AAF looking to boost region's automotive supporting industries

JAKARTA (JP): Automotive supporting industries in Southeast Asian are shifting their market focus overseas to offset the decline in car sales in regional domestic markets, the ASEAN Automotive Federation (AAF) has said.

"The most important step now is to increase orders, so we must prioritize the exports of the products of our supporting industries," the organization's newly elected president, Herman Latief, said here yesterday.

Herman, also the chairman of the Association of Indonesian Automotive Industries, said producers of the car parts in the six countries under AAF, most of which have been hit by the crisis, could increase their supplies of car parts to their principle companies in Japan.

AAF groups automotive industries in Indonesia, Malaysia, Singapore, Brunei Darussalam, Vietnam and the Philippines.

Herman said Japanese car producers had pledged support of their local partners in AAF which were suffering from drastic downturns in sales of cars.

"AAF's task is to see that this commitment is realized into concrete measures."

The Japanese-based principle companies, for example, must provide both financial and market support for their ASEAN partners so they could continue operations and avoid mass layoffs, he said.

He said the local producers of car parts could supply directly to the Japan's plants or through the first line suppliers of the car makers in other countries.

Herman said the supporting automotive industry in Indonesia had long been a problem.

Producers of car parts and components were mostly composed of small or medium-scale companies with little capital, he said.

The companies lacked sophisticated technology and efficient human resources, he said.

The producers also lacked a strong marketing network, he said, adding these factors car producers in Indonesia to depend highly on imported parts.

"But in a time of crisis like this, we cannot depend on just selling cars, we must instead export the components."

Herman estimated sales in Indonesia would likely fall to 50,000 units this year, down from 395,000 last year. In the first half of this year, sales reached about 33,000 cars, he said.

Car sales are also estimated to fall significantly in neighboring countries this year.

Thailand estimated its car sales would fall to 130,000 cars this year from 300,000 in 1997, while Malaysia would likely drop to 180,000 from 420,000, he said. (das)