTAs, tariff rates for auto parts or other trade information. While the AIPC-FTI has not been active on voicing members’ stance on trade and investment liberalization, the FTI plays a greater role in this context. For example, Vice Chairman of the FTI Adisak Rohitasune gave an interview to The Nation published on January 25, 2010 on the full implementation of the AFTA.297 He noted that the benefit of tariff liberalization would help increase sourcing of materials and auto parts within ASEAN and expand the automotive industry across the region. However, the AFTA scheme also brings concerns particularly for auto parts manufacturers with high production costs and lack of research and development facility. According to the FTI, such manufacturers need to raise their competitiveness in order to survive. Nevertheless, the FTI views that the Thai auto industry still has greater potential than any other ASEAN countries. b) Thailand Auto-Parts Manufacturers Association (TAPMA)298 The MOC endorsed the establishment of the Thai Auto-Parts Manufacturers Association (TAPMA) on June 29, 1978. The TAPMA is a union of auto parts manufacturing companies that serves as the central voice to protect, support and develop the Thai auto parts industry. The TAPMA’s role is to monitor and address problems that hinder industry development in terms of production technology efficiencies, raw material import difficulties, and work force challenges. The TAPMA works closely with the AIPC-FTI in representing members’ interests with respect to government policies as well as trade and investment liberalization. Role and Function The TAPMA’s vision is to become a well-established organization that determines the direction of the Thai automotive parts industry. Its primary objectives are to focus on production technology and innovation, increase workers’ capabilities in the automotive parts industry and provide trainings, compete globally in terms of cost of production and quality of products and promote market competition, support the development of SME auto parts manufacturers, and promote export markets. In order to achieve its stated objectives, the TAPMA undertakes a number of functions for its members, including: 296 Supporting the manufacture of automobile parts, components, and tools. Negotiating on members’ behalf to establish common benefits. Monitoring the development of parts, equipments, tools and accessory markets both domestically and abroad. Researching the latest technology and production developments for parts, equipment, tools, and accessories. Compiling statistics, documents, and information concerning members’ companies including parts, equipments, and accessories. Supporting members in producing quality auto parts, equipment, tools, and accessories that meet or exceed international standards. Managing and resolving conflicts between members or between members and outside parties. See: http://ftiweb.off.fti.or.th/industrialgroup/autopart/news.asp 297 Wijayasinha, Kingsley. “Thailand Auto Industry to Benefit Hugely from AFTA,” The Nation, January 25, 2010. See: http://www.nationmultimedia.com/2010/01/25/business/business_30121040.php 298 See: http://www.thaiautoparts.or.th/ Contact: Thailand Auto-Parts Manufacturers Association, 86/6, 1st Floor, Bureau of Supporting Industries Development, Soi Trimit, Rama4 Rd, Klongtoey, Bangkok, Thailand, 10110. Tel: 66 2 712 2246-7. Fax: 66 2 712 2970. Email: [email protected] 98 TAPMA’s website is active and contains up-to-date information on auto parts industry news. Organizational Structure Headed by a President, the TAPMA has seven sub-committees, namely (i) management and planning, (ii) academic, (iii) economic and tax, (iv) export and exhibition, (v) public relations, (vi) SME clusters, and (vii) human resource development. The TAPMA also has its own Secretariat headed by a Secretary-General to manage day-to-day affairs. 299 Currently, the President is Mr. Prasartsilp Ornhat Membership The TAPMA represents 528 members.300 Its membership covers all types of auto parts businesses and is a mix of domestic and foreign auto parts manufacturers, including those with both small and large scales of operation. Members must pay a registration fee of THB 1,000 and annual fees of THB 2,500. According to the TAPMA Secretariat, more than half of TAPMA members are also members of the AIPC-FTI. General Position on Trade and Investment Liberalization The TAPMA plays an important role in negotiating and lobbying with the Thai government on members’ behalf on a number of trade and investment issues. It also works closely with the AIPC-FTI to formulate a collective trade and investment stance. The TAPMA appears to positively support trade liberalization, although it sometimes raised concerns over certain products that might be adversely affected from tariff liberalization. The TAPMA and the AIPC-FTI co-submitted a proposal to Thai Industry Minister Chaiwut Bannawat on October 11, 2010 to address their views and concerns regarding Thai trade policy for the auto parts industry. The proposal addressed the following issues: Parts not sufficiently produced in Thailand: The proposal identified parts which are manufactured in Thailand including engines, engine components, body parts, brake systems, steering systems, suspensions, transmissions, electrical and electronics, interiors and exteriors, among others. However, it indicated that there are a number of components which are not sufficiently produced in Thailand and thus have to be imported. These parts and components include passenger car engines, fuel injection pumps, transmissions, injection nozzles, turbo chargers, differential gears, electronic systems, electronic control units, substrates for catalytic converters, and anti-lock brake systems. In this regard, the TAPMA and the AIPC-FTI proposed that the Ministry of Industry (MOI) consider granting investment incentives to attract investment in setting up production facilities for such products in Thailand. In the meantime, while the parts are still not sufficiently produced in Thailand, the TAPMA and the AIPC-FTI have called on the government to reduce import duty taxes on those products to zero. Set up technical and conformity assessment center: The TAPMA and the AIPC-FTI proposed the MOI to set up a technical and conformity assessment center for automotive parts by 2015. They noted the importance of upgrading domestic automotive parts to become internationally recognized and attain international standards and conformity assessment systems. The standards and tests adopted by the center are expected to improve production efficiency, facilitate the conduct of international trade, and ensure consumers’ safety. Both associations called on the MOI to harmonize technical regulations adopted by ASEAN countries and to accept the results of conformity assessment certified by other countries in accordance with the mutual recognition agreements (MRAs) among ASEAN countries. Support Productivity Development Program: The TAPMA and the AIPC-FTI proposed the MOI to support their joint productivity development program to enhance productivity of automotive parts manufacturers and improve competitive advantage. They called on the MOI to finance the program, especially for SME productivity development. In addition, both 299 See: http://www.thaiautoparts.or.th/abouttapma.php 300 TAPMA’s list of members can be found at http://www.thaiautoparts.or.th/member.php 99 associations proposed the BOI, which is an organization under the MOI, to grant additional investment incentives for the automotive parts industry particularly for SME businesses so they can remain competitive in the industry.301 Skilled worker shortage: The proposal addressed the labor shortage issue, particularly skilled labor. Both associations seek government support in developing training courses for workers in the automotive parts industry. They proposed the MOI to work closely with the Ministry of Education to develop training programs addressing the industry’s needs. They also urged the government to prepare for the liberalization of labor within ASEAN in 2015. Both the TAPMA and the AIPC-FTI are representatives of the Thai automotive industry in the ASEAN Consultative Committee for Standards and Automotive Product Working Group (ACCSQ-APWG). TAPMA’s website provides information on the latest round of the ACCSQ-APWG meeting, which was held in December 2010. The website updates the outcome of the meeting during which the Parties agreed to harmonize 19 standards and establish mutual recognitions for those 19 standards among ASEAN member countries.302 c) Thailand Automotive Institute (TAI)303 Established by the Thai government as an independent institution, the Thailand Automotive Institute started operations on July 7, 1997 to coordinate between the public and private sector on the country’s automotive and auto parts policies. Role and Function The TAI’s objectives are to facilitate and promote the development of the automotive and auto parts industry to achieve global competitiveness. According to the MOI’s Notification 314/1997, its scope of responsibilities includes: Conducting research for the formulation of national automotive policies. Developing master plans for the development of Thailand's automotive and auto parts industries. Establishing Thailand’s automotive and auto parts testing center. Developing domestic auto parts standards. Conducting inspection and testing services for certification. Conducting training, seminars, and providing information services. Providing technical advice with respect to production technology to members. Facilitating the human resource development in the automotive industry. Organizational Structure 301 The BOI offers both tax and non-tax incentives to investors in the Thai automotive industry. Non-tax incentives include land ownership rights for foreign investors, permission to hire foreign experts and technicians, work permits and visa facilitation for expatriate employees. Meanwhile, tax incentives include corporate income tax holidays of up to eight years, reduction or exemption of import duties on machinery and raw materials. It also offers customized investment incentives for the following automotive parts products: ABS braking systems, substrates for catalytic converters, electronic fuel injection systems, molds and dies, jigs and fixtures, and integrated electrical parts. 302 See: http://www.thaiautoparts.or.th/webBoard/shownews1detail.php?q_id=73 303 See: www.thaiauto.or.th Contact: Thailand Automotive Institute, 655 soi 1, Bang Poo Industrial Estate, Moo 2, Sukhumvit Road, Km.34, Muang, Samutprakarn 10280, Thailand. Tel: 66 2 3240710. Fax: 66 2 3239598. Email: [email protected] 100 Headed by a President, the TAI has the following seven sub-committees: (i) policy planning, (ii) production technology, (iii) business development, (iv) information technology, (v) HRD Forum, (vi) public relations, and (vii) the Secretariat.304 Its committee members comprise representatives from public, private, and academic sectors determining automotive policies. AIPC-FTI President Mr. Yongkiat Kittipanach and TAPMA President Prasartsilp Ornhat are TAI committee members. Other committee members include Permanent Secretary of MOI, Secretary-General of Thai Industrial Standard Department, Director of Industrial Economic Department under MOI, and Director-General of Land Transport Department, among others. The current TAI President is Mr. Wallop Tiasiri. Membership Currently, the TAI represents the interests of 639 companies. 305 Its members cover all types of automotive businesses and are a mix of domestic and foreign auto manufacturers, including small and large scales of operation. As an independent organization supported by the government, the TAI’s membership is free of charge. General Position on Trade and Investment Liberalization TAI President Wallop Tiasiri has actively voiced support and/or concerns over the implementation of FTAs. His public comments have suggested that the TAI expects trade liberalization to provide export opportunities for automotive and component manufacturing companies. For example, in 2010, he highlighted that the Thai automotive industry greatly benefited from the Thailand-Australia FTA (TAFTA) due to the reduction of Australia’s import tariffs on auto vehicles from 80 percent to zero percent in 2010.306 He also indicated that exports of auto vehicles to Australia increased by 30 percent in the first year of TAFTA implementation. With respect to trade with India, President Tiasiri noted that the ASEAN-India FTA will provide business opportunities particularly for Thai auto parts products to enter into the Indian market.307 His remarks were supported by India’s Engineering Export Promotion Council (EEPC), which revealed that Indian auto-parts makers and renewable energy firms are looking to invest in Thailand in light of the tariff privileges under the AIFTA. 308 EEPC Executive Director Bhaskar Sarka highlighted that Thailand is the most attractive ASEAN destination as it has all basic elements that the industry depends on including infrastructure, skilled labor forces, and automotive parts. To date, India’s leading automotive company, Tata, already has a presence in Thailand and plans to introduce ecocars to the Thai market. However, challenges remain as Indian auto vehicles use low-cost and cheap auto parts, in which Thai auto parts products may not be competitive.309 In 2009, the TAI introduced a new service called “the Automotive Intelligence Unit” to provide trade statistics and trade information database on its website.310 The trade statistics database provides a list of automotive manufacturers, production capacity and sales, import and export data, production and distribution data, auto registration data, and BOI-promoted companies and projects’ data. The trade information database also includes automotive standards adopted by Thailand and other countries, trade measure data, auto production technology data, rules and regulations data, domestic automotive infrastructure data, international auto industry data, and industry development news. 304 See: http://www.thaiauto.or.th/contacts/contacts.asp 305 See: http://www.thaiauto.or.th/members/TAI_Members.asp 306 Industrial Section of Online Grand Prix Group, accessed March 17, 2011. See http://www.grandprixgroup.com/new/magazine/grandprix/detail.asp?Detail_Id=1535&Column_Name=Industrial 307 “AEM Meeting: Walk Together Towards AEC.” Translation. Tarnsethakit newspaper, August 22, 2009. See: http://www.measwatch.org/autopage/show_page.php?t=20&s_id=1689&d_id=1689 308 “Indian Parts Firms Eye FTA Potential,” Bangkok Post, February 28, 2011. See: http://www.bangkokpost.com/business/economics/223817/indian-parts-firms-eye-fta-potential 309 See: http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=items&cid=27:2010-11-11-10-5804&id=207:2010-11-11-08-53-45&Itemid=65 310 TAI Annual Report 2009, Page 17. See http://www.thaiauto.or.th/performance/document/annual%20report%202009.pdf 101 Under the trade information database, the TAI dedicates several sections to issues of trade liberalization, trade measures, technical barriers to trade, and studies on major trading partners’ automotive policies. The TAI’s publications include Malaysia’s national automotive policy,311 India’s automotive industry, 312 and China’s automotive industry, 313 among others. The TAI published the Department of Foreign Trade’s studies on technical barrier to trade measures adopted by major trading partners such as Australia, 314 the European Union, 315 and Indonesia. 316 The TAI also conducted studies on the impact of Thailand’s bilateral FTAs with Australia and New Zealand317 and the structure of the Thai auto parts industry. 318 In addition, the tariff reduction schedules for automotive and parts products are summarized to identify the benefits of the automotive industry for each FTA.319 2. Production Data and Trade Statistics According to data from the MOC,320 auto parts and accessories exports have steadily increased over the past few years and accounted for USD 8.5 million in 2010. Parts and accessories contributed 60.40 percent of total auto parts industry export revenues, followed by piston engines and accessories (29.01 percent), motorcycle parts and accessories (7.25 percent), ignition parts for engines (2.65 percent), and bicycle parts (0.68 percent). The top five export destinations in 2010 included Indonesia (13.89 percent), Japan (13.77 percent), Malaysia (10.04 percent), Vietnam (6.17 percent), and India (6.04 percent). Other new export destinations that are significantly growing include Brazil and South Africa. According to the TAI, Thailand’s auto vehicle production accounted for 1.8 million units in 2010 or an increase of 64.6 percent from 999,378 units in 2009 due primarily to the global economic recovery.321 According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Thailand is a net exporter of automotive parts322 to India. For the FY 2009/10, Thailand imported USD 103.3 million and exported USD 104.0 million in automotive parts to India. These figures reflect a 94 percent increase in imports from USD 53.5 million and 30 percent increase in exports from USD 80.0 million from FY 2008/09. As a result, Thailand’s net exports in automotive parts with India dramatically decreased by 98 percent from USD 26.7 million in FY 2008/09 to only 311 See: http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=items&cid=15:2010-11-11-10-5359&id=229:malaysia&Itemid=90 and http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=items&cid=15:2010-11-11-10-53-59&id=338:2010-1111-09-21-18&Itemid=90 312 See: http://www.thaiauto.or.th/printed_matters/report_study/document/IU51_India.pdf 313 See: http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=items&cid=27:2010-11-11-10-5804&id=891:2011-02-15-04-22-14&Itemid=65 314 See: http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=items&cid=16:ntms&id=238:australia&Itemid=92 315 See: http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=items&cid=16:-ntms&id=235:eu&Itemid=92 316 See: http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=items&cid=16:ntms&id=232:indonesia&Itemid=92 317 See: http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=items&cid=27:2010-11-11-10-58-04&id=213:ftaaustraliaanz&Itemid=65 318 See: http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=items&cid=27:2010-11-11-10-5804&id=207:2010-11-11-08-53-45&Itemid=65 319 See: http://data.thaiauto.or.th/IU3/index.php?option=com_flexicontent&view=category&cid=15&Itemid=90 320 See: http://www.depthai.go.th/DEP/DOC/54/54001488.doc 321 Thailand auto vehicles data can be found at http://www.thaiauto.or.th/statistic/vehicle_production.asp 322 This data is based upon statistics for products falling under HS 8708. 102 USD 636,241 in FY 2009/10. India sold in the domestic market only 0.42 percent and 0.45 percent323 of the automotive parts imported from Thailand for the FY 2008/09 and FY 2009/10, respectively. 3. India-Related Trade and Investment Activities in the Automotive Parts Industry This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. In 2010, there were 230 companies in Thailand involved in export activities of automotive parts products to India; more than half of which are Japanese companies. The first top five non-Japanese companies that have invested in India or are major exporters to India include the following: Thai Summit Neel Auto Pvt. Ltd324 Established in 2005, Thai Summit Neel Auto Pvt. Ltd. is a joint venture company between one of the largest Thai auto parts company, Thai Summit Group of Thailand and JBM Group of India with 50-50 equity partnership. Thai Summit Neel aims to become the number one parts supplier in India for two wheeler business including motorcycles and scooters. Its products include fuel tanks, assemblies, guards, tubular frames, and complete mufflers. Notably, Thai Summit Group of Thailand is comprised of more than 30 companies dealing in automotive parts, motorcycle parts and agricultural machine parts. The JBM Group is the leading sheet metal component producer in India dealing in the automotive and related industries with more than 10 companies. Siam Lemmerz Co. Ltd.325 Siam Lemmerz Co. Ltd is a joint venture company between a US company, Hayes Lemmerz S.R.L and one of the largest Thai conglomerates, Siam Cement, with 70-30 equity partnership. Siam Lemmerz produces low pressure die casting aluminum wheels for passenger cars and one-ton pick up trucks and exports to several markets, including India. Auto Alliance (Thailand) Co., Ltd.326 Auto Alliance (Thailand) Co., Ltd. (AAT) was established in 1995 as a joint venture between Ford Motor Company and Mazda Motor Corporation. AAT’s manufacturing capacity includes engine assembly, trim and final assembly, body work and paint, quality inspection, packing and delivery. Its current annual production capacity is over 175,000 units. It exports one-ton pick up trucks to more than 130 countries around the world. Currently, it exports completed knock down parts to India for local manufacturing.327 TI Automotive (Thailand)328 323 The market share of automotive part imports from Indonesia into India is calculated by dividing (a) the automotive parts imported from Indonesia into India (“imports”) by (b) the total annual consumption of automotive parts in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 324 See: http://www.thaisummit.co.th/TSN/index.html 325 See: http://www.hayes-lemmerz.com/location_ban_nl.php 326 See: http://www.autoalliance.co.th/aat-info/index_eng.html 327 See: http://www.autoalliance.co.th/aat-info/worldwide.html 328 See: http://www.tiautomotive.com/ 103 TI Automotive (Thailand) is a British-own company established in Thailand in 2006. It supplies fluid carrying system to global automotive markets, including India. Its products include plastic fuel tanks, pump modules, brake and fuel piping. Walker Exhaust (Thailand)329 Established in 2001, Walker Exhaust (Thailand) is a joint venture company between a US company, Tenneco and a Thai-listed company, Yarnapund Public Co.Ltd. It supplies exhaust systems to the original equipment manufacturers (OEM) worldwide including India. 