With the implementation of the ASEAN Economic Community (AEC) 2015, ASEAN will reach a prominent position to attract foreign investment.

As ASEAN is set to become the world's sixth-largest automotive market by 2018, it is expected that regional sales will double to nearly 4.7 million vehicles from 2.4 million last year.

Therefore, its 10 member-states continue to facilitate significant investments to flow into this region. A harmonization of standards and regulations has to be seen as essential step to the success of AEC 2015. Only with such a harmonization can the creation of a single manufacturing base as well as free movement of goods be secured.

According to a report entitled 'CEO 360 Degree Perspective of the Automotive Industry in ASEAN,' Indonesia, Malaysia, Thailand and Vietnam are demonstrating a compound annual growth (CAGR) of 10.1 percent. Sales in Thailand and Indonesia have reached over 1 million vehicles each, and a significant increase in production is expected based on local demands, with Thai dominance of nearly 2.5 million vehicles produced last year alone.

In addition to serving the regional market, ASEAN has assumed a greater role as a global supplier of automotive, and is expected to grow in importance due to a competitive production base with strong competencies in certain product ranges. This will increase substantially not only in terms of economic growth, but also employment and technological advancement.

The Philippines is better getting its act together in becoming one of the automotive production centers in ASEAN. Henry Co, formerly with Ford in the Philippines, outlined in a recent talk that all countries that have strong industrial manufacturing base are involved in automotive production. In his view, the Philippines must decide to develop the automotive industry in a targeted incentives approach. Henry added that once the initial production step is made, the supply industry will naturally follow.

Key recommendations for ASEAN:

Alignment of automotive products with international United Nations Economic Commission for Europe (UNECE) standards

- ASEAN to adopt UNECE regulations for automotive products and to work closely with all member-countries in the region to align the 19 priority UNECE standards. Target is to achieve a single regulatory regime in ASEAN by 2015. ASEAN should implement identical testing procedures using the same metrology method, standards and application regulations.

Consolidation of approval and homologation processes

- ASEAN to create a single regulatory regime for approval and homologation processes to improve time and cost efficiency. The automotive industry in ASEAN strongly advocates relevant authorities to accept test reports by qualified foreign bodies and align their standards in order to facilitate exports based on UNECE-approved regulations. Implementing such a regime will assist in creating economies of scale in production countries like Thailand and Indonesia and hopefully soon in the Philippines.

Adoption of higher fuel quality and emission standards

- The introduction of higher fuel quality and emission standards is the pre-requisite for the introduction of environmental-friendly low emission technologies. In order to prepare for the AEC 2015 and to enable free movement of goods, ASEAN will have to implement more stringent fuel quality and emission standards and harmonize those standards across the region. A concrete road map of implementation is urged by automotive manufacturers and the oil companies.

Harmonization of the definition on local content requirements

- The automotive sector is recommending a harmonization of related implementation procedures for local content and Rules of Origin application as part of the approval and homologation processes in order to become a single manufacturing hub in 2015.

Technology-neutral vehicle taxation scheme

- ASEAN is urged to promote to member-countries the introduction of a technology-neutral emission based taxation scheme, such that vehicles with low CO2 emissions would receive a tax relief whereas high-fuel consumption and high CO2 emission vehicles would be taxed higher, independent of their power train technology. Availability and quality of skilled work force; and

- ASEAN governments are encouraged to facilitate public-private partnerships in engineering and technology training to ensure that the work force meets industrial demand. In the Philippines dual education and apprenticeship need to be revived. The implementation of the Ramos-era legislation is over-bureaucratic; the Technical Education and Skills Development Authority is encouraged to create a public/private sector working group to make the implementation easier.