Young- suk Hyun Ph.D Hannam University Daejeon , Korea email : [email protected]...
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Transcript of Young- suk Hyun Ph.D Hannam University Daejeon , Korea email : [email protected]...
The Prospect of Auto Industry Development in Kazakhstan Kazakhstan Machine Builders Forum April 16 2013
Astana, Kazakhstan
Young-suk Hyun Ph.D Hannam University Daejeon, Korea email : [email protected] skype: yshyun88 mobile : +82-10-4270-1519
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I. Introduction
II. Demand Forecast of Kazakhstan Auto Industry
III. Auto Industry Policy Options and Lessons
IV. Policy of Kazakhstan Auto Industry
V. Discussions
The Prospect of Auto Industry Development in Kazakhstan
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CU
KazakhstanBelarus
Russia
Outside CIS (China, EU)
CIS (Uzbekistan, Ukr… )
I Introduction
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Kazakhstan 9,550 prod (2011) Risk of Nutcracker
Long-term Auto Industry Dev. Plan
Russia 2.0 million prod (2011) Customs Union 2010- Gov. Strategy 2020 for Russian Car Industry - Industrial Assembly Agreement
East Bound Move
China 18.4 million prod (2011) WTO 2013 (KZ)
Cheap Price Largest producer & market M&A
West Bound Move
West and East Bound Move to Kazakhstan
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Strategic Path and Natural Path
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Ship
Natural pathStrategic path
River
Value Added, Job Creation, Industrialization
Large small
□ Kazakhstan’s Access to the WTO Kazakhstan’s accession to the WTO will become one of the most important stages on the way to integration of the country into the global economic system. But under the Customs Union regime, Kazakhstan cannot but follow Russia’s market opening schedule in negotiation with WTO. It will lower common customs tariffs and boost import demand.
□ Impact and Policy Implication
Lower Tariff
Lower Price of Foreign Automobile
Foreign Autos get More Competitive Power
Gain More Kazakhstan’s Auto Market
Domestic Car Makers are difficult to survive
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High Growth Middle Growth Low GrowthAnnual GDP Growth rate
More than 6% 5%~6% Less than 5%
Road Infrastructure Expand until 2020 Expand until 2016 and slowdown
Expand until 2016
Strategy ofAuto company
Aggressive medium Less aggressive
Energy Price Lower Stable Higher
Government Support Strong Weak No
Assumption of Vehicle Demand Forecast in Kazakhstan
Weak Government Support Strong
Company Strategy
Less Ag-gressive
High GrowthMid Growth
Low Growth No Growth
Aggressive
II. Demand Forecast of Kazakhstan Auto Industry
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High Growth Mid Growth Low GrowthNew Vehicle 395,000 248,457 192,000 passenger car 300,000 168,447 130,000
bus
truck
20,000
75,000
16,010
64,000
12,400
49,600
Used Vehicle 125,000 62,500 48,000
Total Demand 520,000 310,957 240,000
Summary of KZ’s Vehicle Demand Forecast in 2020 (Units)
2011 2012 2020
Optimistic Neutral PessimisticTotal New Vehicle Demand
63,607 130,000 395,000 248,457 192,000
New Vehicle Import (import ratio)
55,000 110,000 158,000(40%)
124,227 (50%)
115,200 (60%)
Export 1,229 1,000 70,000 50,000 30,000 Local production 8,000 20,000 307,000 173,728 106,800Reference Case Korea, Uzbekistan
Iran(IKCO) Romania Vietnam
Summary of Three Growth Scenarios in 2020
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III Auto Industry Policy Options and Lessons
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Malaysia
China Russia Thai-land
Brazil Slovakia Uzbek-istan
Korea Kaza-khstan
WTO 1995 2001 2012 1995 1995 1995 no 1995 2013
Firms Local MNC
Total 27 CV 9Local 2 proton, Perodua
MNC(state JV)Local 25
Local Geely, Chery, BYD
MNC Lo-cal
25Car 17CV 8Local GAZ,Kamaz,,,,
MNC
15Japan EU, China
MNC
19US, EUJapan
MNC
3 car onlyFrance, Korea Germany
State JV
1Uz-GM
Local MNC
7Car 5 CV 2Local :Hyundai Kia
Local MNC
Major Prod-ucts
localMNC
MNCLocal
localMNC