329 See: http://www.yarnapund.com/index.asp?submenu=6 104 B. Chemical Product Industry According to the Petroleum Institute of Thailand, the chemical industry can be divided into six subsectors: (i) petrochemicals, such as hydrocarbon and compounds derived from crude oil and natural gas which are further processed into higher-valued products; (ii) petrochemical feedstocks, including petroleum products derived from refinery, condensate slitter, and gas separation plant used for the production of upstream petrochemicals; (iii) the upstream petrochemical industry, which uses petroleum products as feedstocks to produce raw materials (olefins and aromatics) for derivative petrochemical production; (iv) the intermediate petrochemical industry, which uses petrochemicals produced by the upstream industry to produce products that are further used as raw materials by the downstream industry; (v) the downstream petrochemical industry, which uses petrochemicals produced by the upstream industry and/or the intermediate industry as feedstocks to produce petrochemical products that are further processed by the processing industry through simple transformation into semi-finished and/or finished products; and (vi) the other chemical industry, which may use petrochemicals produced by any segment of the petrochemical industry (upstream, intermediate, and downstream) to produce chemical substances, known as solvents, specialty chemicals, and fine chemicals, with specific usages in other chemical and/or pharmaceutical industries. The Thai chemical industry began in the early 1950s with the establishment of processing manufacturers relying primarily on imported raw materials for their operations. The development and progress over the first 20 years of existence was minimal as domestic demand for advanced plastic processing was limited. The key transformation of the chemical industry began after the discovery of natural gas in the gulf of Thailand in 1981. The government’s initial chemical policy segregated the production of upstream (petrochemical) and downstream (chemical) products. The government predominantly controlled the upstream sector through the National Petrochemical Corporation (NPC) and the Petroleum Authority of Thailand (PTT), while established domestic firms, such as the Siam Cement Group, the Thai Petrochemical Industry Group (TPI), the CP Group, developed ambitious plan for expansion in the downstream market. To protect the infant petrochemical industry, the government imposed high tariffs on imported petrochemical products, which effectively forced downstream chemical producers to purchase upstream products from their government’s owned companies. Due to the continued rapid growth of the Thai economy in the early 1990s, demand for upstream products exceeded the output of the government plants. Prices for upstream products in the world market dropped significantly lowered than those being paid by downstream producers in the protected domestic market. In this regard, downstream producers began to pressure the government to remove protection from the upstream plants and allow the private sector to invest. Under pressure from the domestic chemical players and the Asian economic crisis, the government decided to lift the restriction in 1997, which led to massive expansion in the upstream and downstream sectors led by TPI and the Siam Cement Group. Foreign investors such as Esso, Chevron, Dow, and Misubishi also entered the Thai market as independent or joint venture projects. Since then, the Thai upstream and downstream sectors have expanded rapidly both in capacity and complexity. The industry is one of the key industries propelling the Thai economy, constituting approximately 5-7 percent of the country’s GDP as of 2010. 1. Trade Associations There are two major industry and trade associations that represent the interests of chemical businesses in Thailand. These two associations are the Chemical Business Association (CBA) and the Petrochemical Industry Club (PC-FTI). The CBA is more SME-oriented and focuses more on industry-specific issues for its members, while the PC-FTI has greater role in voicing members’ concerns over trade and investment liberalization at the regional and international level. PC-FTI’s members include all large chemical players. 105 a) Chemical Business Association of Thailand (CBA)330 The CBA was established in 1976 to represent the interests of chemical businesses in Thailand. Its vision is to become an established trade association that receives recognition locally and internationally. Role and Function The mission of the CBA is to enhance member relationships and to act as the official voice for members to convey their viewpoints, problems or requirements to the government for legal and commercial resolutions. Another goal is to spur commercial activities and foster closer cooperation both among members and with the international community. In order to achieve these objectives, the CBA provides consulting services to support members’ businesses and provides information and knowledge for members in areas of health, safety, environment, and social responsibility awareness. The CBA website includes information for members and the general public regarding the latest activities of the association, updated news and industry information, and links to a number of government agencies relevant to the industry. Organizational Structure Headed by a president, CBA board of directors comprises three vice presidents, four senior advisors, one advisor, three directors, and one secretary and treasurer.331 The current president is Mr. Sanpong Bumpensanti. Membership The CBA represents 103 members, most of which are SMEs operating in the downstream chemical industry. Large scale enterprises involved in the upstream businesses, such as SCG Chemicals, are not CBA members. Interested parties must pay a registration fee of THB 100 and an annual fee of THB 3,000. 332 Membership is limited to companies operating in the chemical related industry, including both Thai and foreign companies. General Position on Trade and Investment Liberalization The CBA does not publicly issue its position on trade and investment liberalization. Its secretariat only manages day-to-day affairs, arranges members meetings, and does not issue any annual reports. Its website is not current and several sections including “CBA Reports” are still under construction. However, the CBA publishes trade related information on its website. The database includes tariff schedules under ASEAN-India FTA, 333 FTA-related information, such as seminar information, materials on Thailand’s current FTA partners, and the ASEAN Economic Community Blueprint, 334 antidumping measures imposed by Thailand, 335 and laws pertaining to standard and safety measures.336 330 See: www.cba.or.th Contact: Chemical Business Association, 889 5th Floor, Thai CC Tower, South Sathorn Road, Yannawa, Sathorn, Bangkok 10120, Thailand. Tel: 66 2 6739970. Fax: 66 2 2100159. Email: [email protected] 331 See: http://www.cba.or.th/cbadirectors.php 332 See: http://www.cba.or.th/files/CBA%20Member%20Application%20Form.pdf 333 See: http://www.cba.or.th/files/Southeast_Asian-India.pdf 334 See: http://www.cba.or.th/files/FTA_2553.ppt 335 See: http://www.cba.or.th/files/3ADacid.PDF 336 See: http://www.cba.or.th/files/MI_9982__Thai.pdf 106 b) The Petrochemical Industry Club (PC-FTI)337 The Petrochemical Industry Club is a subsidiary of the Federation of Thai Industries (FTI). Supported by major petrochemical producers and large conglomerates, the PC-FTI was established on November 14, 2002. Role and Function The PC-FTI’s main mission is to assist members in gaining competitiveness with the development of the petrochemicals industry in Thailand. Its objectives include representing members’ interests in negotiating with the government agencies, providing a forum for exchange information and for discussion of Thai chemical industry developments and policies among members, and promoting coordination and collaboration among auto chemical companies, relevant government agencies, distributors, and consumers. Another goal is to expand commercial activities and foster closer cooperation with other industry groups under the FTI. In order to achieve these goals, the PC-FTI represents the industry at all related forums and meetings. It also cooperates with government in addressing industry problems and solutions and participates in policy and strategic planning on economic and industrial developments. The PC-FTI aims to collaborate with other international petrochemical industry organizations. Its website is comprehensive and informative and provides members with information on services and regulatory issues. Organizational Structure The PC-FTI is one of the most well-established industry groups under the FTI. Its organization structure includes a board of committees and the secretariat. The board of committees comprises a chairman, five vice chairmen, and four working group leaders. The four working groups include: (i) the social working group, (ii) the environmental and health working group, (iii) the economic working group, and (iv) the strategic and support working group. The secretariat is led by a secretary-general, a treasurer, two coordinators, and two project analysts. In addition, the PC-FTI also formed four taskforces, comprising experts in charge of: (i) International Affairs and FTAs, (ii) Regulations, (iii) Competitiveness, and (iv) Corporate Social Responsibilities (CSR). The current president is Aditheb Bisalbutr. Membership The PC-FTI represents 33 members; all of which are major upstream petrochemical operators including the country’s largest conglomerates, such as PTT and Siam Cement. Members are divided into two categories of membership: (i) 31 ordinary members that refer to any industrial enterprises that operate petrochemical business, and (ii) 2 associate members that refer to those individuals and juristic persons who are not directly involved in the petrochemical business, but whose achievements contribute to the theoretical or technological advancement of the petrochemical business. Interested chemical related companies must first register as FTI members and are subject to a registration fee of THB 2,000 and annual fees ranging from THB 1,000 to 20,000 depending on company total revenue in addition to FTI fees. General Position on Trade and Investment Liberalization The PC-FTI is a well-organized association with a postivie stance on the Thai government’s trade and investment liberalization policies. On its website, the FTI-PC taskforce on international affairs and FTAs has summarized the latest negotiating status of each FTA to which Thailand is a party.338 With respect to India, it has summarized the market access concessions under the ASEAN-India FTA. However, the online link to the information is now broken. The PC-FTI occasionally conducts task force meetings on FTA developments to identify business opportunities and threats to the 337 See: www.ftipc.or.th Contact: Petrochemical Industry Club, Federation of Thai Industries, Sirikij Exhibition Hall, Ratchadapisek, Klongtoey, Bangkok 10110, Thailand. Tel: 66 2 3451177. Fax: 66 2 3451281. Email: [email protected] 338 See: http://www.ftipc.or.th/tabid/118/language/en-US/Default.aspx?PageContentID=1 107 petrochemical industry.339 The latest meeting summarized on the website is dated December 2008. Oftentimes, the FTI in collaboration with the MOC conducts seminars on various FTAs, such as “Export Opportunities: Gaining Access to ASEAN, Japan, and Korea through FTAs” held on March 16, 2011.340 The PC-FTI publishes its agenda of meetings 341 and minutes of meetings 342 where the working groups and special taskforces submit their proposals to the board of committees for consideration. For example, on the first board director meeting in 2010, the economic working group reported on the status of its internal study regarding FTAs and international regulations and their effects on the petrochemical business.343 The environmental and health working group developed Environmental Impact Assessment (EIA) and Health Impact Assessment (HIA) guidelines for chemical projects operating in Thailand.344 The Map Ta Phut case has been the PC-FTI’s major focus since 2009 following the Central Administrative Court (CAC)’s decision to temporarily suspend the operations of 76 projects in the Map Ta Phut Industrial Estate and vicinity of Rayong Province due to an environmental concern. Several of these projects are owned by PC-FTI members, such as Siam Cement Group and PTT Group. In response to the CAC’s decision, PC-FTI Vice Chairman Thanit Sorat publicly voiced concerns on PICFTI’s behalf that the Court ruling had destroyed the confidence of foreign investors and caused investment damage of THB 90 to 100 billion.345 The FTI also plays a role in this context. Following the CAC ruling on September 2, 2010 to allow most of the 76 projects to resume operations, President Payungsak Chartsuthipol welcomed the CAC’s decision. He stated that most of the 76 industrial projects had already passed EIA and HIA as required by the Constitution.346 The PC-FTI also submitted its proposal on environmental and health management for the industrial estates to the government for consideration.347 The proposal is designed to assist Thai industrial estates to become eco-towns in a bid to reduce environmental regulatory risks moving forward. 2. Production Data and Trade Statistics According to MOC data,348 the export value of downstream chemical products increased from 2009 and accounted for USD 4.4 billion in 2010. Chemical ingredients for make up and skin care products contributed 39 percent of total downstream chemical export revenue, followed by organic chemical products (29 percent), miscellaneous chemical products (20 percent), paint chemicals (9 percent), and chemical fertilizer (2 percent). The growth in the electrical appliances and electronic industry, automotive industry, and packaging industry largely contributed to the export expansion of chemical downstream industry as these industries require chemicals as raw materials in the production process. The export value of the upstream chemical industry also increased in 2010 with total exports of USD 8.98 billion. 339 See: http://www.ftipc.or.th/tabid/107/language/en-US/Default.aspx 340 Agenda of Export Opportunities Seminar. See: http://www.ftimatching.com/userfiles/file/280211.pdf 341 Agenda of Meeting 1/2010. Translation. February 22, 2010. See: http://www.ftipc.or.th/Portals/0/Agenda%20Revised.doc 342 Minutes of Meeting 1/2010. Translation. February 22, 2010. See: http://www.ftipc.or.th/Portals/0/Minute%20Feb%202010%20 http://www.ftipc.or.th/Portals/0/FTIPC.pdf 343 See page 11: http://www.ftipc.or.th/Portals/0/FTIPC.pdf 344 See page 10: http://www.ftipc.or.th/Portals/0/FTIPC.pdf %202.doc and 345 “Map Ta Phut Impasse Cost up to THB 100 Billion,” Bangkok Post, December 3, 2009. See: http://thailand-businessnews.com/investment/6508-federation-of-thai-industries-fti-map-ta-phut-impasse-cost-up-to-b100bn 346 “Map Ta Phut Projects to Resume Work in 1-2 Weeks,” Thai Financial Post, September 6, 2010. See: http://thaifinancialpost.com/2010/09/06/fti-map-ta-phut-projects-to-resume-work-in-1-2-weeks/ 347 348 See: http://www.ftipc.or.th/Portals/0/Committee%20Meeting/15_06_10/FTIPC%20Update%20final.pdf Data from the Thai Ministry of Commerce and compiled internally. 108 According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Thailand is currently a net exporter of chemical products349 to India. For the FY 2009/10, Thailand imported USD 154.5 million and exported USD 267.5 million in chemical products to India. These figures reflect a 9 percent increase in imports from USD 142.4 million and 158 percent increase in exports from USD 103.6 million from FY 2008/09. As a result of the dramatic increase in exports, Thailand switched over from a net import position of USD 38.7 million in FY 2008/09 to a net export position of USD 113.0 million in FY 2009/10 in chemical products with India. India sold in the domestic market 1.1 percent and 2.8 percent350 of the chemical products imported from Thailand for the FY 2008/09 and FY 2009/10, respectively. 3. India-Related Trade and Investment Activities in the Chemical Product Industry This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. In 2010, there were 29 companies who have invested in or exported chemical products under HS Chapters 28 and 29 to India. The top five companies, which are non-Japanese, include the following: Thai Carbon Black351 Thai Carbon Black represents the Aditya Birla Group's first joint venture between Indian and Thai investors in the chemical industry. Marketed under the brand name Birla Carbon, the company produces up to 210,000 tons per year of world-class furnace grade carbon black at its manufacturing plant located in the Angthong province of Thailand. Thai Carbon has the capability to customize Carbon Black grades as per clients' requirements. The company exports carbon black to a number of export markets, including India. Polyplex (Thailand)352 Polyplex (Thailand) Public Company Ltd is a subsidiary of Polyplex Corporation Ltd of India. The Polyplex Group is the world's fourth largest producer of thin polyester film (PET). With manufacturing facilities in India, Thailand and Turkey, the Polyplex Group meets the PET film needs of its global customer base. It exports PET products globally, including to India. Thai Rayon353 Promoted by Grasim Industries limited, India and local Thai entrepreneurs, Thai Rayon was incorporated in 1974. Thai Rayon is the pioneer as well as sole manufacturer of viscose staple fiber (VSF) in Thailand. Thai Rayon under its brand ‘Birla Cellulose’ offers a wide range of fiber products exporting to several countries, including India. Notably, fiber products have various applications in apparel, home textiles, dress material, knitwear, wipes, personal hygiene, and medical usages. TPT Petrochemicals PCL354 TPT Petrochemical PCL was originally founded in 1991. Indorama Ventures acquired a majority stake in TPT Petrochemicals in 2008. TPT was the first producer of Purified Teraphthalic Acid (PTA) in 349 This data is based upon statistics for products falling under HS Chapters 28 and 29. 350 The market share of chemical imports from Indonesia into India is calculated by dividing (a) the chemicals imported from Indonesia into India (“imports”) by (b) the total annual consumption of chemicals in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 351 See: http://www.adityabirla.com/our_companies/international_companies/thai_carbon_black.htm 352 See: http://www.polyplexthailand.com/ 353 See: http://www.thairayon.com/ 354 See: http://www.indorama.net/business_pta_facilities_tptpta.php 109 Thailand and currently has an annual capacity of 520,000 tons. It exports PTA products globally, including to India. Indorama Petrochem Limited355 Indorama Petrochem Limited began operation in 2006. It produces PTA, polyester fiber, polyester film, and other applications. It has an annual production capacity of 710,000 tons. The Indorama Petrochem facility supplies its products to external customers worldwide, including to the Indian market. C. Food Industry Thailand is one of the world's largest and most advanced food exporting countries. According to the BOI, it is also the world's largest exporter of rice, canned and frozen seafood, canned and processed tuna, canned pineapples, pineapple juice and concentrates, frozen and processed shrimp, and processed chickens. Currently, there are approximately 10,000 food processing companies in Thailand. These companies consist of small, medium and large scale businesses employing over 600,000 people and producing annual earnings of more than USD 25 billion. Thailand's food industry is largely oriented towards export. Its rich agricultural resources together with its investments in international quality standards, technology, and research and development for food safety, have helped Thailand become the only net food exporter in Asia and one of the top five net food exporters in the world. 