Analysis of the Economic Development Role of Sectoral Business

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Analysis of the Economic Development Role of Sectoral Business ANALYSIS OF THE ECONOMIC DEVELOPMENT ROLE OF SECTORAL BUSINESS ASSOCIATIONS IN THE RUBBER, ELECTRONICS AND ELECTRICAL, AND AUTOMOTIVE SECTORS IN MALAYSIA, THAILAND AND VIET NAM ANALYSIS OF THE ECONOMIC DEVELOPMENT ROLE OF SECTORAL BUSINESS ASSOCIATIONS IN THE RUBBER, ELECTRONICS AND ELECTRICAL, AND AUTOMOTIVE SECTORS IN MALAYSIA, THAILAND AND VIET NAM November 2016 Bureau for Employers’ Activities (ACT/EMP), Working Paper No. 16 International Labour Office ANALYSIS OF THE ECONOMIC DEVELOPMENT ROLE OF SECTORAL BUSINESS ASSOCIATIONS Copyright © International Labour Organization 2016 First published (2016) Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Licensing), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: [email protected]. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with a reproduction rights organization may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. Analysis of the economic development role of Sectoral Business Associations in the rubber, electronics and electrical, and automotive sectors in Malaysia, Thailand and Viet Nam; International Labour Office, Bureau for Employers’ Activities (ACT/EMP). –Geneva: ILO, 2016. (Bureau for Employers’ Activities (ACT/EMP) working paper ; No. 16) ISBN: 9789221308225; 9789221196860 (web pdf) International Labour Office, Bureau for Employers’ Activities economic development / employers organization / input output analysis / rubber industry / electronics industry / electrical industry / motor vehicle industry / Malaysia / Thailand / Viet Nam ILO Cataloguing in Publication Data The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications and digital products can be obtained through major booksellers and digital distribution platforms, or ordered directly from [email protected]. For more information, visit our website: www.ilo.org/publns or contact [email protected]. IN THE RUBBER, ELECTRONICS AND ELECTRICAL, AND AUTOMOTIVE SECTORS IN MALAYSIA, THAILAND AND VIET NAM PREFACE Business membership organizations (BMOs) are increasingly faced with a wide range of challenges posed by profound economic, political, social and technological developments. These forces are changing the traditional functions of such organizations as social partners and a bargaining agents. BMOs are also responding to other factors, such as increasing membership diversification, newly emerging policy fields and new policy actors, innovative ways of doing business and managing production and employment relationships, new pressures and opportunities and increasingly transparent environment, among others. In response, BMOs are adapting and transforming their roles and organizational models to meet the expectations of their members. Today, a multiplicity of political, economic and social demands calls for a better understanding of the role of business organizations in social and economic development, and an analysis of the evolving institutional roles and organizational functions of BMOs. The Bureau for Employers’ Activities (ACT/EMP) of the International Labour Organization has intensified its research efforts on how BMOs are changing and reacting to these challenges. The focus of this sector-specific working paper on countries in South-East Asia is sensitive to significant regional differences and responds to the need for more research on organized business in Asia. We hope the findings from this paper acts as a stimulus to on-going discussions on the wider role that sectoral associations can play in the development of the economy, sector, individual enterprises and ultimately workers and their families. Deborah France-Massin Director Bureau for Employers’ Activities International Labour Office iii ANALYSIS OF THE ECONOMIC DEVELOPMENT ROLE OF SECTORAL BUSINESS ASSOCIATIONS CONTENTS PREFACE III CONTENTS IV LIST OF FIGURES VI LIST OF TABLES VI ACKNOWLEDGEMENTS VII ABBREVIATIONS VIII 1 INTRODUCTION 1 2 OVERVIEW OF THE RUBBER, ELECTRONICS AND ELECTRICAL (E&E), AND AUTOMOTIVE SECTORS IN MALAYSIA, THAILAND AND VIET NAM 4 2.1 Rubber sector 4 2.1.1 Economic importance 4 2.1.2 Rubber