MNC MNC MNC MNC Local MNC
Policy(WTO after)
Product taxLocal content
Local con-tent
Recy-cling tax
2020 Plan (2010)
Japa-nese produc-tion hub
MNC depen-dent
Export to EU
Import prohibit
NO WTO
Special Con-sump-tion TaxAutomo-bile tax
Recy-cling taxLocal content product tax (VAT)
Re-marks
Self re-liance
Large do-mestic demand
Large poten-tial de-mand
Large popula-tion
Large popula-tion
EU CIS Gov Initia-tive
Gov. 1970s
Prod 2011
Car 488,261CV 45,254
Car 14,472,416CV 4,032,698
Car 1,738,163CV 250,757
Car 537,987CV 919,808
Car 2,519,389CV 1,013,227
Car: 640,230 only
Car 222,022only
Car 4,221,617CV 435,477
7,000
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WTO and Gov Auto Industry Policy Policy WTO Ac-
cessCountry After WTO WTO, re-
marks 1.MNC admit and local model dev
WTO early
Early 1995 Malaysia -local content-product tax
protest
MNC admit and Local dev WTO late
Late
more late
China Dec. 2001 RussiaAug. 2012
-local content
-recycling tax
protest
protest
3. MNC admit and no local model
Early1995
Thailand, Brazil Slovakia
- no violate
4. MNC admit And no local model NO WTO
No Uzbekistan -Import prohibit -export promotion
NA
5. MNC admit But Strong Self Re-liant
Early1995
Korea -special consump-tion tax (purchase) -automobile tax (operating)
R&D, educa-tion, busi-ness, tech support
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Performance
Time
Chaos (Market Opening)
Leaf frog
Mainstream
chasm (Death Valley)
Infant Growth Mature
Developing countries
Korea
Fall Behind
□ Korean government has supported holistically for the automotive industry. - Government’s support is important to cross the chasm.
Establish Long-term Development Plan
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Lessons from Korea’s Experience WTO Local Brand 1. Korea : 10th auto producing country (2.52 mil. production, export
978 thousands in 1995 when accessing WTO
2. Government strong initiative in supply and demand policy to dev local model in 1970s by local firm Hyundai Motor
3. Before WTO Korea, Gov could implement every policies to support local model and local maker : (ref: KOICA Report to Kazakhstan Gov. Feb. 2010)
4. Hyundai Motor selected “self reliance strategy” to develop local model with high risk taking entrepreneurship.
5. Korean Gov 1) special consumption tax (purchase tax : product Tax) 2) automobile tax (operating tax) to regulate foreign car import -
heavy tax for large cars (most import car) after WTO 3) Emission regulation as to regulate import of large foreign car
abolished as of the FTA with USA in 2012 8. Lessons - strong gov. intervention : industry policy, local content, local model
dev - without local model, hard to increase local content - but it was experience in 1970, 1980s before WTO - rapid catch up strategy under GATT
China after WTO (Dec 11 2001)
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1) Import Quota ; 1986-2005 (20 years) even after WTO Dec 11 2001
2) Local Content Issues 1 : WTO 2001 over 60% foreign parts vehicle assembled in China (below 40 local content vehicle) import duty (Custom tax) is same as complete vehicle 25% 2006 EU, USA proclaim to WTO as Unfair Trade 2008 China defeated but protest again to prevent simple screw drive foreign
vehicle plant in China 2009 Abolish3) Local Content Issues 2: by 2005 some parts custom duty 30% ( other parts 13-17%) 2006 to comply WTO complete vehicle 25% parts : 10% 4) Local Brand Vehicle Target (2006) 40% (2005) 60% (2010) 5) regulate foreign investment 2001-2008 limit not over 50% of foreign investment in automobile industry
not parts ind.6) Vehicle Safety Regulation (2005) : 9 regulations (back mirror, door
lock, interior materials … 7) Minimum Export Ratio Policy (2006) : new auto plant must meet Min
export Ratio
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1.농림수산품3.음식료품5.목재 및 종이제품7.석유석탄제품9.고무 및 플라스틱
11.철강13.금속제품15.전기전자기기
17.자동차19.기타수송장비21.전력가스수도
23.도소매25.운수 및 보관
27.금융 및 보험29.사업서비스
31.교육 및 연구33.문화오락서비스
35.기타
1.농림수산품
2.광산품
3.음식료품
4.섬유제품
5.목재 및
종이제품
6.인쇄 및
출판
7.석유석탄제품