1. Trade Associations There are several industry and trade associations that represent the interests of food businesses in Thailand ranging from meat, processed food, rice, and coffee, among others. These include the Thai Broiler Processing Exporters Association, the Thai Food Processors Association, the Thai Maize and Produce Traders Association, the Thai Rice Mill Association, the Rice Exporters Association, the Thai Coffee Exporters Association, the Thai Frozen Foods Association, the Thai Overseas Fisheries Association, the Thai Sugar Manufacturing Association, the Thai Tapioca Flour Industries Association, the Soybean and Rice Bran Oil Processor Association, the Thai Fishmeal Products Association, the Thai Fruits and Vegetables Exporters Association, the Thai Sugar Producers Association, and the Food Processing Industry Club under the FTI. Among these associations, the Thai Food Processors Association (TFPA), the Thai Frozen Foods Association (TFFA), and the Food Processing Industry Club under the Federation of Thai Manufacturers (FP-FTI) are the most active associations in terms of involvement in trade and investment at the regional and international level. a) The Thai Food Processors Association (TFPA)356 The TFPA was established in 1970 as an association by grouping all food business activities together in order to promote and develop the Thai food processing industry. Its main mission is to promote TFPA as a world class association to be widely recognized and connected among global businesses, international and domestic associations, and government bodies. The TFPA works closely with the FP-FTI as well as other trade associations and a number of government agencies, such as the MOC. Role and Function According to Article 2 of the TFPA’s Code of Association, its objectives are to promote and develop the Thai food processing industry. The TFPA serves as a focal point between the private and 355 See: http://www.indorama.net/business_pta_facilities_petrochem.php 356 See: www.thaifood.org Contact: Thai Food Processors’ Association, 170/21-22, Floor 9, Ocean Tower 1, New Ratchadapisek Road, Klongtoey, Bangkok 10110, Thailand. Tel: 66 2 2612684-6. Fax: 66 2 2612996. Email: [email protected] 110 government sectors, and voices a collective stance on trade and investment issues on behalf of members. It has also become the central channel for oversea clients to directly contact and deal with business operators in the food processing industry. In addition, the TFPA plays a supporting role by recommending the develop of both domestic food regulations and international food standards It strictly monitors rules, regulations and trading standards, which are no longer limited to food safety, but also extend to environmental, business etiquette, and other areas. The TFPA conveys news, information and academic advice to members regarding the industry. This includes dealing with all parties concerned to adhere to the guidelines for fair trade and to enable continuous growth for the Thai food industry. Organizational Structure The Management Board, comprised of a president, six vice presidents, a treasurer, a registrar, and a secretary-general, is responsible for the operations. Each vice-president also leads the association’s six product groups, including (i) the Sweet Corn Processor’s Group, (ii) the Seafood Processor’s Group, (iii) the Fruits and Vegetables Processor’s Group, (iv) the Pineapple Processor’s Group, (v) the Tuna Processor’s Group, and (vi) the Ready to Eat Processor’s Group. The day-to-day operations of the association are the responsibility of the Secretariat. The current acting TFPA President is Mr. Nat Onsri from Kingfisher Holdings Ltd., while the Executive Director of the Secretariat is Mr. Vikran Komlaputra. Membership The TFPA currently serves 226 members ranging from small to large companies operating in six subsectors, namely sweet corn, seafood, fruits and vegetable, pineapple, tuna, and ready to eat subsectors. The membership is divided into two types: (i) ordinary members and (ii) associate members. Ordinary members refer to individuals or enterprises that operate business in one of the six subsectors. Associate members include individuals and juristic persons whose work relates to one of the six sub-sectors and whose achievements contribute to the theoretical or technological advancement of the food processing industry in Thailand. Interested individuals and parties are entitled to a registration fee of THB 10,000 and annual fees of THB 25,000 for ordinary membership and THB 12,000 for associate membership.357 Notably, several TFPA members are also TFFA and FP-FTI members. General Position on Trade and Investment Liberalization The TFPA plays an important role in negotiating and lobbying with the Thai government on members’ behalf. It also works closely with other related associations to formulate a collective trade and investment stance. For example, in April 2010, the TFPA attended a public hearing seminar on the bilateral EU-Thailand FTA hosted by the MOC and attended by several stakeholders and various trade associations. During the meeting, the TFPA urged the government to seek a FTA mandate from the parliament and enter into FTA negotiations with the European Union as soon as possible.358 The TFPA claimed that the Thai food industry would lose competitiveness if Vietnam was able to conclude an FTA with the European Union before Thailand. This indicates that the TFPA generally supports the government’s engagement in FTA negotiations. The TFPA also raised issues with respect to market access restriction to the European Union and the import quota during the meeting. The TFPA website contains an interactive session for TFPA members.359 Members have been active in posing online queries on trade and investment issues, including tariff rates and import quotas under each FTA, sanitary and phytosanitary (SPS) measures, antidumping measures, and packing requirements, among others. The TFPA also publishes a newsletter called the TFPA Trade and Technical Weekly Brief.360 The weekly newsletter features regular sections on trade (including FTA developments), global SPS notifications, the outcomes of cabinet meetings with respect to the 357 See: http://www.thaifood.org/index.php/membership/membership-registration/36-2010-08-19-06-42-04 358 “TFPA Supports Government to Enter FTA Talks with EU” Translation. Manager Online, April 26, 2010. 359 See: http://www.thaifood.org/index.php/e-data/qaa-service-new 360 “TFPA Trade and Technical Weekly Brief”, TFPA Weekly Newsletter Issue, February 7-13, 2011. See http://issuu.com/tfpa/docs/tfpa_trade_technical_weekly_brief_7-13_feb_2011/1 111 processing food industry (if any), and foreign exchange data. The weekly newsletters are available for membership only and require a member log in. In parallel with the weekly newsletters, the TFPA issues monthly newsletters to provide in-depth analysis on industry developments. In its monthly newsletter, the TFPA also voices its concern regarding trade barriers introduced by Thailand’s major trading partners such as the European Union and the United States. For example, the latest monthly newsletter noted the child and labor allegation charge against Thailand and new EU regulatory measure on canned tuna products as examples, which have restricted Thai export potentials. The TFPA claims that Thai FTAs tend to benefit importers more than exporters due to the non-tariff measures introduced by FTA trading partners.361 b) Thai Frozen Foods Association (TFFA)362 The Thai Frozen Foods Association (TFFA) was established in 1968 under the Thai Trade Association Act. Its original name was Thai Marine Products Association and was renamed to the Thai Fishery and Frozen Products Association in 1983 to cover the frozen food industry. The present name of Thai Frozen Foods Association was adopted in 1994. The name reflects the expansion of the association’s supervisory role beyond marine products to cover the entire category of frozen products. Role and Function The TFFA’s mission is to set a direction for the Thai frozen food industry and to enhance and increase the industry’s competitive capabilities. Its main objectives are to: (i) serve as the intermediary in resolving conflicts that may occur among members and other parties, including government agencies, (ii) exchange information on trade, investment, food safety measures, and export opportunities among members, (iii) compile statistics of production, sales, and export data, (iv) survey and study members’ opinions concerning their business operations, and (v) promote the entrepreneurship of all types of frozen fishery and agricultural products. Organizational Structure The TFFA runs by board of directors elected from its members for a two-year term. Its board of directors comprises a president, two vice presidents, an honorary advisor, nine directors, two coordinators, a, secretary general, a registrar, and a treasurer. Each board of director’s member is a representative from a food processing company. The day-to-day operations of the association are the responsibility of the Secretariat. The current acting president is Dr. Panisuan Jamnarnwej, while the executive director of the secretariat is Mrs. Thanitha Jaengprai. Membership The TFFA has 217 members, including 188 ordinary members and 29 associate members. 363 Ordinary members refer to individuals or enterprises that operate business in the frozen food product industry. Associate members include individuals and juristic persons whose work relates to the frozen food product industry and whose achievements contribute to the theoretical or technological advancement of the frozen food product industry in Thailand. Interested individuals and parties are entitled to a registration fee of THB 20,000 and annual fees of THB 30,000 for ordinary members and THB 15,000 for associate members. Notably, several TFFA members are also TFPA and FP-FTI members. 361 “TFPA Monthly Newsletter,” TFPA Monthly Newsletter, January-March 2011, pg. 10. See: http://www.thaifood.org/index.php/component/content/article/172-e-newsletter-january-march-2011 362 See: www.thai-frozen.or.th Contact: 92/6 6th Floor, Sathornthani Building 2, North Sathorn Road, Bangkok 10500, Thailand. Tel: 66 2 2355622-4. Fax: 66 2 2355625. Email: [email protected] 363 See: http://www.thai-frozen.or.th/th/member.asp?alphabet=1 112 General Position on Trade and Investment Liberalization The TFFA has a well-developed website, which features regular sections on (i) trade exhibitions, (ii) information center, (iii) trade center, (iv) prices of seafood products, (v) seafood industry news, (vii) online business matching, and (vii) data center. The data center regularly updates and publishes information on export and import statistics, export and import procedures, customs HS codes and import tariff for marine products, and rules and regulations. In addition, the TFFA issues monthly newsletters to provide in-depth information on industry developments. It has so far published the benefits of Thailand’s FTAs and updated new standards and/or regulations adopted by major trading partners, including the European Union, the United States, and Japan in its newsletters.364 The TFFA has collective stances on government trade and investment liberalization policies. It actively engages in voicing members’ support and concerns on FTA movements. For example, in January 2010, while TFFA welcomed the implementation of AFTA under which tariffs for ASEAN-6 were reduced to zero on January 1, 2010, it brought up concerns with respect to the risk of cheap and bad quality shrimp imports flooding into Thailand from neighboring countries.365 The TFFA also urged Thai Customs to strengthen its inspection measures to ensure that good quality shrimp can only be imported. On trade barriers, the TFFA voiced concerns on members’ behalf that the measures imposed by the United States and the European Union largely affected the Thai food industry. Specifically, from 2010, the European Union introduced a ban on fishery products which were originated from illegal, unregulated, and unreported (IUU) fishing. To import into the European Union, all fishery products will be required to obtain a certificate from the competent authorities, i.e. the Thai Fishery Department, to certify that products are non-IUU. The TFFA viewed that the EU measure will largely affect small entrepreneurs in the Thai fishery, who will not be able to prepare the documents required by the European Union.366 Meanwhile, in 2009, the US Department of Labor issued a report prohibiting state organizations from purchasing products made with child and forced labor in 141 countries. The Thai shrimp industry is of the industries subject to the ban. In response, TFFA President Panisuan Jamnarnwej strongly defended the industry on members’ behalf denying the use of child and forced labor.367 He claimed that the allegation significantly damaged the Thai shrimp industry, and insisted that production facilities are inspected regularly by officials of the US Immigration and Customs Enforcement Agency (ICE), which found no illegal and unethical practices. The TFFA also plays an important in role in representing the Thai seafood industry at the regional level. With the lead of TFFA, the ASEAN Seafood Federation (ASF) was established on May 13, 2009. Its founding members include six sea food associations from six ASEAN members, namely (i) the Indonesian Frozen Seafood Association, (ii) the Malaysian Frozen Food Processors Association, (iii) the Myanmar Fishery Products Processors and Exporters Association, (iv) the Fresh and Frozen Seafood Association of the Philippines, (v) the TFFA, and (vi) the Vietnam Association of Seafood Exporters and Producers.368 The Brunei Darussalam Aquaculture Producers Alliance Cooperative Limited was subsequently adopted as a new member. The ASF’s objective is to promote cooperation among its members in seafood production, food safety, and marketing. 364 See: http://www.thai-frozen.or.th/hotnews_newsletter.asp 365 “AFTA and Frozen Food Industry” Translation. Thansettakij newspaper, January 29, 2010. See: http://www.thannews.th.com/index.php?option=com_content&view=article&id=20819:3&catid=87:2009-02-08-11-2326&Itemid=423 366 “Fishery Exports Set to Rise 2 Percent”, Bangkok Post, December 23, 2009. See: http://www.bangkokpost.com/business/economics/29818/fishery-exports-set-to-rise-2-2 367 “Responses Planned to Child and Force Labor Allegations”, Bangkok Post, October 1, 2010. See: http://www.bangkokpost.com/business/economics/24828/responses-planned-to-child-and-forced-labour-allegations 368 “ASF Lays Down the First Bricks for Its Future,” Vietfish International, September 6, 2010. See: http://vietfish.org/201009030645459p0c49/asf-lays-down-the-first-bricks-for-its-future.htm 113 c) The Food Processing Industry Club under the Federation of Thai Manufacturers (FP-FTI)369 The Food Processing Industry Club is a subsidiary of the FTI. Supported by both large and small food processing producers, the FP-FTI was established in 1974. The FP-FTI works closely with other trade associations in representing members’ interests with respect to government policies as well as trade and investment liberalization. Role and Function The FP-FTI aims to act as a coordinating center for the food processing industry under the FTI.370 Its stated roles are to represent members’ interests in negotiating with government agencies, providing a forum for exchange of information and for discussion of industry developments and policies among members, and promoting coordination and collaboration among food processing manufacturers, relevant government agencies, distributors, and consumers. The association also aims to increase the number of food processing manufacturers and improve production standards in the country. This is achieved by coordinating with other industry groups under the FTI and expanding sales channels to the new markets worldwide. Organizational Structure The FP-FTI is led by an executive committee 371 comprising a president, six vice presidents, a secretary-general, three deputy secretary-generals, a registrar, and a treasurer. Each vice president also leads the association’s sub-committees on (i) standards and food technology, (ii) law and legal activities, (iii) energy and environment, (iv) regulatory affairs, (v) food supply chain and capacity building, and (vi) export promotion. Each committee member is a representative from a food processing company. While the FP-FTI is an independent entity, it uses certain services from the FTI, including secretarial, administration, office space, and information support services. The current acting president is Mr. Visit Limprana. Membership The FP-FTI has 226 members, including 206 ordinary members and 20 associate members. 372 Ordinary members refer to individuals or enterprises that operate business in the food processing industry. Associate members include individuals and juristic persons whose work relates to the food processing industry and whose achievements contribute to the theoretical or technological advancement of the food processing industry in Thailand. Interested individuals or companies must first register as FTI members and are subject to registration fees of THB 2,000 and annual fees ranging from THB 1,000 to 20,000 depending on company total revenue. To become FP-FTI members, there is an enrollment fee of THB 4,000 in addition to the FTI fees.373 General Position on Trade and Investment Liberalization The FP-FTI president has so far not come forward to voice opinions and concerns on members’ behalf with respect to trade and investment liberalization. It appears that FP-FTI members, who are also TFPA and TFFA members, are more active in TFPA and TFFA forums. The FP-FTI does not provide as much information about trade and investment liberalization as other industry groups under the umbrella of the FTI. Its website only provides food processing industry news374 and does not 369 See: http://ftiweb.off.fti.or.th/industrialgroup/food/index.asp Contact: Food Processing Industry Club, Federation of Thai Industries, Sirikij Exhibition Hall, Ratchadapisek, Klongtoey, Bangkok 10110, Thailand. Tel: 66 2 3451167. Fax: 66 2 3451281. Email: [email protected] 370 Article 5 of the FP-FTI Code of Practice. 