Southeast Asian Electronics Industry and Liberalization of Trade in Goods

Abstract

The purpose of this study is to clarify how FTAs has affected the industrialization of Southeast Asian countries based on the case of the electronics industry which is a representative industry in this area.

The results are summarized as follows;

First, Southeast Asian countries have independently carried out export- oriented industrialization and international division of labor under “ASEAN’s strategy for collective FDI-dependent and exported-oriented industrialization.” Although ASEAN has been promoting regional economic cooperation since the latter half of the 1970s, initially most of the cooperation ended in failure. But, Liberalization of trade in goods through the BBC (Brand to Brand Complementation) scheme, AFTA, AICO (ASEAN Industrial Cooperation) scheme from the latter half of the 1980s contributed to export-oriented industrialization using foreign capital in Southeast Asian countries.

Second, based on the case of the electronics industry, this paper confirmed the relationship between industrialization and trade liberalization of Southeast Asian countries since the 2000s. 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 because of cut of tariffs under AFTA.

Finally, when the production base of the final product is consolidated in a specific country in Southeast Asia, exports of parts have increased in other countries such as Vietnam and the Philippines.

From the above results, Liberalization of goods trade under the FTA has brought intraregional division of labor within the ASEAN region, and it can be said that Final products and parts circulated in the region and encouraged industrialization in Southeast Asian countries.