Factors Influencing Automotive Investment in Three ASEAN Countries

The automotive sector is considered vital for promoting the economy. Likewise, Cambodia also prioritizes this sector. Moreover, Cambodia aims to become a production hub to export automotive parts to both regional and global markets. However, Cambodia has very few automotive assembly industries due to many complicating factors. What factors influences automotive investment? And how about those factors in Cambodia compared to Indonesia and Thailand? Thus, this study seeks to (1) explore a comprehensive understanding of factors affecting automotive investment and (2) provide implications to address these key factors of Cambodia compared to Indonesia and Thailand. For the methods of this study, the first stage is to write codes in R program for extracting journal articles related to factor affecting automotive industry, by selecting only title, doi, and issued. We found that a total of 95 journal articles related to the study were retrieved using the rcrossref, tidyr, dplyr, and rstatix packages in the R-program and RStudio version 4.4.1. After screening with the selection criteria, 26 studies were identified. Finally, 11 of the 26 papers were evaluated for eligibility and were analyzed to identify key factors affecting automotive investment. The second stage is to group and collect the existing data for each factor from reliable sources in order to compare these factors in the three ASEAN countries. The study was conducted for six months from July to December 2024. The findings showed that a promising landscape of Cambodia for automotive investment has such as a strong political stability, a high economic growth rate, tax incentives, a young workforce, attractive labor costs, growing industrial capacity, rising domestic demand, and a stable business environment. However, Cambodia must address infrastructure and bureaucratic challenges. The infrastructure of Cambodia is in developing stage, compared to Indonesia and Thailand. Bureaucratic inefficiencies are able to hinder business operations, making it difficult for companies to navigate regulatory processes efficiently. The following solutions are proposed to the Royal Government of Cambodia such as (1) prioritize strategic investments in infrastructure projects and continue its efforts on upgrading infrastructure, including transportation, digital connectivity, and utilities; (2) streamline bureaucratic processes in order to reduce complexity and length of administrative processes; and (3) adopt digital solutions and simplify regulatory frameworks. The integration of digital solutions into regulatory and business operations can improve transparency, reduce corruption, and increase efficiency.