IMPACTS OF THE ASEAN FREE TRADE AREA (AFTA) AGREEMENT ON SOURCING STRATEGIES IN MALAYSIA

With the implementatioii of ASEAN FREE TRADE AREA agreement, the barriers to trade within the ASEAN community will be eliminated. Given the seriousness of the ASEAN FREE TRADE AREA agreement, the initial years of the implementation-are the most opportune tune for members of the local business community to monitor closely its impact and adopt the most appropriate strategies to counter the effects. This research aims to identify the impact of AFTA agreement to the corporate sourcing strategies in Malaysia. With the elimination of barriers to trade there will be a major impact to the local industry that has been under the local government protection. Local corporate companies need to be competitive in order to compete. Current management strategies must be reviewed and revised in order to be AFTA compliant, in other words to be able to compete m the ASEAN market. Designing and reviewing current and new sourcmg, logistics and supply chain strategies are a must. With the elimination of trade barriers, corporate companies will be able to source from fellow ASEAN countries and the potential to market their products to ASEAN countries is prevalent. Corporate companies should perceive ASEAN as a one nation instead of many member countries and take advantage of the agreement. Only when the requirements and the constraints of the marketplace are understood, can a company, attempt to develop a strategy that will meet the needs of both the supply chain and the end customer. Competitive is a businesses need to improve organisational structures, information system and logistics processes. As a contributory factor on the knowledge in the impact of the AFTA agreement, this research identifies the economic concept of absolute and comparative advantage whereby companies must be specialised not only in production but other issues such as logistics, sourcing and supply chain management. This research perhaps is the first academic research on the impact of AFTA to Malaysia's corporate sourcing strategies. It is intended to analyse the impact and to anticipate possible issues that needs to be addressed as well to understand the behaviour of local corporate companies to the agreement