Potential For Regional Value Chains in the Automotive Sector: Can SADC Learn from the Asean Experience?

"The Association of Southeast Asian Nations (ASEAN) Industrialisation Cooperation (AICO) scheme created an opportunity for both foreign investors in the ASEAN region and member states to benefit from the regional free flow of goods in support of regional industrial development. The scheme played an important role in the development of a strong automotive sector in the ASEAN region, and lessons can be learned from its implementation. Despite the fact that the middle class in Southern Africa is growing, vehicle ownership is still minimal. It is thus appropriate to examine the prospects for a similar scheme within SADC. South Africa has by far the most developed automotive sector in the region, while Zimbabwe and Botswana are both attempting to build up their industries and Mozambique is beginning to receive foreign direct investment. Due to South Africa’s automotive dominance, regional integration has not expanded much beyond its exporting components and vehicles to other countries in the region. There is also an emerging trend of South African companies’ shifting production of certain components to other Southern African Customs Union (SACU) countries. This paper will examine AICO’s utilisation, challenges and successes in order to derive lessons for SADC, as well as the prospects of regional automotive integration."