value chain structure and challenges 8 2.2 E&E sector 10 2.2.1 Economic importance 10 2.2.2 E&E value chain structure and challenges 12 2.3 Automotive sector 14 2.3.1 Economic importance 14 2.3.2 Automotive value chain structure and challenges 16 3 RECENT TECHNOLOGICAL INNOVATIONS AND CHALLENGES 19 3.1 Rubber sector 19 3.1.1 Upstream segment 19 3.1.2 Midstream segment 20 3.1.3 Downstream segment 21 3.2 E&E sector 21 3.2.1 Malaysia 22 3.2.2 Thailand 24 3.2.3 Viet Nam 26 3.3 Automotive sector 28 3.3.1 Malaysia 28 3.3.2 Thailand 29 3.3.3 Viet Nam 31 iv IN THE RUBBER, ELECTRONICS AND ELECTRICAL, AND AUTOMOTIVE SECTORS IN MALAYSIA, THAILAND AND VIET NAM 3.4 Conclusions 33 3.4.1 Rubber 33 3.4.2 E&E 33 3.4.3 Automotive 34 4 THE ROLE AND ABILITY OF SBAS IN DRIVING TECHNOLOGY UPTAKE, ECONOMIC DEVELOPMENT AND EMPLOYMENT GROWTH 35 4.1 Rubber SBAs 35 4.1.1 MARGMA 35 4.1.2 MRPMA 37 4.1.3 MARGMA and MRPMA: Facilitating work for foreign migrant workers 39 4.1.4 Thai Rubber Products Industry Club (RPIC): Maximizing productivity 39 4.1.5 VRA 40 4.2 E&E SBAs 43 4.2.1 Malaysian American Electronics Industry and Japanese Chamber of Trade and Industry Malaysia (JACTIM): 43 Supporting E&E American and Japanese enterprises 4.2.2 TEEAM and the National Information and Communication Technology (ICT) Association of Malaysia (PIKOM): 44 Providing trade benefits, preferential interest rates and training to both national and foreign enterprises 4.2.3 Thai Embedded Systems Association: Promoting technology uptake and E&E training 44 4.2.4 Thai Electrical and Mechanical Contractors Association (TEMCA): Supporting the creation of new national standards 45 4.2.5 International Disk Drive and Equipment and Materials Association (IDEMA), Thailand 45 4.2.6 Viet Nam Electronic Industries Association (VEIA) 46 4.3 Automotive SBAs 48 4.3.1 MACPMA 48 4.3.2 TAPMA 51 4.3.3 Viet Nam’s automotive SBAs 53 4.4 Conclusions 53 CONCLUSIONS 55 REFERENCES 56 APPENDIX 63 v ANALYSIS OF THE ECONOMIC DEVELOPMENT ROLE OF SECTORAL BUSINESS ASSOCIATIONS LIST OF FIGURES Figure 1. Natural rubber production (panel A, millions of tonnes) and area harvested for natural rubber 5 (panel B, millions of hectares), Malaysia, Thailand and Viet Nam, 1961–2013 Figure 2. Rubber exports (panel A, total in billions of current US$) and rubber share of total exports 6 (panel B, percentage), Malaysia, Thailand and Viet Nam, 1995–2015 Figure 3. Natural rubber value chain 8 Figure 4. Total employment in manufacture of electronics and electrical products and share of total 10 manufacturing employment, Malaysia, Thailand and Viet Nam, latest available year (thousands) Figure 5. Total E&E exports (Panel A, in billions of current US$) and E&E as a share of total exports 11 (Panel B, percentage), Malaysia, Thailand and Viet Nam, 1995–2015 Figure 6. Total employment in manufacture of motor vehicles and parts and share of total 14 manufacturing employment, Malaysia, Thailand and Viet Nam, latest available year (thousands) Figure 7. Automotive exports (panel A, total in billions of current US$) and automotive share of total exports 15 (Panel B, percentage), Malaysia, Thailand and Viet Nam, 1995–2015 Figure 8. Car production in selected ASEAN Member States by share, 2015 16 Figure 9. Automotive supply chain 17 LIST OF TABLES Table 1. Main E&E product categories and products in Malaysia, Thailand and Viet Nam 12 Table 2. Concrete functions, activities and partners of MARGMA 36 Table 3. Concrete functions, activities and partners of MARPA 38 Table 4. Concrete functions, activities and partners of RPIC 40 Table 5. Concrete functions, activities and partners of MACPMA 49 Table 6. Concrete functions, activities and partners of TAPMA 51 vi IN THE RUBBER, ELECTRONICS AND ELECTRICAL, AND AUTOMOTIVE SECTORS IN MALAYSIA, THAILAND AND VIET NAM ACKNOWLEDGEMENTS We wish to acknowledge the contributions of numerous individuals and organizations in developing this working paper. Without their active engagement and expertise, a report of this nature would not have been possible. The contributions of the employers’ organizations from across the region were instrumental. In particular, we acknowledge the Vietnam Chamber of Commerce and Industry,
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