8.화학제품
9.고무 및
플라스틱
10. 비금속광물제품
11. 철강
12. 비철금속
13. 금속제품
14. 일반기계
15. 전기전자기기
16. 정밀기기
17. 자동차
18. 선박
19. 기타수송장비
20. 기타제조업제품
21. 전력가스수도
22. 건설
23. 도소매
24. 음식 및
숙박
25. 운수 및
보관
26. 통신 및
방송
27. 금융 및
보험
28. 부동산
29. 사업서비스
30. 공공행정 및
국방
31. 교육 및
연구
32. 의료 및
보건
33. 문화오락서비스
34. 기타서비스
35. 기타
0
10
20
30
40
50
60
70
<Figure > Unit Structure of Korean Automobile Industry (2000)
Source : Input-Output Table, Bank of Korea
Chemical
Rubber & plastic
Steel Machinery
Electronics
Extensive inter-industry relationships
Auto Industry
IV. Policy of Kazakhstan Auto Industry
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Industrialization of Kazakhstan
⊙ Basic Approach
Driver Demand Creation Investment (Foreign/Local) Auto Industry Machinery: MES 20,000- 50,000 for auto plant
for parts Industry Parts Industry
Kazakhstan CU CIS
MES : Minimum Economic Scale
MachineryDemand Supply
Automobile
Vehicle
Manufacturing Industry
Industrialization of Kazakhstan Kazakhstan
Parts Industry for after market
After market Parts
Basic Strategy in Automobile and Automotive Parts Industry
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Policy Options of Kazakhstan Auto Industry
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Strategy Coun-try
Local Mar-ket protect
Gov. role Remarks
1
MNC Invest Local ModelWTO access protest
MalaysiaChinese Russian
-Recycling tax
-Product tax -Local content
Gov: Local model Sup-port Policy
Many MNC firms
Local firms
2 MNC Invest No Local ModelWTO access and Follow
Thai-landBrazil Slovakia
-Dependent on MNC
How to meet Rus-sia, China Uzbekistan
Thailand : Japa-nese production hub
Custom Union
1. Strategic path : Government Strong support 2 Natural path : Government Weak support
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Two Paths : Malaysia vs Thailand
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Malaysia Thailand Basic Policy Self reliance, Look East Policy in
1980sdependent
WTO Access 1995 1995
ASEAN ASEAN Member ASEAN Member
Auto Maker Local Maker. Model
27Local Maker: Proton. Perodua Local Model : Proton,
15No Local maker No Local model : Toyota, Isuzu, Honda Nissan . Mitsubishi
Gov Policy 2009 New Auto Industry Policy Incentive for local brand
2007 Eco car Program Incentive for foreigner Investment in auto industry
Local Model Share
60% + 0 % Japanese model 90%
WTO Against Follow Key Role Man Mr. Mahatier (Advisor Proton)
Previous Prime Minister 2011 Produc-
tion 2011 Export
1,193,000 units ( major : car ) 1,457,795 units (major : pick-up) 733,950
Remarks Lead Indonesia to start Timor Project in mid 1990s but fail as of WTO dispute
2012 : 10th auto making countryPick-up Export Base
Malaysian path
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1. Gov Policy : strong gov. support for local maker, local model in 1980s “Proton” to follow Korean Hyundai Path in 1970s [Look East Pol-icy]
2. Technical Assistance from Mitsubishi Motor/Japan 1995 60 % local Brand
( Proton, Perodua) 3 Product Tax 2004 1.1 Auto Parts custom tax decrease for ASEAN countries Product Tax Increase for imported vehicle, local vehicle assembled by foreign makers Product Tax is internal tax not WTO issues but national interest4. Strong Man PM : Dr. Mahatier “Hereafter 20 years, Malaysia needs protection policy for local model
car 4. Against and argue WTO : 2009 10 Industry Policy Used car Import prohibited/ 50% reduction of consumption tax for lo-
cal model /Old car support to buy local model 5. Free trade in 2006 : ten year after WTO6. ASEAN member in competing Thailand’s parts industry Japanese
support 7. Motivate Indonesia to start national car “Timor Project” in mid 1990s Indonesia : Low local content / dependent on MNC Japanese makers Screw drive factory
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Thailand Path
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1. Gov Policy : weak support , no local maker , no local model
2. Japanese production hub for ASEAN countries production 90% Japanese Brand