371 See: http://ftiweb.off.fti.or.th/demo/6101/sitedata/site48/board/OrgChart.pdf 372 See: http://internet1.off.fti.or.th/erp_member_search/_memberIndustrial_TH.aspx?indus_club=110 373 See: http://ftiweb.off.fti.or.th/industrialgroup/member_dl/feeclub.pdf 374 See: http://ftiweb.off.fti.or.th/industrialgroup/food/news.asp 114 provide any information for its members concerning FTAs or tariff rates for food processing products. Other available information includes hygiene standards and contaminants on foods.375 2. Production Data and Trade Statistics Thai food industry covers a diverse range of product segments. The major segments include: (i) canned seafood products, (ii) canned fruits and vegetables products, and (iii) processed chicken products; iv) frozen and processed shrimp products, and (v) fish products. According to data from the Thai Ministry of Commerce376, exports of canned seafood products decreased by 11.86 percent in 2009 or accounted for USD 2.48 billion due to the global economic downturn. The first half of 2010 saw an upturn with total exports standing at 1.3 billion as of end June 2010. Canned tuna contributed 61.45 percent of total canned seafood industry’s export revenue, followed by processed fish (22.81 percent), canned shrimp (6.18 percent), canned sardine (3.33 percent), other canned products (3.05), canned and processed crab (2.46), and canned and processed squid (0.72 percent). The top five export destinations for canned seafood products in 2009 and the first half 2010 included the United States (24.02 and 25.50 percent, respectively), Japan (11.43 and 11 percent), Australia (6.73 and 7.26 percent), Canada (5.28 and 4.62 percent), and Egypt (3.87 and 4.43 percent). Other new export destinations include the United Arab Emirates and Russia. Exports of canned fruits and vegetable products increased by 11.57 percent in 2010 or accounted for USD 538 million; 80 percent of which are canned fruit products, and 20 percent are canned vegetable products. Under the 80 percent of canned fruits segment, canned pineapple contributed 30 percent, followed by pineapple juice (25 percent), other canned fruit products (20 percent), and canned mixed fruits (5 percent). Under the 20 percent of canned vegetable segment, canned sweet corn contributed 12 percent, followed by canned baby corn 5 percent, canned bamboo shoots 2 percent, and other canned vegetable products 1 percent. The top five export destinations for canned fruits and vegetable products in 2010 included the United States (31.11 percent), Japan (8.39 percent), the Netherlands (7.24 percent), Russia (3.35 percent), and Germany (4.05 percent). Other new export destinations include Australia and Spain. Exports of processed chicken accounted for 95 percent of total the chicken industry, while exports of chilled and frozen chicken accounted for 5 percent. Total production capacity for both processed chicken and frozen chicken stood at 1.4 million tons in 2010. The top five export destinations in 2010 include Japan (44.83 percent), the United Kingdom (30.18 percent), the Netherlands (7.68 percent), Germany (2.97 percent), and Singapore (2.80 percent). Other potential export markets are Laos, Malaysia, and South Africa, while the major competitors are Brazil, the United States, China, and the European Union. Exports of shrimp products amounted to USD 3.06 billion in 2010, which is an increase of 9.4 percent from 2009. Chilled and frozen shrimp products accounted for 55 percent, while processed shrimp products accounted for the remaining 45 percent. The top five export destinations in 2010 included the United States (47.31 percent), Japan (20.53 percent), Canada (5.40 percent), and the United Kingdom (4.47 percent). Exports of fish products amounted to USD 870 million in 2010, which is an increase of 13.8 percent from 2009. The top five export destinations in 2010 included Japan (24.48 percent), China (16.28 percent), Malaysia (8.94 percent), the United States (3.91 percent), and Hong Kong (3.87 percent). According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Thailand is currently a net exporter of food products377 to India. For the FY 2009/10, Thailand imported USD 161.8 million and exported USD 209.8 million in food products to 375 See: http://ftiweb.off.fti.or.th/demo/6101/sitedata/site48/articles/ATC719_ccfh41report.pdf and http://ftiweb.off.fti.or.th/demo/6101/sitedata/site48/articles/ATC718_ 2%20_2_.pdf 376 %20CCCF%202010_ Data from the Thai Ministry of Commerce and compiled internally. 377 This data is based upon statistics for products falling under HS Chapters 2, 3, 4, 7, 8, 9, 10, 11, 12, 15, 16, 17, 18, 19, 20, 21, and 22. 115 India. These figures reflect a 36 percent increase in imports from USD 119.0 million and 221 percent increase in exports from USD 65.3 million from FY 2008/09. As a result of the dramatic increase in exports, Thailand switched over from a net import position of USD 53.7 million in FY 2008/09 to a net export position of USD 48.1 million in FY 2009/10 in food products with India. India sold in the domestic market only 0.2 percent and 0.7 percent378 of the food products imported from Thailand for the FY 2008/09 and FY 2009/10, respectively. 3. India-Related Trade and Investment Activities in the Food Industry This section of the report summarizes the major activities of non-Japanese companies toward the Indian market. This research is based on recent trade and industry news. In 2010, there were 382 companies who have invested in or exported food products under HS Chapters 2, 3, 4, 7, 8, 9, 10, 11, 12, 15, 16, 17, 18, 19, 20, 21, and 22 to India. The selected large players, which are non-Japanese, include the following: Thai Union Frozen (TUF)379 Established in 1988, Thai Union Frozen has become one of Thailand’s leading food processors. In 2009, the TUF formed a joint venture with 14.99 percent owned Avanti Feed to establish Avanti Thai Aqua Co.,Ltd in Gujarat, India with registered capital of THB 55.44 million. The TUF held a 50 percent stake in the venture. The purpose of the joint venture is to build a shrimp feed manufacturing facility to take advantage of the potential of increased demand in Western India as a result of the Indian government’s approval of raising white shrimp by farmers. Charoen Pokphand Foods (CPF)380 Founded in 1978, CPF is Thailand’s largest food conglomerate. On March 19, 2011, CPF President Adirek Sripratak revealed CPF’s plan to invest approximately USD 1.3 billion through 2015 in several markets, including India. The investment is meant to take advantage of the robust global food market and a strengthening domestic currency. The investment projects will include CPF’s farm, farm related, and food businesses. Notably, CPF already has a presence in India through its subsidiary named Charoen Pokphand (India) Private Limited established in 2005. Its businesses involve feed production and farming. Its current exports to India include processed chicken and meat. Betagro381 Founded in 1967, Betagro is now Thailand’s second largest agribusiness conglomerate. Its business involves animal feed production, livestock and animal health products, and processed food products. It exports these products to several parts of the world, including India. In addition, on October 6, 2010, Betagro revealed its business plan to be implemented from 2011 to 2014. Under the plan, Betagro identified India as a key market for development of farming and processing technology moving forward. Hi-Q Food Products382 Hi-Q Food Products was founded in 1986 to produce quality canned food products. Its canned products include canned mackerel, canned tuna, and kernel sweet corn. Hi-Q also produces sauces including tomato ketchup, chilli sauce, and light soy sauce, among others. In addition, It has 378 The market share of food product imports from Indonesia into India is calculated by dividing (a) the food products imported from Indonesia into India (“imports”) by (b) the total annual consumption of food products in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 379 See: http://www.thaiuniongroup.com/home/intro.html 380 See: http://www.cpfworldwide.com/ 381 See: http://www.betagro.com/index_th.php 382 See: http://www.hiqfood.com/about_main.asp 116 expanded to produce ready-to-eat meals. Hi-Q exports these products to several countries, including India. Marine Gold Products Ltd383 Established in 2000, Marine Gold Products is a strategic expansion of Ruxchai group, who has been a significant player in the seafood business for more than two decades. Marine Gold manufactures and exports premium different kinds of shrimp products to the market around the world, including India. D. White Electric Home Appliance Industry According to the BOI, Thailand is ASEAN’s largest electrical appliance production base. It is also the world’s second largest producer of air conditioning units and fourth largest producer of refrigerators. Attracted by its robust manufacturing base and good infrastructure, all global manufacturers have located in Thailand. The country has become ASEAN’s hub for white home appliance production for Japanese, Korean, European, and American multinational companies. The industry comprises approximately 800 factories. 1. Trade Associations Thailand does not have a separate industry association grouping for all white electric home appliances. However, there are several trade associations that represent the interests of the general electrical and electronic industry and certain specific industries, such as air-conditioning. These include the Air-Conditioning Engineering Association of Thailand, the Thai Refrigeration Association, the Thai Electrical and Electronics Institute, the Air Conditioning and Refrigeration Industry Club under the FTI, the Thai Electrical & Mechanical Contractors Association, and the Electrical Electronics & Allied Industry Club under the FTI. While some of these associations are not active and do not have a website, the Thai Refrigeration Association, the Electrical and Electronics Institute, and the two FTI industry clubs play a greater role in voicing members’ concerns and interests on trade and investment liberalization at the regional and international level. a) Thai Refrigeration Association (TRA)384 The TRA was established in 1991 to promote the development of refrigeration business in Thailand. Role and Function The objectives of the TRA are to represent members' common concerns to government and private organizations to help solve, where possible, business problems on regulations, approvals and standards. The TRA also provides assistance to members for participation in trade exhibitions and trade missions overseas as well as researches and publishes technical and safety standards for refrigeration businesses. The TRA’s scope of responsibilities includes developing safety standards for the refrigeration industry, and promoting mutual understanding with the government for legal and commercial resolutions. It also facilitates trade and business opportunities through TRA’s contacts with local and overseas organizations and trade missions. 383 See: http://www.mrgshrimp.com/project/web/home.php 384 See: http://www.thairefrig.or.th Contact: Thai Refrigeration Association, 348 Chalermprakiat Road, Nongbon, Pravej, Bangkok 10250, Thailand. Tel: 66 2 3281035-49. Fax: 66 2 3281245. Email: [email protected] 117 Organizational Structure The TRA management committee comprises 22 members.385 It is led by a president and five vice presidents. Other supporting positions to the committee include a sectary, a treasury, economic advisors, public relations advisors, and ordinary members. Khun Sumet Jiambutr is the current president for the 2010-2012 period. Membership The TRA has 95 members,386 most of which are small-scale enterprises in the industry. Its members are limited to companies operating in the refrigeration business. Interested companies are entitled to a registration fee of THB 4,000 and annual fees of THB 3,000. General Position on Trade and Investment Liberalization The TRA does not publish any stance on trade and investment liberalization. It focuses more on new technological and engineering aspects of refrigeration business. Its publications include information on “Equipment, Design, and Installation of Ammonia Mechanical Refrigerating Systems” 387 and regulatory updates on new safety standards for refrigeration products. 388 It does not have any information on trade and investment liberalization, including on FTAs. b) The Electrical and Electronics Institute (EEI)389 The EEI was established on July 7, 1998 under the supervision of the Ministry of Industry. The Industrial Development Foundation serves as the EEI’s secretariat. Role and Function The EEI’s mission is to become the main body in developing and promoting the Thai electrical and electronic industry in a bid to sustain competitiveness in the international arena. The scope of responsibilities includes promoting and supporting the use of raw materials, parts, and components in the manufacturing of electrical and electronic products, development of product standards, and exports of electrical and electronic products. The EEI also serves as an information center for study, research and development of electrical and electronic products. Organizational Structure Headed by a director, the EEI organization 390 has three main departments as follows: (i) administration department, (ii) operation and standards department, and (iii) information and technical service department. The administration department is in charge of (i) general administration, (ii) policy and planning, and (iii) industrial promotion. The operation and standards department is in charge of (i) marketing and inspection body, (ii) operation, and (iii) technical and standards. The operation division is sub-divided into: (i) energy test group, (ii) lighting test group, (iii) chemical test group, (iv)electromagnetic compatibility test group, (v) electrical appliances test group, (vi) electronics apparatus test group, (vii) information technology equipment test group, and (viii) material test group. The information and technical service department is in charge of (i) research, (ii) publications, and (iii) website. The current EEI director is Mr. Somboon Hortrakul. 385 386 See: http://www.thairefrig.or.th/s0104/index.php A full list of TRA members can be found at http://www.thairefrig.or.th/t0103/index.php 387 See: http://www.thairefrig.or.th/download/thairefrig_or_th/keep%20kool%202.pdf 388 See: http://www.thairefrig.or.th/download/thairefrig_or_th/ammonia%20law.pdf 389 See: www.thaieei.com Contact: Electrical and Electronic Institute, 6th Department of Industrial Works Building, 57 Prasumen Road, Bangkok, Thailand. Tel: 66 2 2807272. Fax: 66 2 2807273. Email: [email protected] 390 See: http://www.thaieei.com/neweei/images/image/Organization-1.jpg 118 Membership The EEI has 565 members; 134 of which are electrical home appliance manufacturers.391 Individual members are entitled to annual membership fee of THB 100 baht, while corporate members are subject to THB 4,000 annual membership fees in addition to a THB 1,000 registration fee.392 General Position on Trade and Investment Liberalization The EEI has a positive stance towards trade and investment liberalization and actively represents its members’ interests these issues. In 2009, the EEI started implementing a well developed database called “Intelligence Unit” on its website. 393 The database contains information on the following categories: (i) production capacity and markets, (ii) global electrical and electronic industry, (iii) publications and industry development summary, (iv) public and private cooperation activities, (v) government investment incentives and subsidies, (vii) technology trend, (viii) environment regulations and standards, (ix) trade negotiations, (x) research abstract, and (xi) product profile. With respect to India, it published guidelines on India’s electrical appliances, standards, and import procedures394 to facilitate market access into India. The guidelines include a list of potential products or exports to India, detailed safety standards’ requirements by the Indian authorities, and trade statistics. This indicates how important the Indian market is to EEI members. In addition, the EEI compiled a list of non-tariff measures imposed by major trading partners including India, China, and the European Union, among others.395 c) The Air Conditioning and Refrigeration Industry Club under the Federation of Thai Industries (AR-FTI)396 The Air Conditioning and Refrigeration Industry Club is a subsidiary of the FTI. Supported by all major air-conditioning and refrigeration producers, the AR-FTI was established in August 1979. Role and Function The AR-FTI’s main objectives include acting as a coordinating center for the air conditioning and refrigeration industry under the FTI, representing members’ interests in negotiating with government agencies, providing a forum for exchange of information and for discussion of industry developments and policies among members, and promoting coordination and collaboration among air conditioning and refrigeration manufacturers, relevant government agencies, distributors, and consumers. The association also aims to increase the number of air conditioning and refrigeration manufacturers and improve production capacity and efficiency in the country. This is achieved by coordinating with other industry groups under the FTI and expanding sales channels to the new markets worldwide. Its scope of responsibilities includes representing the industry on all related forums, promoting airconditioning and refrigeration products in domestic and international market, cooperating with government in addressing industry problems and solutions, collaborating with other industry organizations worldwide, and providing members with information services and regulatory issues. 391 A list of electrical home appliance members can be found at http://www.thaieei.com/iu/factory/factory_list.php?start=130&page=14&&home_app=1&member_flag=1 392 See: http://www.thaieei.com/eei2009/en/member.html 393 See: http://www.thaieei.com/newiu/ 394 See: http://www.thaieei.com/eei2009/pdf/article/ 395 See: http://www.thaieei.com/eei2009/th/measure.html 396 See: http://ftiweb.off.fti.or.th/industrialgroup/air/index.asp .pdf Contact: Air Conditioning and Refrigeration Industry Club, Federation of Thai Industries, Sirikij Exhibition Hall, Ratchadapisek, Klongtoey, Bangkok 10110, Thailand. Tel: 66 2 3451170. Fax: 66 2 3451281-2. Email: [email protected] 119 Organizational Structure The AR-FTI is led by an executive committee397 comprising a president, an honorary president, nine vice presidents, two honorary advisors, ten committee members, a treasury, a secretary, and a secretary assistant. While the AR-FTI is an independent entity, it uses certain services from the FTI, including secretarial, administration, office space, and information support. The current president is Mr Pirat Ua-chuyos. Membership The AR-FTI has 78 members, including 58 ordinary members and 20 associate members,398 Ordinary members refer to any enterprise that operates in the air conditioning and refrigeration industry. Associate members refer to individuals and juristic persons whose work relates to industry and whose achievements contribute to the theoretical or technological advancement of the air conditioning and refrigeration industry. Interested individuals or companies must first register as FTI members and are subject to registration fee of THB 2,000 and annual fees ranging from THB 1,000 to 20,000 depending on company total revenue. To become AR-FTI members, there is an annual fee of THB 3,000 in addition to the FTI fees.399 General Position on Trade and Investment Liberalization The AR-FTI has been active in lobbying the government on trade and investment liberalization policy. In 2010, the AR-FTI was successful in lobbying the government to reduce the excise tax imposed on air-conditioning from 15 percent to zero.400 AR-FTI Chairman Pirat Ua-Chuyos actively makes public comments on the FTAs. For example, he welcomed the implementation of AFTA on January 1, 2010, under which tariffs for ASEAN-6 were reduced to zero. Mr. Parat highlighted that Thailand stands to benefit most in the air-conditioning and refrigeration businesses as Thailand has already been a production base for such products. All major foreign companies are based in Thailand and expect to increase their exports to other ASEAN countries.401 The AR-FTI regularly updates its website. The website provides two types of information: (i) industry development news section, and (ii) research paper section. The industry development news section includes information on trade related seminars, such asseminars on “Strengthening SME Businesses in preparation for AEC in 2015”402 organized by the FTI. Meanwhile, the research paper section includes country-specific information, such as a paper on “India as an Export Destination”403 prepared by the FTI. d) Electrical Electronics & Allied Industry Club under the Federation of Thai Industries (EEA-FTI)404 The Electrical Electronics & Allied Industry Club is a subsidiary of the Federation of Thai Industries (FTI). Supported by small and large electrical and electronics producers, the EEA-FTI was established in 1977. 