A race between member countries to attract factories undermines ASEAN ambitions to become a unified economic powerhouse, analysts say.
A man runs past national flags of ASEAN member states on May 5 outside a media center in Cebu, the Philippines, ahead of the 48th ASEAN Summit. (AFP/Ted Aljibe)
Indonesia and Thailand’s tussle over Toyota factories shows how weak regional integration could hamper ASEAN’s economic ambitions to become a unified powerhouse and global production base, with member states relying in incentives and restrictions to lure investments away from one another.The Association of Southeast Asian Nations has spent decades lowering trade barriers and linking supply chains, yet the bloc still struggles to coordinate investment and industrial policy, with members still competing for bigger slices of the common pie.
Earlier this month, Jakarta publicly urged Toyota to consider shifting its regional production base from Thailand to Indonesia, with Finance Minister Purbaya Yudhi Sadewa offering sweeping incentives and regulatory concessions to woo the Japanese carmaker.
“I’ll give you every incentive you want,” Purbaya said, questioning why Thailand remained ASEAN’s automotive manufacturing hub when Indonesia, Southeast Asia’s largest economy with nearly 290 million people, has yet to turn its huge market into a regional manufacturing base.
