【正文】 2023 PricewaterhouseCoopers LLP. All rights reserved. Potential AFTA Vulnerabilities AFTA may be predicated on flawed model ? More like struggling Mercosur model than successful NAFTA ? Unlike NAFTA, for example, the major trade partners for ASEAN countries are outside AFTA (US, EU, Japan), not within the bloc ? AFTA does not seem relevant, given extraregion exportorientation of all the regional economies ? AFTA a false promise, aimed more at outside investors than a true attempt to change structure in the region? May just be too little, too late ? Though a good and necessary action to decrease inefficiencies in the region and add scale to successful enterprise … ? … Still may not allow AFTA to pete successfully with the much larger market of China ? Will the AFTA members allow the hard choices rationalization, elimination of national panies/petitors, trust of neighbors? AFTA vs. China ? China?s joining the WTO, opening its market, and sheer size threatens to take foreign investment from ASEAN and put it at a severe petitive disadvantage ? However, while ASEAN is likely to lose out in a relative sense, China?s economic improvement may well be a ?rising tide that lifts all boats?, leading to increased prosperity in SE Asia ? In order to win, region must ultimately change to plementary economic basis to China, not petitive 22 169。 2023 PricewaterhouseCoopers LLP. All rights reserved. ASEAN Vehicle VBE Performance, 20232023 Avg. D a e w o oDCXF o r dPr o to nGMH o n d aPSAR e n a u l tVWT o y o ta010020030040050060070080010% 20% 30% 40% 50% 60% 70% 80%U t i l i za t i o nCapacity (000s)80% Shared pain: All manufacturers are suffering from low capacity utilization in the region. This can be attributed to the historic need to duplicate investment in each ASEAN country as well as cater to wildly divergent vehicle tastes, tax laws, and government protectionist measures. 20 169。 2023 PricewaterhouseCoopers LLP. All rights reserved. C h an g e to A si a C ap aci ty, 20232023 7 5 0 5 0 0 2 5 00250500750ChinaASEANRest of Asia(000) UnitsA SEA N C a p a c i ty G r o w th 2 0 0 0 2 0 0 8050100150200MalaysiaThailandPhilippinesIndonesiaVietnam(000) UnitsNet New Capacity in ASEAN Malaysia’s capacity growth is mostly attributed to Proton’s ambitious expansion plans. Most Thai capacity came online in 2023…future trajectory is not new investment but rather utilizing existing assets. China?s capacity growth alone exceeds all of ASEAN Over 700K units of negative capacity growth mostly due to plant rationalization in Japan 18 169。 2023 PricewaterhouseCoopers LLP. All rights reserved. ASEAN Assembly Growth by Segment A v e r a g e V o lu m e 2 0 0 0 2 0 0 80 2 5 0 , 0 0 0 5 0 0 , 0 0 0 7 5 0 , 0 0 0 1 , 0 0 0 , 0 0 0S m a l lM i dF u l lS m a l l C a rM i d C a rF u l l C a rP i c k u pS p o r t U t i l i t yV a n% C T G 2 0 0 0 2 0 0 80% 10% 20% 30% 40% 50% 60% 70%Sm a l lM i dFullSm a l l C a rM i d C a rF u l l C a rPi c k u pSp o r t U ti l i tyV a nGrowth in 20232023 will e mainly from mid and small vehicles. Pickup trucks continue to be a solid source of growth as Thailand solidifies role as global pickup assembly source, being the largest assembler of pickups in the world behind the . A large portion of midsize growth is pickups 16 169。 2023 PricewaterhouseCoopers LLP. All rights reserved. Upside Scenario: AFTA successfully implemented, regional trade grows, governments allow businesses to make difficult choices (unpetitive panies fail, old and excess capacity eliminated), China serves as engine for regional growth, and political and economic stability maintained across the region. If all this occurs, ASEAN will be key global growth region, a resurgent tiger, and will significantly exceed baseline volume predict