397 See: http://ftiweb.off.fti.or.th/industrialgroup/air/about02.asp 398 See: http://internet1.off.fti.or.th/erp_member_search/_memberIndustrial_TH.aspx?indus_club=102 399 See: http://ftiweb.off.fti.or.th/industrialgroup/member_dl/feeclub.pdf 400 ”AR-FTI Chairman Pirat Ua-Chuyos to Move Forward the Air Conditioning Industry.” Translation. Tarnsethakit Newspaper, January 27, 2011. See: http://ftiweb.off.fti.or.th/industrialgroup/air/news_dt.asp?id=5885 401 See: http://ftiweb.off.fti.or.th/industrialgroup/air/news_dt.asp?id=4265 402 See: http://ftiweb.off.fti.or.th/industrialgroup/air/news_dt.asp?id=6232 403 See: http://ftiweb.off.fti.or.th/demo/6101/sitedata/site27/articles/ATC310_India_market4Thai_09sep2008_15.pdf 404 See: http://ftiweb.off.fti.or.th/industrialgroup/electric/index.asp Contact: Electrical Electronics & Allied Industry Club, Federation of Thai Industries, Sirikij Exhibition Hall, Ratchadapisek, Klongtoey, Bangkok 10110, Thailand. Tel/Fax: 66 2 3451178. Email: [email protected] 120 Role and Function The EEA-FTI’s main objectives are to act as a coordinating center for the electrical and electronics industry under the FTI, represent members’ interest in negotiating with the government agencies, and provide a forum for exchange information and for discussion of the industry developments and policies among members. The EEA-FTI also aims to promote coordination and collaboration among electrical and electronics manufacturers, the relevant government agencies, distributors, and consumers and safeguard its members’ interests and promote the stability of domestic electrical and electronics industry. Another goal is to increase a number of electrical and electronic manufacturers and improve production quality and efficiency. This is achieved by coordinating with other industry groups under the FTI and expanding sales channels to the new markets worldwide. The EEA-FTI’s scope of responsibilities includes representing the industry on all related forums, promoting electrical and electronics products in domestic and international market, cooperating with government in addressing industry problems and solutions. Its role also involves in collaborating with other industry organizations worldwide, and provides members with information services and regulatory issues. Organizational Structure The EEA-FTI is led by an executive committee405 comprising a president, eleven vice presidents, a secretary, and eighteen committee members. While the EEA-FTI is an independent entity, it uses certain services from the FTI, including secretarial, administration, office space, and information support. The current president is Mr. Supachai Sutipongchai. Membership The EEA-FTI has 178 members including 155 ordinary members and 23 associate members. 406 Ordinary members refer to any enterprise that operates in the electrical and electronics industry. Associate members refer to individuals and juristic persons whose work relates to industry and whose achievements contribute to the theoretical or technological advancement of the electrical and electronic industry. Interested individuals or companies must first register as FTI members and are subject to registration fee of THB 2,000 and annual fees ranging from THB 1,000 to 20,000 depending on the company total revenue. To become EEA-FTI members, there is an annual fee of THB 4,000 in addition to the FTI fees.407 General Position on Trade and Investment Liberalization The EEA-FTI has been active in voicing the industry’s concerns on FTAs. For example, the previous EEA-FTI Chairman Kattiya Kraikarn commented on the implementation of the ASEAN-China FTA that the electrical and electronic industry would lose competitiveness to China due to cheaper costs of production. He noted that although Thailand still keeps its import duties on electrical household appliances in the 20 percent range, Chinese imports significantly increased due to very low costs of production. The EEA-FTI has urged the government to negotiate with China to remove the electrical household appliances from China’s sensitive list, which is subject to import tariffs of more than 20 percent when exporting to China.408 The EEA-FTI’s website has similar features to that of the AR-FTI. While the AR-FTI’s website primarily focuses on providing information concerning the air-conditioning and refrigeration business, the EEA-FTI has more information on the electronic and electrical industry. On the EEA-FTI’s website, there are two types of information: (i) industry development news section, and (ii) research paper section. With respect to trade and investment liberalization, the industry development section includes information on trade related seminars such as a seminar on “Strengthen SME Businesses in 405 See: http://ftiweb.off.fti.or.th/industrialgroup/electric/about02.asp 406 See http://internet1.off.fti.or.th/erp_member_search/_memberIndustrial_TH.aspx?indus_club=109 407 See: http://ftiweb.off.fti.or.th/industrialgroup/member_dl/feeclub.pdf 408 “ASEAN-China FTA: Six Years after Implementation” Translation. Tarnsethakit Newspaper, January 13, 2010. See http://www.thailog.org/th/hot-news/1719-6--fta-.html 121 preparation for AEC in 2015” 409 organized by the FTI. Meanwhile, the research paper section includes a trade related publication on “ASEAN Economic Community: AEC by 2015”410 prepared by the FTI. 2. Production Data and Trade Statistics According to data from the MOC,411 white electric home appliance exports have steadily increased over the past few years and accounted for almost USD 3 million in 2010. Air conditioners and their components contributed 17.31 percent of total electrical appliance industry exports, and had the highest export value in the industry. The export of refrigerators, digital cameras and video camera recorders also grew significantly. The production of microwave ovens has largely expanded with investments by major manufacturers, including Sharp, Samsung, and LG. Exports of large appliances such as washing machines and dry-cleaning machines also grew significantly particularly to demand from ASEAN, Australia, and the Middle East countries. In general, the major export destinations for Thailand’s white electrical appliances in 2010 were Japan (14.58 percent), the United States (14.06 percent), China (5.61 percent), Hong Kong (4.68 percent), and Australia (4.14 percent). Other export destinations that are significantly expanding include Singapore, Vietnam, Malaysia, Indonesia, and the Netherlands. According to data from the Indian Ministry of Commerce’s Directorate General of Commercial Intelligence & Statistics, Thailand is a net exporter of white electric home appliances to India. For the FY 2009/10, Thailand imported USD 769,845 and exported USD 135.5 million in white electric home appliances to India. These figures reflect a 37 percent decrease in imports from USD 1.2 million and 44 percent increase in exports from USD 94.0 million from FY 2008/09. As a result, Thailand’s net exports in white electric home appliances with India increased by 45 percent from USD 92.8 million in FY 2008/09 to USD 134.7 million in FY 2009/10. India sold in the domestic market 1.5 percent and 2.0 percent412 of the white electric home appliances imported from Thailand for the FY 2008/09 and FY 2009/10, respectively. 3. India-Related Trade and Investment Activities in the White Electrical Home Appliances Industry The major players are foreign or joint-venture companies; 43 percent of which are Japanese including Sony, Hitachi, Mitsubishi and Panasonic. In addition, several world-class European, American, and Korean electrical appliance companies including Electrolux, Schneider Electric, Honeywell Electronic Material, Emerson Electric, Carrier, LG, and Samsung have established their production base in Thailand for exports. The most recent company that moved its production base to Thailand is Fisher&Payke, a New Zealand’s electrical appliance producer to utilize the benefits of Thailand-New Zealand Economic Partnership Agreement and the ASEAN-Australia-New Zealand Free Trade Agreement. The top five electrical home appliance companies which are non-Japanese are summarized as follows: 409 See: http://ftiweb.off.fti.or.th/industrialgroup/air/news_dt.asp?id=6232 410 See: http://ftiweb.off.fti.or.th/demo/6101/sitedata/site20/articles/ATC777_ 411 See: http://www.depthai.go.th/DEP/DOC/54/54001488.doc 412 _263.pdf The market share of white electric home appliance imports from Indonesia into India is calculated by dividing (a) the white electric home appliances imported from Indonesia into India (“imports”) by (b) the total annual consumption of electric home appliances in India (“consumption”). Consumption is calculated by adding imports and subtracting exports from the total production in India. 122 LG Electronics (Thailand)413 LG is a global electrical and electronics company headquartered in Korea. Its products vary from televisions, telecom devices to electrical home appliances including air conditioners, washing machines, refrigerator, vacuum cleaners, and microwaves, among others. LG Electronics (Thailand) manufactures several electrical home appliance products and export to the rest of the world, including India. Samsung Electronics (Thailand)414 Samsung Electronics (Thailand) is a subsidiary company of Samsung Electronics Co. Ltd based in Korea. It uses Thailand as a production base for televisions, washing machines, microwaves, LCD and LED televisions, refrigerators, and air conditioners. Samsung Electronics (Thailand) supplies these products to several countries, including India. Emerson (Thailand) Limited415 Emerson (Thailand) is a US based company, which started operation in Thailand in 1996. Its products are air-conditioning compressors, with an annual capacity of one million units. Emerson exports its products to the every part of the world, including India. Haier Electric (Thailand)416 Haier is the world’s forth largest white electrical home appliance manufacturer. Haier Electric (Thailand) was initially established in 2002 as a joint venture with a domestic electrical appliance manufacturer, Distar Electric Corporation. It did not have a production base and was only responsible for trading and distributing Haier products such as color TV and refrigerator. In parallel, Haier imported air conditioner parts to manufacture into finished goods at Distar Factory. In 2007, Haier reached an agreement to take over Sanyo Universal Electric, which is Japan’s leading refrigerator producer. Since then, Haier has used Thailand as production base for various kinds of home appliances such as refrigerators, freezers, washing machines, air conditioners, color televisions, LCD televisions. It exports these products to several countries, including India. Philips Electronics (Thailand)417 Philips is a global electrical and electronics company headquartered in the Netherlands. Philip Electronics (Thailand) started operations in 1952 to manufacture incandescent lamps and other electrical products. Their home appliance products include LCD televisions, DVD players, and rechargeable sonic toothbrushes, among others. They export these products to other parts of the world, including India. 413 See: http://www.lg.com/th/index.jsp 414 See: http://www.samsung.com/th/ 415 See: http://www.emersonclimate.com/en-US/Pages/home.aspx 416 See: http://www.haier.co.th/cms/index.php/page/content/contactUs/WE1003 417 See: http://www.philips.co.th/about/company/companyprofile.page 123 第 VI 章 BARRIERS TO FOREIGN TRADE AND INVESTMENT IN INDIA The Indian government imposes numerous measures that constitute barriers to trade and foreign investment. This report describes measures that may impede trade and foreign investment in the industries covered (“targeted industries”) in this report. The restrictions discussed below apply horizontally to all the targeted industries, unless otherwise indicated. 1. Indirect Taxation a) Restrictive Export/ Import Trade, Duty and Customs Clearance Procedures Special Additional Duty The Indian government imposes a 4 percent Special Additional Duty (SAD) in lieu of the domestic Value Added Tax (VAT) or the Central Sales Tax (CST) on the import of goods. In September 2007, the Government introduced a refund mechanism for importers who subsequently sold the imported goods within India and had paid the State level VAT/ CST. In practice however, the procedure for claiming this refund is cumbersome and time consuming. With effect from February 27, 2010, unconditional exemption is provided on the import of mobile phones, apparels and watches from the levy of the SAD. Further, import of all other goods are exempted from SAD subject to fulfillment of the condition that the goods are imported in a pre-packaged form intended for retail sale and the Maximum Retail Price (MRP) is declared on the goods. Import Licensing Regime The import of certain goods requires an import license (e.g. livestock products, certain chemicals, among others). Certain other imports are subject to specific conditions for importation (e.g. import of wheat through State Trading Corporation). Practical difficulties exist in implementing the license mechanism such as excessive details, quantity limitations, delay between application and grant of license, among others. The import of goods such as skins, bones, parts of wild animals, among others, into India is prohibited. Annex I provides a list of goods falling under the targeted industries, the import of which is “prohibited,” “restricted,” or subject to specified conditions. Customs Valuation Procedures Certain procedural problems exist with regard to customs valuation. For instance, as regards transactions with related parties, the importer is subjected to long and cumbersome proceedings by the Special Valuation Branch (SVB) to determine whether the value of imported goods is at arms’ length. Customs authorities impose requirements for excessive documentation in this regard. In addition, excessive powers are given to the Customs officer to reject the declared value. The Indian government in the Finance Bill 2011-12418 has proposed to introduce self-assessment at customs to expedite the clearance of the cargo by customs authorities and modernize the customs administration. Under the self-assessment system, importers and exporters will themselves assess their duty liabilities while submitting their declarations in the Electronic Data Interchange (EDI) system.419 The department will verify such assessments on a selective system driven basis. Registration and Publication Requirements Imports of pre-packaged commodities intended to be sold in the domestic market are required to comply with various requirements, such as registration under the Legal Metrology Act, 2009 and 418 The Finance Bill is enacted and becomes an Act after approval by the Parliament of India and final assent by the President. The Bill is pending for discussion in the Parliament and will be effective from the date of assent of the President. 419 The EDI is a system for electronic exchange of information in the customs department which aims to ensure paperless work. 124 Rules thereof, publication of the importer’s name and address, MRP, month and year of manufacturing/ packing on the packaged commodity, among others. These requirements must be complied with prior to importation of goods into India, that is, before the customs clearance of the goods in India. MRP-based Valuation The high level of customs duties penalizes imported goods across several sectors such as vehicle parts, certain agricultural and food commodities, electrical and electronic goods, among others. Even where the tariff rate has been reduced to 10 percent, the level of the countervailing duty in lieu of excise (CVD) remains high and is calculated in a discriminatory way on the basis of the MRP instead of the transaction value. This rule was introduced out of concern that local manufacturers may declare only a part of their actual production costs to lower their tax liability and fraudulently declare the rest of their actual production cost as transport costs, margins authorized to the distributors, publicity, among others, in order to increase their profit margins. The government therefore requires that excise duty be calculated on the MRP minus a prescribed reduction which corresponds to an evaluation of the cost structure made by the relevant tax administration in India. Consequently, goods having a high selling price or MRP are penalized under this method of calculation. Centralized Database for Customs Duties Although the government publishes applied tariff and other customs duty rates applicable to imports, it does not issue any official centralized publication or searchable database setting forth applied tariff and other customs duty rates. In order to determine the applied tariff or other customs duty rate applicable to a particular product, importers must consult separate customs or excise notifications that may subject the product to higher or lower rates than those set forth in the schedules. Determining whether any such notification exists in itself poses a challenge for importers. Such a system lacks transparency and is burdensome for importers. Standards and Certification Certain products are required to conform to prescribed standards and certification norms which results in increased licensing and inspection costs for importers. For example, the clearance of imported food products requires conforming to standards under the Prevention of Food and Adulteration Act. The stringent homologation 420 requirements for motor cars imported in India constitute another example. Restrictions to trade arising from the imposition of product standards are discussed in further detail below and under the section on industrial standards. High Rates of Customs Duty Certain goods falling under the targeted industries are subject to high customs duties which can impede trade significantly. Details regarding the industries which are subject to high rates of customs duties and other customs clearance related impediments are provided below: Motorcycle Industry The import of motorcycles into India attracts high customs duties (as against the normal effective customs duty of 26.85 percent) at the rates below: 420 Homologation requirements entail certification that a particular imported car is roadworthy and fulfills certain specified criteria laid out by the government for all vehicles made or imported into the country. 125 Category Basic Customs Effective Duty 10%421 28.06% Semi Knocked Down (SKD) 60% 87.69% Completely Built Unit (CBU) 60% 87.69% Second-hand motor cycles 100% 135.39% Completely Knocked Down (CKD) The import licensing conditions applicable to motorcycles are provided in Annex I. Passenger Vehicle Industry Imports of motor vehicles principally designed for the transport of persons attract high customs duty rates in India as follows: − New motor cars for transport of less than ten persons imported in SKD or CBU form attract basic customs duty (BCD) of 60 percent; − Second-hand motor cars for transport of less than ten persons attract BCD of 100 percent. Stringent and time consuming homologation requirements apply to imported motor cars that must be fulfilled before a vehicle is considered roadworthy for India. These requirements entail certification that a particular car is roadworthy and matches certain specified criteria laid out by the government for all vehicles made or imported into the country. India permits the import of motor cars only from specific ports and only from the country of manufacture. The import licensing conditions applicable to passenger vehicles are provided in Annex I. Automotive Parts Industry The import of automotive parts (except chassis) into India attracts an effective customs duty rate of 26.85 percent. The import of chassis attracts a general BCD as well as a specific rate. In addition, as discussed above in passenger vehicle sector, imports are subjected to stringent and time consuming homologation requirements. No specific customs duty exemptions are granted to the import of automotive parts, discouraging their import into India. In addition, the method employed for the valuation for automotive parts results in the levy of a high countervailing duty in lieu of excise. The countervailing duty is levied on the value of the MRP declared on the product (less a prescribed abatement) instead of the transaction value. This method of calculation results in a higher base for the levy of CVD, thereby resulting in increased customs duty. The 2011-12 Union Budget amended the definition of CKD units for vehicles including two wheelers, which are eligible for concessional import duty. The new definition of CKD units excludes from its purview units containing a pre-assembled engine or gearbox or transmission mechanism or a chassis where any of such parts of sub-assemblies is installed. Thus, the definition of a CKD unit eligible for concessional duty has been restricted. On March 24, 2011, the Central Board of Excise & Customs (CBEC) notified the modified basic customs duty rates applicable to CKD units for vehicles as provided below: HS Description of Goods Standard Rate 8703 Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02), including station wagons and racing cars , new, which have not been registered anywhere prior to importation, if imported: 421 Certain CKD units are subject to a basic customs duty rate of 30 percent. The “Automotive Parts Industry” section provides further detail. 126 HS Description of Goods 1. 