Abstract
Southeast Asian countries have rapidly developed through industrialization after the Second World War. In particular, foreign companies have been main players of industrialization after the nations converted their strategies into export-oriented industrialization from the 1980s onwards. It was evident in the consumer-electronic industry. However, the difference among Southeast Asian countries has expanded based on the production value and the revealed comparative advantage index of product, which represent the competitiveness of the industry, after the year 2000. One of the possible reasons for this is that the countries in the region have concluded and put into practice FTAs successively. Foreign electronics manufacturers had made direct investment and performed production operation in almost all Southeast Asian countries until the 1990s, while in recent years, some of them have shifted from local production to the import of products under the FTAs. It indicates a close connection between FTAs and production activities by foreign electronics manufacturers in Southeast Asia.
This paper analyzes the effects of FTAs on the white goods industry in Malaysia and Thailand, with reference to the case study of Japanese air conditioner and refrigerator companies. The result of analysis is as follows; First, FTAs prompted Japanese manufacturers to reorganize their production systems in Southeast Asia. In other words, they no longer needed to build production bases in the region and instead started to export products from countries like Malaysia and Thailand to neighboring countries under FTAs because of cut of tariffs under AFTA. Second, Southeast Asian countries, in particular Malaysia, have emerged as production base to supply to India after the ASEAN-India Free Trade Agreement entered into force. Finally, production capability in neighboring countries has been absorbed and production bases have been aggregated in certain countries under FTAs, resulting in increase in quantity of production and export amount in those nations.
