JAFZA Invites Malaysian Auto Parts Firms To Set Up Operations At Free Trade Zone

By Manik Mehta FRANKFURT, Oct 14 (Bernama) -- Malaysia’s well-developed auto parts and components industry has caught the attention of a number of global free trade zones which are courting foreign producers to set up manufacturing and assembly operations in their trade zone. Dubai’s Jebel Ali Free Trade Zone Authority (JAFZA), which set up a huge stand at the recent Automechanika 2016 show in Frankfurt, was courting both German and non-German manufacturers of these products to set up manufacturing, assembly and distribution operations at its free trade zone. Automechanika 2016 is the world’s biggest trade fair for the global auto parts and components industry There was also a large contingent of Malaysian exhibitors showcasing their wide range of products for the after-service market of the automotive industry. In an interview with Bernama at the Automechanika show, Ibrahim Mohamed Al Janahi, Deputy CEO and Chief Commercial Officer of JAFZA, made a strong pitch for his free trade zone whose importance would increase in the coming years as global automotive production is expected to peak. "Global automotive production is expected to exceed 100 million vehicles by 2017, according to Moody’s Investor Service, which sees auto sales improving in 2016, with steady growth in the US and strong sales in Western Europe. "This will offset the lower sales in Japan and slowing growth in China,” he said, pointing to the distribution facilities at JAFZA and the access to the Middle East markets. JAFZA claims that in the Middle East and Africa region, 45 per cent of the consumers prefer buying new cars, while 30 per cent prefer used vehicles. By 2021, nearly three million cars will be built yearly in the Middle East and Africa region, an output increase of about 50 per cent, according to PwC Autofacts. To gain a strong sales foothold in the region, PwC emphasises the need for automakers to have a substantial factory and distribution presence. The logical consequence of this development for foreign suppliers of automotive parts and components will be to follow automakers who rely on suppliers of such products to cater to the needs of the market. Frost & Sullivan, a consultancy company, sees total light vehicle sales in the Middle East reaching 4.4 million by 2020, with the number of vehicles in operation on the region’s roads touching 44.5 million. This rapid growth is also expected to drive up demand for parts and accessories too, for which sales are forecast to reach US$17.2 billion. A large number of Malaysian suppliers of automotive parts and components are already supplying buyers in the Middle East region. Al Janahi said that within the Gulf region, increased government spending, low interest rates and private sector activity are expected to boost demand for light vehicles by 25 per cent, to 1.75 million. Highlighting what he described as the “JAFZA advantage”, Al Janahi said that in 2015, JAFZA’s specialised trade platform supported a trade volume of some US$5 billion worth of vehicle and auto parts with its customisable manufacturing spaces, warehouse facilities and dedicated areas for packaging and repackaging, and a customs bonded corridor connecting Jebel Ali Free Zone to one of the world’s largest air cargo and shipping hubs. More than 620 of the world’s largest automotive and spare parts companies share this unsurpassed infrastructure with over 7,000 companies from 125 countries from around the world. As the Middle East’s trade and logistics hub, JAFZA seeks to attract more auto industry majors into the Free Zone interested in expanding their presence in the region. According to Frost & Sullivan, total light vehicle sales in the Middle East are ‎estimated to reach 4.4 million by 2020 compared to 3.2 ‎million in 2015. "This provides major opportunities for European multinationals in the auto sector and we encourage other majors in Europe to come to JAFZA to take advantage," he said. Al Janahi said JAFZA is the only regional trade and logistics hub in the world which is located between a world-class sea port and an international airport, adding that the automotive sector is “one of the most dynamic and innovation-driven sectors in JAFZA. "The free zone is currently home to over 620 automotive companies which include global names such as Honda, Nissan, Ford, GM, Daimler & Chrysler, Caterplllar, Mobis and Schaeffler. "JAFZA's automotive sector generated trade worth US$5 billion in 2015,” he said. JAFZA is currently home to over 7000 businesses including more than 100 Fortune Global 500 enterprises. It also has strong ties with Malaysia, having been involved in the management of Malaysia’s Port Klang Free Zone. Developed on 405 hectares, the Port Klang Free Zone is adjacent to Westports in Selangor and close to the Kuala Lumpur International Airport. According to JAFZA, many companies had shown interest in setting up operations in the Port Klang Free Zone when it was launched. -- BERNAMA