8711 Standard Rate as a CKD kit containing all the necessary components, parts or sub-assemblies, for assembling a complete vehicle, with,a. engine, gearbox and transmission mechanism not in a preassembled condition; 10% b. engine or gearbox or transmission mechanism in preassembled form but not mounted on a chassis or a body assembly. 30% c. in any other form. 60% Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side cars, and side cars, new, which have not been registered anywhere prior to importation,1. as a CKD kit containing all the necessary components, parts or sub-assemblies, for assembling a complete vehicle, with,a. engine, gearbox and transmission mechanism not in a preassembled condition; 10% b. engine or gearbox or transmission mechanism in preassembled form, not mounted on a body assembly. 30% c. in any other form. 60% Any import licensing conditions applicable to automotive parts are provided in Annex I. Synthetic Fiber and Textile Industry Goods covered under the synthetic fiber and textile industry attract varying levels of specific duties depending on the tariff classification of the goods. Therefore, determining the appropriate classification of such goods is important. The difference in the goods corresponding to the various tariff sub-classifications however cannot be determined by physical inspection alone and requires submission of samples for tests by the Indian government’s Textiles Committee (more detail in paragraph below). This results in inordinate delays in the clearance of goods. The import of textiles and textile articles is permitted subject to the condition that such goods do not contain any of the hazardous dyes whose handling, production, carriage or use is prohibited by the Indian government under the provisions of the relevant legislations.422 For this purpose, the import consignments must be accompanied by a pre-shipment certificate from a textile testing laboratory accredited to the National Accreditation Agency of the country of origin. Where such certificates are not available, the consignment will be cleared after getting a sample of the imported consignment tested and certified from certain notified agencies.423 The sampling is based on various parameters such as testing of at least 25 percent samples thereby ensuring that a maximum number of samples are drawn. The test report is valid for a period of only six months. All imports of woolen textiles and woolen blended fabrics must display markings or a description indicating the composition of fiber blends. For this purpose, all consignments must be accompanied by a pre-shipment inspection certificate from a textile testing laboratory accredited to the National Accreditation Agency of the country of origin certifying the composition of the woolen textiles and blends. A consignment not accompanied by a preshipment inspection certificate is allowed clearance only after getting the sample of the imported consignment tested and certified from the specified agencies. Further, imports are only permitted on the production of a certificate of origin and a certificate from the brand owners certifying the genuineness of the product and of the markings thereon as well as the 422 Section 6(2)(d) of the Environment (Protection) Act, 1986 (29 of 1986) read with the relevant rule(s) framed thereunder. 423 These agencies are listed in Public Notice No. 12 (RE-2001)/1997-2002 dated 3rd May, 2001. 127 authority to use their brand names. The import of textile and textile products is also subject to an increasing imposition of antidumping and countervailing duty measures. Certain textile articles are subject to a specific BCD on a “per piece” basis which leads to a levy of high customs duty on imports. Imported readymade garments bearing a brand name on which the retail price is declared are assessed to countervailing duty of excise at 45 percent of their declared retail sale price. This results in a high incidence of customs duty on the textiles imports. Certain textiles products are subject to import licensing conditions as provided in Annex I. Practical difficulties exist in implementing the license mechanism such as excessive details, quantity limitations, delay between application and grant of license, among others. Palm Oil Industry Crude palm oil, not for edible purposes, attracts a high customs duty rate of 100 percent. The Indian government is undertaking special efforts to promote the domestic palm oil industry, such as a greater allocation of funds thereby proposing to increase in domestic capacity. This may act as a deterrent for foreign investment in the palm oil industry. Any import licensing conditions applicable to palm oil are provided in Annex I. Plastics and Rubber Industry The rubber industry in India is suffering from an inverted duty structure since the peak customs duty rate on natural rubber is high (20 percent), while the customs duty of finished rubber products is lower. Tires, for instance, attract a BCD of 10 percent. This acts as a potential barrier for foreign investment in this sector in India. The import of rubber products is subject to an increasing imposition of antidumping and countervailing duty measures. The import licensing conditions applicable to plastics and rubber are provided in Annex I. Chemical Product Industry Chemical products face an inverted duty structure which is hampering the growth of the chemical industry. For instance, fertilizers are exempt from excise duties while procurement of inputs attracts concessional customs duties. Since, fertilizers do not have any output excise duty liability, the tax incidence on inputs becomes a cost. The import of chemical products is subject to an increasing imposition of antidumping and countervailing duty measures. Several chemical products are subject to import licensing measures as provided in Annex I. The import of hazardous waste or substances containing or contaminated with such hazardous wastes as specified in the Hazardous Wastes (Management and Handling) Amendment Rules, 1989 is prohibited. Where hazardous chemicals are imported without a license, the importer is required to furnish prescribed details in accordance with the provisions of the Manufacture, Storage and Import of Hazardous Chemicals Rules 1989 (made under the Environment (Protection) Act, 1986), among other conditions. Food Industry In order to protect domestic agriculture and the food industry, the Indian government levies high customs duty rates on various agricultural-based products ranging from 37.8 percent to 102.78 percent. Packaging costs constitute a large proportion of the cost of processed food products. Packing materials attract excise duty. However, credit is not available in respect of the excise duty that most processed food manufacturers pay on packing materials. This is because most processed foods are exempt from excise duty. The packaging material used in the processed foods industry should also be exempt from excise duty, in order to reduce the cost of manufacturing processed food products in India. 128 Divergence in the approach to taxation by the Central and State governments has been another hindrance to the growth of the processed foods industry. While the Central government has identified the food processing industry as a priority industry by exempting the levy of excise duty (on goods such as tea, milk food for babies et al), the State Governments typically levy VAT on the sale of these products. This lack of uniformity between Centre and State policies has undermined the benefits to the food processing industry arising from excise duty exemptions. Stringent guidelines exist for the customs clearance of food items, including checking the physical or visual appearance of food items and compliance with labeling requirements under the Prevention of Food Adulteration Rules and the Packaged Commodities Rules. In addition, in many cases, samples of imported food products are tested prior to their customs clearance resulting in significant delays. Import of beef in any form and import of products containing beef in any form is prohibited. All consignments of edible oils and processed food products, imported in bulk, must carry a declaration from the concerned exporter on the shipping documents that the consignment does not contain beef in any form. All consignments of edible products, imported in consumer packs, must carry a declaration on the label of the package that the product does not contain beef in any form. The importation of meat and poultry products is subject to compliance with conditions regarding manufacture, slaughter, packing, labeling and quality conditions as laid down in the Meat Food Products Order, 1973. All manufacturers of meat or poultry products exporting their goods to India are required to meet the sanitary and hygiene requirements as stipulated under Schedule II of the aforementioned Order. The imported product must also comply with the specified packaging, labeling and quality standards as laid down in Schedule IV of the Order. Compliance with these conditions must be ensured before allowing customs clearance of the consignment. The import of meat and meat products of all kinds including fresh, chilled and frozen meat, tissue or organs of poultry, pig, sheep, goat; egg and egg powder; milk and milk products; bovine, ovine and caprine embryos, ova or semen; and pet food products of animal origin is subject to a sanitary import permit to be issued by the Department of Animal Husbandry and Dairying of the Indian government. The importation of all such edible or food products including tea, the domestic sale and manufacture of which are governed by the Prevention of Food Adulteration Act, 1954, are subject to all the conditions laid down in the aforesaid Act. Import of all these products must comply with the quality and packaging requirements as laid down in the Act. Compliance of these conditions must be ensured before allowing customs clearance of the consignment. In addition, the importation of all such edible or food products, the domestic sale and manufacture of which are governed by the Prevention of Food Adulteration Act, 1954 are subject to the condition that, at the time of importation, the products must have a valid shelf life of not less than 60 percent of their original shelf life. The shelf life of a product is calculated, based on the declaration given on the label of the product, regarding its date of manufacture and the due date for expiry. Imports of plants and plant products into India are subject to certain sanitary and phytosanitary measures which pose a significant barrier to trade. In particular, India’s Plant & Quarantine Order, 2003 (“PQ Order”) requires compulsory fumigation treatment of certain plants and plant products with methyl bromide. India requires the use of compulsory fumigation treatment with methyl bromide prior to importation in the exporting country for a number of plant species. India claims that the risk of the nematode pest for these other plants products is higher and that it can only be mitigated by methyl bromide fumigation. Methyl bromide, however, has been recognized as having an adverse impact on human, plant and animal health as well as on the environment by international standard-setting bodies such as the International Plant Protection Convention (IPPC) under the Food and Agriculture Organization (FAO), the United Nations Environment Program (UNEP) and the Montreal Protocol on Substances that Deplete the Ozone Layer. This has led several countries worldwide to prohibit the use of methyl bromide including as a fumigant for quarantine and pre-shipment purposes. Importers are, therefore, unable to fulfill the requirement under the 129 Indian PQ Order that fumigation take place prior to exportation in such countries that have banned the use of methyl bromide. The requirement for fumigation with methyl bromide in the PQ Order effectively bars the import of certain plants and plant products from several countries. The import of all primary agricultural products is subject to securing a Biosecurity and Sanitary-Phytosanitary import permit. The permit is issued by the Department of Agriculture and Co-operation, as per the conditions of the Plants, Fruits and Seeds (Regulation of Import into India) Order, 1989. The permit is based on an Import Risk Analysis of the product concerned. Finally, the importation of alcoholic beverages as classified under Chapter 22 of the ITC(HS) Classification of Export and Import Items, is subject to compliance with mandatory requirements as stipulated by the State Governments.424 The import licensing conditions applicable to agricultural and food products are provided in Annex I. White Electric Home Appliance Industry The imports of goods used in the white electric home appliance industry are subject to an effective peak customs duty of 26.85 percent. However, certain specified capital goods are subject to a concessional customs duty of 23.89 percent depending upon the HSN classification of goods. Any import licensing conditions applicable to white electric home appliances are provided in Annex I. Electric device industry The imports of goods used in the electric device industry are subject to an effective peak customs duty of 26.85 percent. However, certain specified capital goods are charged a concessional customs duty of 23.89 percent depending upon the HSN classification of goods. Any import licensing conditions applicable to electric devices are provided in Annex I. b) Service Tax The 2011-12 Budget has proposed the introduction of the Point of Taxation Rules, 2011 (‘POT Rules’), which follow the general rule that the ‘point of taxation’ for payment of service tax will be the earliest of the dates as follows: (i) Date on which service is provided or to be provided; (ii) Date of invoice; or (iii) Date of payment. The POT Rules have a number of implications. They may result in a significant change in the service tax legislation. These will require changes in accounting systems, invoicing, management information systems, tax records et al. Further, the changes are expected to require businesses to reengineer their entire processes and systems related to tax payment and compliance. This will require significant investments resulting in an increase in costs to businesses. Also, most Goods and Services Tax (GST) legislations in countries such as Australia and New Zealand link the payment of service tax with the issuance of the invoice or receipt of payment rather than with the provision of the service. This is due to the difficulties involved in determining the time of provision of services, which are intangible in nature. With the implementation of the POT Rules in India, the mode of determining the time of services provided or to be provided remains unclear. The definition of ‘input services’ for the purpose of availing credit has been amended under the 201112 Budget to restrict the availability of credit on certain services such as rent-a-cab services, outdoor catering services, commercial and industrial construction services, construction of complex services used for construction of a building or a civil structure et al. Accordingly, this may result in an increase in costs in various sectors. For instance, for the call centre and business process outsourcing (BPO) 424 This includes licensing requirements under State excise legislation, requirement for registration for labels, retailing license, among others and the imposition of a State levy on imports into the States in addition to the customs duty. 130 industry which use substantial volumes of rent-a-cab services, this development would result in a considerable increase in costs. The 2011-12 Budget also introduces provisions relating to prosecution upon submission of false information, provision of service without invoice et al. These provisions will apply in addition to the existing penalty provisions. Thus, taxpayers will need to exercise greater discretion in following service tax procedures, compliances et al. Where the services of companies qualify as ‘export,’ the companies are eligible to claim refund of the credit on any input goods or services that they used towards the provision of their output service for export, as per the prescribed refund procedure. However, in practice, service tax officials require excessive verification of documents in trying to establish the nexus between input services and output services. This results in significant delays in obtaining refund. Therefore, for most of companies, the cenvat credit425 remains blocked for substantial periods. c) Value Added Tax / Central Sales Tax Most States have recently increased the VAT rates from 4 percent to 5 percent and 12.5 percent to 13.5/14.5 percent. d) Excise Tax The 2011-12 Budget raises the concessional rate of excise duty from 4 percent to 5 percent. Accordingly, items such as prepared foods such as sugar confectionery, pastry and cakes, starches, paper and articles of paper, textile intermediaries and textile goods will now be subject to the enhanced rate of duty of 5 percent. Further, an excise duty of 1 percent without cenvat credit facility is being imposed on about 130 specified items, which were hitherto either fully exempt from excise duty or chargeable to the zero rate of excise duty. The list of such goods is provided in Notification No 1/ 2011 dated March 1, 2011 attached under Annex II. 2. Direct Taxation The taxation measures discussed below apply horizontally to all the targeted industries, unless otherwise indicated. In order for India to remain globally competitive and an attractive investment destination, it is important that Indian corporate tax rates be in tune with other countries. The 2011-12 Budget however, brings few significant amendments in corporate tax rates. The surcharge on corporate tax for foreign companies however has been reduced from 2.5 percent to 2 percent. Accordingly, the corporate tax rate for a foreign company has fallen from 42.23 percent to 42.02 percent. The worldwide trend has been to gradually lower corporate tax rates. Particularly, in recent years, the global average corporate tax rate has fallen to around 25 percent. Increase in rate of Minimum Alternate Tax (MAT) A company is required to pay MAT on its book profits. The rate of MAT has almost doubled in the last 10 years. Further, the 2011-12 Budget, proposes to increase MAT from the current rate of 18 percent to 18.5 percent of book profits (plus the applicable surcharge and education cess). Therefore, the effective MAT rate will be 20.01 percent as against the present effective rate of 19.93 percent in case 425 Under the Cenvat Credit System, manufacturers are eligible to receive credit for the excise duty they paid on intermediate goods or for the service tax they paid on services which they used as inputs in the manufacture or production of their final goods. Similarly, a service provider is eligible to receive credit for excise duty they paid on goods and service tax they paid on services which they used as inputs in the provision of their output services. 