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APEC seeks to empower SMEs in auto supply chain

MEMBER economies of the Asia-Pacific Economic Cooperation (APEC) seek to come up with an actionable agenda that would empower small and medium enterprises (SMEs) to play a bigger role in the automotive global value chain (GVC) given the fast pace of growth in the auto industry.

This developed on the second day of the 22nd APEC Automotive Dialogue held in Makati City on Thursday, April 23 with the theme “Integrating SMEs (Small and Medium Enterprises) into the Automotive Global Value Chains.”

The APEC dialogue aims to encourage economies to move toward more integrated regional and global approaches to automotive policies.

Ma. Corazon Halili-Dichosa, chair of the 22nd APEC Automotive Dialogue, noted that APEC economies’ gross domestic products (GDP) have been growing briskly since the 2008 and 2009 financial crises along with world trade in motor vehicles.

“The combined GDP of the APEC economies in 2013 has been growing steadily and in 2013 it actually reached $34.5 trillion.  Growing GDP suggests increasing disposable incomes of consumers which can directly have positive spillover effects to the auto sector in the region, such as the increase in automobiles and increasing dynamism of auto manufacturing in the region,” Halili-Dichosa said.

In 2013, APEC economies accounted for 47.76 percent in the world trade of motor vehicles (MV) and parts.

“The dip in world trade for motor vehicles and parts in 2008 and 2009 is actually steeper compared to that of APEC economies’ total trade for MV and parts, suggesting resiliency of the APEC economic trade in MVs despite the drop in world demand,” Halili-Dichosa said.

Dynamic regional trade

There is a dynamic intra-regional trade in auto parts in Asia-Pacific, with the APEC economies intra-regional in MV parts growing at an annual compounded rate of 5.28 percent.

Similarly, trade in MV parts with the rest of the world is also growing at an annual compounded rate of 6.3 percent, which is actually bigger than the intraregional trade
“The faster pace of growth in MV parts trade compared to the MV trade suggests the growing importance of our economies in GVCs not just in Asia-Pacific region but with the rest of the world,” Halili-Dichosa said.

“SMES account for 97 percent of total APEC firms, and if we’re going to link it to auto manufacturing over the course of history, we can say that it has become more sophisticated and fragmented regionally,” she said.

“However, the clustering pattern of auto production and consumption in developed economies is now seen to have gradually shifted to developing economies, but the shift of the major markets to developing economies is not translating into opportunities for SMES.” she said.

An APEC study notes that SMES are often left out of the formation of GVCS as the fragmentation of the production process and cross border trade take place mostly within the networks of TNCs (transnational corporation).

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