4. 2007 Eco car program below 1300cc gasoline 1400 cc diesel car 500 Million Baht Invest 100,000/ year within 5 year, engine, core parts in Thailand product tax 30% discount -> no corporate tax for 8 years -> no Tariff for Machine and facility for auto plant induce : Honda, Susuki, Nissan, Mitsubishi, Toyota
5. Relatively strong parts industry by Japanese makers 5. ASEAN member in competing Malaysia 6. 0th auto making country in 201 2
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Free TradePolicy
Majorto KZ
Weapons and Strategy Influence on Kazakhstan’s auto Industry (new vehicle Import por-tion, Data: Custom Office Kz) 2010 2011
CustomUnion (CU)
Russia -East Bound Move -Russia’s 2020 Plan/Gov-ernment support -Foreign alliance
Car Truck 46.4 % Bus 59.6 %
Car Truck 50% Bus 21.6%
WTO China -West bound Move -Cheap Price-World factory (largest producer, largest market)
Car Truck 29.6%Bus 9.3
Car Truck 32.8%Bus 8.2
CU and WTO to Kazakhstan’s Automobile Industry
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Specification CompetitionCurrent competi-tor
Potential competitor Source of Com-petitive Strength
Car - 1500cc UzbekistanUz-Daewoo
China Low price
1500-1800cc Russia Lada Russia, China Korea
1800-3000 Japan, Toyota Japan, GermanKorea
Quality, Brand
Over 3000 Japan, Toyota Japan, German Quality, Brand Bus Russia Russia, China Truck - 5 ton Russia Russia, China
5-20 ton Russia Russia, ChinaOver 20 ton China China
Special Vehicle*
ChinaBelarus
China
Competitors Analysis of Kazakhstan Automotive In-dustry
Forecast
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1. Russia
-Renault allied with AvtoVaz will export vehicles to Kazakhstan unless Kaza-khstan can not develop her own automobile industry.
- Kazakhstan could impose ‘recycling tax’. But that will be hindrance to Kazakhstan’s
automobile export. Governments of vehicle export countries will retaliate on vehicles
produced in Kazakhstan (ex: China) - How Meet Foreign and Russian vehicles made in Russia exported to Kaza-
khstan
2. China China will build auto plant in Belarus, Russia and Kazakhstan to use CU
and WTO : Commercial Vehicle, car
3. Uzbekistan : small car export or assembly in KZ
4. EU : car assembly plant in Kazakhstan
5. Asia : Korea, Japan : car and commercial vehicle (Bus Truck) YSHYUN, Machine Builders Forum : 16 April 2013 Astana
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1. Gov Strategic Decision : Malaysia or Thailand Path 2. WTO (ref : China and Malaysia case) 1) More extended grace time for developing country 2) Financial Support : Corporate Tax Recycling Tax, Product Tax, Consumption Tax 3) Tariff reduction for Plant and facility for auto plant in Kazakhstan 4) Local Content Regulation : preferential tariff for high local content
car 5) safety, emission regulations (Technical Center) 3. Industry Structure : number of auto makers increase so many as of dealer’s perspective 4. Export Models Local Model - Lada Model to export to CU and other countries - SUV Model -Commercial Vehicle 5. Local/ Foreign maker : start foreign model but target local model
in the long CAUV : Central Asian Utility Vehicle : [ref: Toyota Kijang in Indone-
sia]6. Parts Industry and Localization : Local Content Regulation, Joint
Venture 7. Technical regulation/standards (GLONASS system, Technical Center
by Gov. ) 8. What is Kazakhstan’s Ideal Picture in the future : - Contingency plan - Steering and Advisory Committee
Kazakhstan’s Policy Options
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V. Discussions
Ship
Natural pathStrategic path
River
Value Added, Job Creation, Industrialization of Kazakhstan
Large small
1. How to protect local market under CU and WTO ?2 How to take advantage of scale economy ? 2. How to increase value added in Kazakhstan ?3. How to access Local content, local model
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Thank for Your Attention
Young-suk Hyun Ph.D
Hannam University, Daejeon, Korea [email protected], skype: yshyun88 mobile : +82-10-4270-1519
YSHYUN, Machine Builders Forum : 16 April 2013 Astana