131 of a company whose book profit is more than one crore.426 The effective MAT will be 19.06 percent as against the present rate of 18.54 percent in case of a company whose book profit is less than one crore. The regular increase in the MAT rate is hampering the growth of industry. Withdrawal of MAT benefits to SEZ developers and units Presently the income earned by Special Economic Zone (SEZ) developers or units in a SEZ or unit is not considered as part of ‘book profit’ for MAT purposes. The 2011-12 Budget proposes that such income be considered for computing ‘book profits’ for MAT purposes. Consequently, income of SEZ developers and units will be subject to the MAT with effect from April 1, 2011. Withdrawal of benefits of Dividend Distribution Tax (DDT) to SEZ developers and units Currently the dividend declared by SEZ developers is not subject to DDT. However, immunity provided to SEZ developers has been withdrawn with effect from June 1, 2011. Dividends declared by SEZ developers will be subject to DDT with effect from June 1, 2011. Alternative Minimum Tax (AMT) on Limited Liability Partnership (LLP) Presently, LLPs are liable to pay regular income tax at the rate of 30 percent (plus education cess) of the total income computed as per the normal provisions of the Indian Income Tax Act. Now, LLPs will be subject to AMT at the rate of 18.5 percent (plus education cess) of the adjusted total income if the regular income tax payable is lower than the AMT. Adjusted total income will be the total income as computed under the normal provisions as increased by deductions claimed under: (i) deductions in respect of certain incomes (Heading C - Chapter VI-A); and (ii) deduction in respect of profits of SEZ units (Section 10AA) Further, AMT paid in excess of the regular income-tax computed under the normal provisions will be available as credit against future income-tax liability. The AMT credit can be carried forward for a period of 10 years succeeding the year in which such credit becomes allowable. It shall be allowed to be set-off for an assessment year in which the regular income tax exceeds the AMT to the extent of the excess of the regular income tax over the AMT. LLPs will further be required to obtain a report from a chartered accountant certifying the computation of the adjusted total income and AMT. Such a report will be required to be furnished on or before the due date of filing of the income tax return. Thus, provisions with respect to LLPs have been made more restrictive. No benefit of export profits in computation of MAT So far, while computing book profits for the levy of MAT, the downward adjustments included reduction of the export profits eligible for tax holidays. Certain judicial precedents resulted in an anomalous interpretation of the provisions, such that deduction of the export profits would be allowed while computing book profits for MAT, even after the phase out of the tax holiday to export profits. An amendment has been proposed in the Finance Bill 2011 proposing that no deduction shall be available for export profits, while computing book profit for levy of MAT. The proposed amendment will take place retrospectively from the tax year 2004-05. Transfer Pricing Presently, for transfer pricing purposes, where the difference between the arm’s length price (ALP) and the transaction price does not exceed 5 percent of the transaction price, the transaction price is deemed to be the ALP. Now, it is proposed that the allowable variation will be such percentage of the transaction price as the Indian government may notify. This amendment is proposed to take effect for the financial year April 1, 2011 and will accordingly apply in relation to Assessment Year 2012-13 and subsequent years. The Transfer Pricing Officer (TPO) is empowered to examine additional international transactions (which were not formally referred by the tax authority), if identified subsequently in the course of 426 A crore is a unit in the Indian numbering system equal to ten million. 132 proceedings before him. TPOs will now be granted additional powers for conducting a survey. These amendments will take effect from June 1, 2011. Further, the Finance Bill, 2011 introduces an antiavoidance provision in the income tax laws to discourage transactions with persons located in countries or territories that do not effectively exchange information with India. This provision is envisaged to take effect from June 1, 2011. This will have the following tax consequences: Any transaction between the taxpayer and a person located in a Notified Jurisdictional Area (NJA) will be deemed to be an international transaction subject to the transfer pricing provisions of the Indian income tax laws and all parties to such international transaction will be deemed to be associated enterprises. No deduction will be allowed for any payment made to a financial institution located in a NJA unless the taxpayer authorizes the tax authority to seek relevant information from the said financial institution. No deduction will be allowed for any expenditure or allowance (including depreciation) arising from such transactions, unless the taxpayer maintains such documentation and furnishes such information as may be prescribed. Any sum received or credited by the taxpayer from a person located in the NJA will be deemed to be the income of the taxpayer, unless the taxpayer satisfactorily explains the source of such money in the hands of such person or in the hands of the beneficial owner located in the NJA. Any payment to a person located in a NJA on which tax is deductible will be subject to withholding tax, at the higher of the following rates: (i) at the rates specified under the Income Tax Act; or (ii) at the rates in force; or (iii) at the rate of 30 percent. The above amendment will take place from June 1, 2011. Presently, companies are required to file their return of income on or before 30 September. It is proposed that the due date for filing the return of income by those companies, that have international transactions and are required to file an Accountant’s certificate in the prescribed format in respect of its international transactions, will be 30 November. The above amendment will be effective from April 1, 2011. The memorandum to the 2011-12 Budget notes that a non-resident person having a Liaison Office in India does not file a return of income in India on the ground that no business activity is allowed to be carried out in India. The 2011-12 Budget proposes that such a non-resident will be required to file a statement in a prescribed form, providing details of activities carried out by the Liaison Office in India. The time limit for filing the above statement will be 60 days from the end of the financial year. The amendment will take effect from June 1, 2011. This provision seeks to monitor the activities of the Liaison Office and seeks better enforcement if the activities are viewed as creating a taxable presence. Currently, the dividend received by an Indian parent from its foreign subsidiary is taxable at the rate of 30 percent (plus applicable surcharge and education cess). The 2011-12 Budget proposes that such dividend income, included as income in the hands of the Indian parent during the tax year April 1, 2011 to March 31, 2012, will be taxable at the concessional rate of 15 percent (plus applicable surcharge and education cess) on gross basis. For this purpose, a subsidiary is defined as a foreign company in which the Indian company holds more than 26 percent of the nominal value of the subsidiary’s equity share capital. Deduction from business income Presently, a weighted deduction of 175 percent is allowed for any sum paid to a national laboratory or a university or Indian Institute of Technology (IIT) or a specified person for the purpose of an approved scientific research program. The weighted deduction shall now be enhanced to 200 percent with the view to encourage more contribution to such approved scientific research programs. This amendment is proposed to take effect from April 1, 2011 (and will accordingly apply in relation to assessment year 2012-13 and subsequent years). 133 Further at present, a hundred percent deduction is allowed on capital expenditure (other than on land, goodwill and financial instrument) incurred by a taxpayer wholly and exclusively for the purpose of certain specified businesses. The following specified businesses are eligible for availing the above mentioned deduction: Setting up and operating a cold chain facility. Setting up and operating a warehousing facility for storage of agricultural produce. Laying and operating a cross-country natural gas and crude or petroleum oil pipeline network for distribution, including storage facilities being as integral part of such network. Building and operating, anywhere in India, a new hotel of two-star or above category as classified by the Central Government. Building and operating, anywhere in India, a new hospital with at least one hundred beds for patients. Developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government and notified by the Board in this behalf in accordance with the guidelines prescribed. The deduction for capital expenditure will also be allowed to taxpayers engaged in: Developing and building affordable housing projects under a scheme framed by the Central Government or a State Government; or Production of fertilizers in a new plant or in a newly installed capacity in an existing plant in India. The abovementioned business must commence activities on or after April 1, 2011. 3. Industrial Standards427 a) Restrictions under the Bureau of Indian Standards (BIS) Act, 1986 The measures discussed below apply horizontally to all the targeted industries, unless otherwise indicated. The Bureau of Indian Standards (BIS) Act provides for the development of the activities of standardization, marking and quality certification of goods. The BIS set up under the BIS Act, establishes and promotes Indian standards in relation to any article or process. It may recognize as an Indian Standard, any standard established by any other Institution in India or elsewhere, in relation to any article or process, subject to certain conditions. The BIS specifies a standard mark to be called the BIS Certification Mark, which has a prescribed design representing a particular Indian standard. The BIS may grant, renew, suspend or cancel a license for the use of the standard mark in relation to any article or process. Moreover, the BIS inspects and takes samples of any material or substance as and when it is required to check whether any article or process in relation to which the standard mark has been used conforms to the Indian Standard. The purpose of such inspection is to verify whether the standard mark has been improperly used in relation to any article or process with or without a license. The BIS may conduct an inspection on any article or process in relation to which the standard mark is used or which is required to conform to the Indian Standard under the BIS Act. 427 This section also covers standards related to environmental and waste disposal. Certain standards such as sanitary and phytosanitary measures and technical regulations have been discussed under indirect taxation above as customs clearance of imports often depends on compliance with such standards. 134 Where the Central Government, after consulting the BIS, is of the opinion that it is necessary or expedient in the public interest, it may (i) notify any article or process of any scheduled industry,428 which shall conform to the Indian Standard; and (ii) direct the use of the standard mark under a license as compulsory on such article or process.429 Certification Requirements for Foreign Manufacturers India operates a product certification scheme for foreign manufacturers through the BIS. A license can be granted for any product against an Indian Standard specifying product characteristics amenable to certification. A manufacturer operates on a self-certification basis and is permitted to apply for the Standard Mark on the product concerned once the conformity of the product to the Indian Standard is ascertained. The BIS keeps surveillance on the quality of goods certified. A separate application is required for each product/Indian Standard. The final product is tested as per the relevant Indian Standards and the conforming product is permitted to apply the BIS Standard Mark. The applicants for the BIS licenses must pay the application fees, processing charges, expenditure on travel, stay among others for the inspecting team for the inspection of the manufacturing premises, cost of sample test et al. A license is granted to an applicant only if: The results of preliminary inspection and testing are found satisfactory. The applicant has in-house requisite manufacturing and testing facilities and competent personnel The applicant agrees to comply with the requirements laid down under the Scheme of Testing & Inspection (STI) The applicant undertakes to pay the BIS Marking Fee of USD 2,000 for one year in addition to the marking fee on a unit rate basis. The applicant is required to pay an annual license fee together with the annual marking fee and subsequently a quarterly fee based on production as per the undertaking mentioned above. On the expiry of the validity of the license, the licensee needs to apply to the BIS for renewal. This system of certification hampers imports into India by setting cumbersome additional requirements and imposing extra costs on the foreign manufacturers. Certification Requirements for Importers India has enforced a mandatory product certification requirement for the import of many goods. As per the scheme of certification, imports of these products are permitted only after BIS certification. A license can be granted to the importer for import of any product against an Indian Standard specifying product characteristics amenable to certification. An importer operates on self-certification basis and is permitted to apply for the standard mark on the product once the conformity of the product to the Indian Standard is ascertained. The BIS maintains surveillance on the quality of goods certified. Under this scheme of certification, an importer is treated in the same manner as the manufacturer and the license is therefore granted in a manner similar to the other Indian manufacturers. As per Indian laws, the applicants for BIS licenses must pay application fees, processing charges, expenses of the inspection visits from India to the exporting unit, testing costs, annual marking fees for the licenses and license fees. The BIS may impose certain conditions on the importers in order to ensure compliance of the product to the Indian standard. The aforesaid conditions may include: (i) precertification of components or raw materials, and/or (ii) a visit to the original manufacturer’s premises to assess quality control of the process adopted in manufacturing. In such a case, the applicant must 428 Refer to Annex III for a list of scheduled industries. 429 See the Industries (Development and Regulation) Act, 1951 for detailed requirements. 135 bear the cost of travelling, stay and other miscellaneous expenses incurred on the visit of the inspecting team. This system of certification hampers imports into India by establishing stringent compliance requirements and burdening importers with extra costs. b) Restrictions under Air (Prevention and Control of Pollution) Act, 1981 The Air (Prevention and Control of Pollution) Act, 1981 (“Air Act”) establishes ambient air quality standards to counter problems associated with air pollution. The Air Act seeks to combat air pollution by prohibiting the use of polluting fuels and substances, as well as by regulating appliances that give rise to air pollution. Under the Air Act, the establishment or operation of any industrial plant in the pollution control area requires consent from the state pollution control boards. The boards are also expected to test the air in air pollution control areas, inspect pollution control equipment and manufacturing processes. National Ambient Air Quality Standards (NAAQS) for major pollutants were notified by the CPCB in April 1994. These are deemed to be levels of air quality necessary with an adequate margin of safety, to protect public health, vegetation and property. The NAAQS prescribe specific standards for industrial, residential, rural and other sensitive areas. The National Ambient Air Quality Standards (NAAQS) for major pollutants is provided in Annex IV. c) Restrictions under the Environment Protection Act, 1986 The Environment Protection Act, 1986 (“EPA”) is an umbrella legislation designed to provide a framework for the co-ordination of central and state authorities established under the Water (Prevention and Control) Act, 1974 and Air (Prevention and Control) Act, 1981. Under the EPA, the central government is empowered to undertake measures necessary to protect and improve the quality of the environment by setting standards for emissions and discharges, regulating the location of industries, management of hazardous wastes, and protection of public health and welfare. The Central government issues notifications for the protection of ecologically-sensitive areas under the EPA. Notifications issued under the EPA include: Doon Valley Notification (1989), which prohibits the setting up of an industry in which the daily consumption of coal/fuel is more than 24 million tonn (MT) per day in the Doon Valley. Coastal Regulation Zone Notification (1991), which regulates activities along coastal stretches. As per this notification, dumping ash or any other waste in the Coast Regulation Zone (CRZ) is prohibited. The thermal power plants (only foreshore facilities for transport of raw materials, facilities for intake of cooling water and outfall for discharge of treated waste water/cooling water) require clearance from the Ministry of Environment and Forest (MoEF). Dhanu Taluka Notification (1991), under which the district of Dhanu Taluka has been declared an ecologically fragile region and setting up power plants in its vicinity is prohibited. Revdanda Creek Notification (1989), which prohibits setting up industries in the belt around the Revdanda Creek as per the rules laid down in the notification. Industrial projects with investments above IDR 500 million must obtain MoEF clearance and are further required to obtain a Letter Of Intent (LOI) from the Ministry of Industry. A No Objection Certificate (NOC) from the State Pollution Control Board (SPCB) and the State Forest Department is required if the location involves forestland. Once the NOC is obtained, the state authority converts the LOI into an industrial license. Under the EPA, the MoEF has also issued several notifications to tackle the problem of hazardous waste management. These include: Hazardous Wastes (Management and Handling) Rules, 1989, which govern the manufacture, storage and import of hazardous chemicals and management of hazardous wastes. 136 Biomedical Waste (Management and Handling) Rules, 1998 govern proper disposal, segregation and transportation of infectious wastes. Hazardous Wastes (Management and Handling) Amendment Rules, 2000 provide the guidelines for the import and export of hazardous wastes in the country. The EPA prescribes emission and effluent standards pertaining to specific sectors as set forth below: General Standards: for discharge of environmental pollutants can be accessed at http://cpcb.nic.in/GeneralStandards.pdf Chemicals: for organic chemical industries can be accessed at http://cpcb.nic.in/IndustrySpecific-Standards/Effluent/OrganicChemicalsManufacturingIndustry.pdf The effluent standards for inorganic chemical industries can be accessed http://cpcb.nic.in/Industry-Specific-Standards/Effluent/InorganicChemicalIndustry.pdf at Food: the effluent standards for food and fruit processing industries can be accessed at http://cpcb.nic.in/Industry-Specific-Standards/Effluent/Food&FruitProcessingIndustry.pdf Fiber: the effluent standards for man-made fiber industries can be accessed at http://cpcb.nic.in/Industry-Specific-Standards/Effluent/Man-madeFibreIndustry.pdf Rubber: the effluent standards for natural rubber industries can be accessed at http://cpcb.nic.in/Industry-Specific Standards/Effluent/NaturalRubberProcessingIndustry.pdf The effluent standards for synthetic rubber industries can be http://cpcb.nic.in/Industry-Specific-Standards/Effluent/SyntheticRubber.pdf accessed at Motor Vehicles: the vehicular exhaust emission standards can be accessed at http://cpcb.nic.in/Industry-Specific-Standards/Emission/MotorVehicles.pdf d) Restrictions under the Factories Act, 1948 The Factories Act, 1948 provides for permissible levels of certain chemicals in the work environment. Annex V provides details in this regard. 4. Special Economic Zones (SEZ) The measures discussed below apply horizontally across all the targeted industries, unless otherwise indicated. Policy on Foreign Direct Investment (FDI) in SEZs In May 2003, the Indian government issued the FDI Manual under the FDI policy announcing the decision to permit 100 percent FDI in SEZs through the automatic route 430 for all manufacturing activities except those listed below: arms and ammunition, explosives and allied items of defense equipment, defense aircraft and warships; atomic substances; 430 No prior approval is required for FDI under the automatic route. Only information to the RBI within thirty days of inward remittances or issue of shares to non residents is required to be given. 