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Therefore it is necessary to divide ASEAN into 2 groups.

The figure 6 below shows the value of automobile export to ASEAN. In year 2001, the export value of automobile from Thailand to ASEAN-5 is very low. This is because at this point AFTA is not fully operated yet. Even though ASEAN members have signed AFTA agreements in 1992. In year 2003, AFTA is now fully operated and this results in huge increase in export of automotive to ASEAN-5 which is shown in figure 6 point A.

Figure 6: Export of vehicles to ASEAN markets

A

(Source: The Customs Department)

Export of vehicles to ASEAN-5 market is growing at very fast rate with average growth of more than 100% since the beginning of 2001. After the joining of AFTA by ASEAN-5, Thailand cannot ignore this market because of this huge value of export are traded between them. One of the reasons behind this large value of export of automobile is the production capacity that Thailand has. Figure 7 shows the production of vehicles by ASEAN-5 countries.

From the figure above we can noticed that Thailand has the highest vehicle production among ASEAN-5 countries. Thailand can produce automobile twice as good as Indonesia. Half of total vehicles productions in ASEAN-5 countries are coming from Thailand in both 2009 and 2010. The production capacity is now compared to population between ASEAN-5 produces. Size of population and production Capacity are shown in figure 8 below.

Firstly, let’s assume that each nation in ASEAN-5 has same demand for automobile according to their populations. Thus this mean nation with high population will demand more vehicles than nation with lower population. By this assumption, any nation with population higher than Thailand should has production capacity higher than Thailand. For simplicity we will assume that demand of vehicles are supply by each nation, no trades are involve. Thus nation such as Indonesia, Philippines should have higher production capacity than Thailand. But in reality these 2 countries have lower production capacity than Thailand. In order to serve their domestic demand, they need to import. Therefore Thailand needs to supply their demand. As a result we saw huge increase in export of vehicles to ASEAN-5 nations. From figure 7 and 8, we could say that Thailand has become automobile production hubs in South-East Asia.

The figure 9 below shows the export of automobile to CLMV markets. Export of vehicles to CLMV market is growing at very fast rate especially Lao. Thai export to Lao with value of only 120 million baht in year 2001. After AFTA export of Lao has grown more than 40 times since 2001. In 2010 Thailand export vehicles to Lao with export value greater than 4,000 million baht. However value of export to Lao may seems very high in CLMV markets but when Value of automobile export to Lao is compared to ASEAN-5 nation such as Indonesia, Thailand export vehicles to Indonesia with value nearly reached 30,000 million baht. That’s nearly 1/10 of Lao’s value. In figure 9, we noticed that Cambodia, Lao and Myanmar have higher export value than Vietnam. This is because these 3 countries have boarder next to Thailand and it makes transportation of vehicles much easier.

Figure 9: Export of automobile to CLMV markets

(Source: The Customs Department)

Both ASEAN-5 and CLMV markets have been one of the m