In what ways will the proposed ASEAN Economic Community (AEC) implementation in 2015 impact the automotive industry?
APFEL: AEC is a term that has been used as if there would be steep change overnight. This is not what it is. Since 2010, since the ASEAN Six, there was a free trade agreement already in place. If you have 40% local content on a vehicle produced in the ASEAN Six countries, which Thailand and Indonesia are both part of, you can export into the other countries that are a part of this group. For us, the region is one. If we build a vehicle like our Colorado truck in Thailand, we also export it to Indonesia. We sell it to Cambodia and a number of other countries as well. In 2015, you will see some of the ASEAN countries, like Vietnam, that still have barriers, begin to take them down. This will make it easier for us to look at the total supplier footprint, to source parts from where capabilities are best. It will allow us to export vehicles from our production hubs to more countries. This is an opportunity. This isn't anything new though. We are essentially improving on what we have already been good at since 2010.
What we will see with the AEC is that the access to other locations in Southeast Asia for capable suppliers will be easier. Competition will increase. Competition is a good thing. We are looking forward to competition. We are sourcing parts and services every year in Southeast Asia to the value of $1.6bn. This is critical not only for our operations here, but for our manufacturing facilities around the world. As Southeast Asia opens up and becomes more of a trading block for the region, different strengths will play out. Malaysia has strength in its education system. There are very good universities there, just like in Singapore. Indonesia has an ample supply of capable labour. Thailand has strength in its supplier footprint. There are customers all over the region. As the countries grow together, they should play like a team and not upstage each other. They should play to their individual strengths and complement each other. This will make the region much stronger.
What new initiatives and plans for growth does General Motors have in Indonesia?
APFEL: Indonesia is a fascinating market. Indonesia’s demographics and macroeconomics have produced a growing middle class. Boston Consulting Group’s recently released report discusses the increasing spending power of the Indonesian middle class. They are the largest untapped opportunity for companies. We have a heritage in Indonesia. We were the first manufacturer of vehicles with GM Java in the 1920s. We have a strong Chevrolet heritage in Indonesia and we will return with a new plant to build a new vehicle called the Chevrolet Spin. This is a small 7-seater, which targets the heart of the Indonesian market. This is the largest segment in Indonesia. We will build where we sell, and we will be sourcing where we build. Chevrolet is our signature brand around the globe. We build and sell Chevrolet cars in this region. We actually have one Opel dealer in Singapore, but we are concentrated on Chevrolet. We have an ever-increasing portfolio and we are very happy with it. We have a growing dealer network. If you think about it, this year alone in Thailand, we are going to move from 96 to 120 dealer points. This represents an investment of about THB1.5bn ($51m). Our dealer partners are putting money down because they believe in the business. They have seen their sales numbers go up. They are hiring, and they are looking for talented mechanics.
What plans does GM have to enter the Myanmar market?
APFEL: Myanmar is fascinating. I was part of the first mission of US businesses to Myanmar at the very beginning of its opening up, and our team has been back regularly since then to talk to our partners, and to understand consumer behavior. We are actually very intrigued by the opportunity. You have to balance that to make sure you have due diligence in everything you do, and that you deal with the right people. For us, winning with integrity is the overriding principle. We have progressed to a point where we are now ready to appoint a distributor very soon. I am very certain that we will sell the first Chevrolet vehicles out of a very nice showroom in downtown Yangon this year. We started business in Laos in July of 2012 and there is a very nice showroom there. Within 5 months, our market share has increased from 0% to 6%. I am looking forward to seeing a similar number from Myanmar. It is a great opportunity to export the vehicles we build in Indonesia, or in Thailand, or in some of our other operations, to a market that is hungry for a great product. This is what we are intending to do.
AEC is a term that has been used as if there would be steep change overnight. This is not what it is. Since 2010, since the ASEAN Six, there was a free trade agreement already in place. If you have 40% local content on a vehicle produced in the ASEAN Six countries...you can export into the other countries that are a part of this group. For us, the region is one.