137 narcotics and psychotropic substances and hazardous chemicals; distillation and brewing of alcoholic drinks; and cigarettes/cigars and manufactured tobacco substitutes. Foreign direct investment in SEZs, however, is subject to the sectoral caps prescribed under the FDI sectoral guidelines.431 The FDI sectoral guidelines provide industry-wise sectoral limits of investment in India by persons resident outside India or by foreign companies. The targeted industries can be established in SEZs subject to the FDI sectoral guidelines. Details on the sectoral limits of investments in these industries are provided in the section on foreign ownership limitations below. Limitations on setting up industries in SEZs The targeted industries can be established either in sector-specific SEZs or multi-product SEZs. Such industries must, however, be set up in SEZs that are more than 10 hectares in size. Approval procedure for Units or Enterprises in a SEZ The procedures for setting up a unit in a SEZ are lengthy and cumbersome. The approval required for establishing a unit in SEZ involves multi-level clearances. For instance, an application must be made to the office of the Director General of Foreign Trade (DGFT) for allotment of the Importer-Exporter Code (IEC) number. In addition, registration with the Central Pollution Control Board is sought through a separate application and subsequent to the registration, an application is made to seek pollution control clearance. The SEZ units are under an obligation to fulfill the terms and conditions subject to which the Pollution Control Board grants pollution control clearances. Moreover, the units must be registered under the Central Sales Tax and VAT legislations. Therefore, securing approval for establishing a SEZ unit involves approaching several authorities for such registrations. Export obligations Exportation being one of the main objectives of SEZ, every SEZ unit is under an obligation to export its products or services. Under the SEZ Rules 2006, a SEZ unit must meet the positive net foreign exchange earning432 requirement. Domestic Tariff Area (DTA) Clearances SEZ units are allowed to export their products to the DTA433 subject to the levy of applicable duties. SEZ units are however, permitted to import or procure raw materials, semi-finished goods among others without payment of duty, taxes or cess for their authorized operations. As envisaged in the Union Budget 2011-12, all clearances from SEZ into the DTA are exempt from the levy of the SAD434 provided they are not exempt from the levy of VAT or sales tax. All procurements or clearances are subjected to verification by the appropriate customs or other authorities. 5. Controls on Foreign Exchange The measures discussed below apply horizontally to all the targeted industries, unless otherwise indicated. 431 FDI policy guidelines prescribe the ceiling for foreign investment in Indian companies engaged in various sectors of business. 432 The net foreign exchange earning amounts to the excess of the free on board (FOB) values of all exports over the cost insurance and freight (CIF) value of all imports. 433 DTA means the whole of India (including the territorial waters and continental shelf) but does not include the areas of the Special Economic Zones. 434 SAD is levied under Section 3(5) of the Customs Tariff Act, 1975 on imported goods, having regard to the maximum sales tax, local tax or any other charges for the time being leviable on a like article on its sale or purchase in India. 138 a) Foreign Investments in Equity or Preference Shares or Debentures Under the FDI scheme, 435 a person resident outside India can purchase equity or preference or convertible preference shares and convertible debentures issued by an Indian company. At present, the issue of shares by a company in India to a person resident outside India is permitted only against inward remittance of convertible foreign exchange through normal banking channels or by debit to the Non-resident External (NRE)/Foreign Currency Non- Resident (FCNR) account of the person concerned maintained with an authorized foreign exchange dealer or bank. Some Indian companies raise funds under the FDI route through the issuance of hybrid instruments such as optionally convertible or partially convertible debentures that are intrinsically debt-like instruments. Some recent developments in this area include: Current Account Transactions - Remittances under Technical Collaboration Agreements – Liberalization On May 13, 2010, the Reserve Bank of India (RBI) issued Circular No. 52 to amend the Foreign Exchange Management (Current Account Transactions) Rules, 2000, (the “Current Account Rules”). Before the above amendment, Rule 5 of the Current Account Rules required prior approval of the Indian Ministry of Commerce and Industry for drawing foreign exchange for remittances under technical collaboration agreements where payment of royalty exceeds 5 percent on local sales and 8 percent on exports and the lump-sum payment exceeds USD 2 million. Pursuant to the aforesaid amendment, drawing of foreign exchange by persons for payment of royalty and lump-sum payment under technical collaboration agreements is permitted without the approval of the Indian Ministry of Commerce and Industry. Foreign Direct Investment in Indian Companies Indian companies can issue equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares to the public subject to pricing guidelines or valuation norms prescribed by regulations under the Foreign Exchange Management Act (FEMA). The inward remittance received by an Indian company through the issuance of Depository Receipts (DRs) and Foreign Currency Convertible Bonds (FCCBs) are treated as and counted towards FDI. Issue of shares by Indian Companies under FCCB/ADR/GDR Indian Companies can raise foreign currency resources abroad through the issue of FCCBs or DRs, in accordance with the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and guidelines issued by the Indian government from time to time. A company can issue American Depository Receipts (ADRs) or Global Depository Receipts (GDRs) if the company is eligible to issue instruments to persons resident outside India under the FDI Policy. However, an Indian listed company,436 which is not eligible to raise funds from the Indian Capital Market including a company which has been restrained from accessing the securities market by the Securities and Exchange Board of India (SEBI), will not be eligible to issue ADRs/GDRs. Unlisted companies, which have not yet accessed the ADR/GDR route for raising capital in the international market, require prior or simultaneous listing in the domestic market, while seeking to issue such overseas instruments. Moreover, unlisted companies, 437 which have already issued 435 The FDI scheme is defined as any scheme of investment by a non-resident entity or person resident outside India in the capital of an Indian company under Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000. 436 A listed company is one which has a listing agreement with a stock exchange and whose shares are quoted at the exchange and which feature in the official list of quotations. Apart from paying regular listing fees, the company must fulfill certain requirements, such as a minimum asset base and publication of specific financial information, both at the time of listing and periodically thereafter. If, for failure to fulfill these obligations a company is delisted, its shares cannot be traded on the exchange. 437 Companies which have already issued ADRs/GDRs as per the provisions of the erstwhile Foreign Exchange Regulation Act, 1973 139 ADRs/GDRs in the international market, must list in the domestic market upon making a profit or within three years of such issue of ADRs/GDRs, whichever is earlier. The proceeds raised through the issue of such ADRs/GDRs must be kept abroad until actually required in India. Pending repatriation or utilization of the proceeds, the Indian company can invest the funds in deposits, certicate of deposits (CDs) or other instruments offered by banks rated by agencies such Standard and Poor, Fitch IBCA, and Moody’s. with a credit rating not below the credit rating stipulated by the Reserve Bank of India (RBI). Also, the funds can be invested in the deposits with the overseas branches of Indian Authorized Dealers (ADs), treasury bills and other monetary instruments with a maturity or unexpired maturity of one year or less. There is no monetary limit up to which an Indian company can raise ADRs/GDRs. The erstwhile Overseas Corporate Bodies (OCBs),438 which are not eligible to invest in India and entities prohibited from buying, selling or dealing in securities by SEBI, will not be eligible to subscribe to ADRs/GDRs issued by Indian companies. The pricing of ADR/GDR issues must be made at a price determined under: (i) the provisions of the Scheme of Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993; (ii) the guidelines issued by the Indian government; and (iii) directions issued by the RBI from time to time. b) Entities into which FDI can be made FDI in an Indian Company Indian companies including micro and small enterprises can issue capital439 against FDI. FDI in Partnership firm/ Proprietary concern A Non-resident Indian (NRI) or a Person of Indian Origin (PIO) resident outside India can invest by way of contribution to the capital of a firm or a proprietary concern in India on a non-repatriation basis provided: Amount is invested by inward remittance or out of Non-resident External (NRE)/ Foreign Currency Non-resident (B) / Non-resident ordinary (NRO) account maintained with ADs or authorized banks. The firm or proprietary concern is not engaged in any agricultural/plantation or real estate business440 or print media sector. Amount invested shall not be eligible for repatriation outside India Regarding investments with repatriation benefits, an NRI or PIO may seek prior permission of the RBI for investment in sole-proprietorship concerns or partnership firms with repatriation benefits. The application will be decided in consultation with the Indian government. For investment by non-resident other than NRI or PIO, a person resident outside India other than NRI or PIO may make an application and seek prior approval of RBI for making investment by way of contribution to the capital of a firm or a proprietorship concern or any association of persons (AOPs) in 438 ‘Erstwhile Overseas Corporate Body’ (OCB) means a company, partnership firm, society and other corporate body owned directly or indirectly to the extent of at least 60 percent by a non-resident Indian. OCBs include overseas trusts in which not less than 60 percent beneficial interest is held by non-resident Indian directly or indirectly but irrevocably. However, the overseas trust was in existence on the date of commencement of the Foreign Exchange Management [Withdrawal of General Permission to Overseas Corporate Bodies (OCBs) ] Regulations, 2003 (‘the regulations”) and immediately prior to commencement of the regulation was eligible to undertake transactions as per the general permission granted under the Regulations. 439 ‘Capital’ means equity shares, fully, compulsorily & mandatorily convertible preference shares and fully, compulsorily and mandatorily convertible debentures. 440 Business of dealing in land and immovable property with a view to earning profit or earning income. 140 India. The application will be decided in consultation with the Indian government. However, there are some restrictions. An NRI or PIO is not allowed to invest in a firm or proprietorship concern engaged in any agricultural/plantation activity or real estate business or engaged in print media. FDI in Trusts FDI in Trusts other than a Venture Capital Fund is not permitted. FDI in other entities FDI in resident entities441 other than those mentioned above is not permitted. 6. Foreign Ownership Limitations Applicable to Foreign Investors Non-residents can make investments in the capital of a resident entity only to the extent of the percentage of the total capital as permitted in India’s FDI policy. While investment is prohibited in certain sectors, restrictions or caps on investment are applicable in certain other sectors. The current FDI policy in India permits 100 percent investment under the automatic route442 in the sectors below: Motorcycle Industry Synthetic Fiber and Textile Industry Automotive Parts Industry Plastics and Rubber Industry White Electric Home Appliance Industry Electric Device Industry Passenger Vehicle Industry Chemical Product Industry As per the RBI Master Circular No. 13/2010-11 dated July 1, 2010, 100 percent investment is permissible for manufacturing of hazardous chemicals, viz. hydrocyanic acid and its derivatives, phosgene and its derivatives, and isocyanates and diisocyantes of hydrocarbon under the automatic route. However, industrial license under the Industries (Development & Regulation) Act, 1951 and other sectoral regulations must be secured towards this end. As per the RBI Master Circular No. 13/2010-11 dated July 1, 2010, 100 percent investment is permissible for manufacturing of Industrial Explosives under the automatic route. However, industrial license under the Industries (Development & Regulation) Act, 1951 and Regulations under Explosives Act, 1898 must be secured towards this end. 441 Resident entity means any person resident in India, excluding an individual, such as: (i) any person or body corporate registered or incorporated in India; (ii) an office, branch or agency in India owned or controlled by a person resident outside India; and (iii) an office, branch or agency outside India owned or controlled by a person resident in India outside India owned or controlled by a person resident in India. 442 Investments can be made by non-residents in the equity shares/fully, compulsorily and mandatorily convertible debentures/ fully, compulsorily and mandatorily convertible preference shares of an Indian company, through two routes: the Automatic Route and the Government Route. Under the Automatic Route, the non-resident investor or the Indian company does not require any approval from the RBI or Government of India for the investment. Under the Government Route, prior approval of the Government of India through the Foreign Investment Promotion Board (FIPB) is required. 141 Food / Palm Oil Industry One hundred percent investment is permissible in certain agricultural sectors such as floriculture, horticulture, development of seeds, pisciculture, cultivation of vegetables and mushrooms under controlled conditions and services related to agro and allied industries, under the automatic route, subject to certain regulatory conditions.443 FDI is not allowed in any other agricultural sector or activity. One hundred percent investment is permissible under the tea sector, including tea plantation. However, the FDI proposal will be considered by the FIRB, subject to divestment of 26 percent equity in favor of an Indian partner or the Indian public within five years and prior approval of State Government concerned in case of any change in future land use. FDI is not allowed in any other plantation sector or activity. Distillation and brewing of alcohol are eligible for 100 percent FDI investment through the automatic route, subject to the grant of license by the appropriate authority. Coffee and rubber processing are eligible for 100 percent FDI investment through the automatic route. Industrial Parks One hundred percent FDI investment is permissible under the automatic route for ‘Industrial Parks’. The relevant definitions in this context are provided below: 443 “Industrial Park” is a project in which quality infrastructure in the form of plots of developed land or built-up space or a combination with common facilities, is developed and made available to all the allottee units for the purpose of industrial activity. “Infrastructure” refers to the facilities required for functioning of units located in the industrial parks and including roads (including approach roads), water supply and sewerage, common effluent treatment facility, telecom network, generation and distribution of power and air conditioning. “Common facilities” refers to the facilities available to the units located in the industrial park, and include facilities of power, roads (including approach roads), water supply and sewerage, common effluent treatment, common testing, telecommunications services, air conditioning, common facility buildings, industrial canteens, convention/conference halls, parking, travel desks, security services, first aid center, ambulance and other safety devices, training facilities and such other facilities meant for common use of the units located in the industrial Park. “Allocable area” in the Industrial park means: (i) in the case of plots of developed land, the net site area available for allocation to the units, excluding the area for common facilities; (ii) in the case of built up space, the floor area and built space utilized for providing common facilities; and (iii) in the case of a combination of developed land and built up space, the net site and floor area available for allocation to the units excluding the site area and built up space utilized for providing common facilities. “Industrial Activity” means manufacturing, electricity, gas and water supply, post and telecommunications, software publishing, consultancy and supply, data processing, database activities and distribution of electronic content, other computer related activities, research and experimental development on natural sciences and engineering, business and management consultancy activities and architectural, engineering and other technical activities. Details regarding the regulatory conditions applicable to FDI in the noted agricultural sectors are provided in Annex VI. 142 The Indian government allows 100 percent FDI under the automatic route in Industrial Parks subject to the following conditions: (i) the industrial park must comprise of a minimum of 10 units; (ii) no single unit should occupy more than 50 percent of the allocable area; and (iii) a minimum of 66 percent of the total allocable area must be allocated to the industrial activity. 7. Protection and Implementation of Intellectual Property Rights The WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) provides for minimum standards for the protection of certain categories of intellectual property rights such as patents, copyrights and related rights, trademarks, geographical indications, industrial designs and layout designs of integrated circuits. The TRIPS Agreement sets out standards which WTO members must adopt, though they are free to provide higher standards of protection. While a major step forward has been achieved in India with the enactment of the new Patent Law in 2005, implementation needs to be monitored carefully to guarantee full compliance with the TRIPS Agreement. Patents The international convention for the protection of Industrial Property (i.e., the Paris Convention) and the TRIPS Agreement provide patent rights for the protection of industrial property. In India, the rights conferred on a patentee are statutory rights conferred by the Patent Act, 1970 as amended from time to time. The basic obligation in the area of patents is that, inventions in all fields of technology whether products or processes will be patentable if they meet the three tests of being novel, involving an inventive step and being capable of industrial application. Certain provisions in Indian patent laws however are perceived as imposing stricter requirements for securing a patent than those under the WTO TRIPS Agreement. Under the Indian patent law there are certain inventions which are deemed specifically not patentable. Section 3(d) of India's Patents Act forbids the patenting of derivative forms of known substances (e.g., salts, polymorphs, metabolites, and isomers) unless they are substantially more effective than the known substance. In essence, Section 3(d) provides: No "new form" of an existing substance may be patented, unless it demonstrates increased efficacy. If it does demonstrate increased efficacy, then it is treated as an altogether "new substance". The "mere new use" of a known compound cannot be patented. Neither the Indian patent statute nor its implementing rules define “efficacy.” They give the patent office no guidelines for applying the new test. The pharmaceutical company Novartis has challenged this provision before the Indian courts as inconsistent with the WTO TRIPS Agreement. Geographical Indications The TRIPS Agreement contains a general obligation that WTO members must provide the legal means for interested parties to prevent the use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other that the true place of origin of the good. In India, the Geographical Indications of Good (Registration and Protection) Act, 1999 protects against the misuse of geographical indications. Trademarks WTO member countries are obliged to grant full protection to the registered trademarks. The Trade Marks Act, 1999 provides for the registration of trademarks for goods and services in India. Industrial Designs 143 The development of a design for commercial purposes involves considerable expenditure on research, time and creative skills. The value of a design as an intellectual property right is directly proportional to its originality and novelty. Under the Indian Design Act, 1911, the key criterion for registration of a design is that it be new or original. In addition, it must not have been previously published. 144