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东盟自由贸易区是一个贸易协议，支持在所有10个东盟国家当地制造的东南亚国家联盟，包括马来西亚、新加坡、泰国、菲律宾、印度尼西亚、文莱、越南、老挝、缅甸和柬埔寨。东盟自由贸易区创建提升东盟竞争力的成员国之间建立自由贸易区在全球市场的生产基地和吸引外国投资者投资东盟国家。这个目标可以通过取消非关税壁垒，降低关税和进口东盟内部限制数量。进口货物将在关税税率降低到0%至5%。
由于降低东盟内部的关税，东盟国家倾向于在成员国之间进行贸易和进口。降低关税使进口增加。东盟自由贸易区的间接原因对传统出口行业的竞争力产生不利影响。这是一个很大的挑战，降低了当地企业的竞争力。这是因为货物便宜，现在由于税收对进口原材料的低利率。
AFTA is a trade agreement by the Association of Southeast Asian Nations in supporting local manufacturing in all 10 ASEAN countries, which are Malaysia, Singapore, Thailand, Philippines, Indonesia, Brunei, Vietnam, Laos, Myanmar and Cambodia. AFTA is created to enhance ASEAN's competitiveness as a production base in the world markets by constructing a free trade area among member countries and attract foreign investors to invest in ASEAN country. This objective can be done by abolish the non-tariff barriers, reduce intra-ASEAN tariffs and limit the imports quantity (SEACON, n.d.). Imported goods will be taxes on reduce tariff to 0% to 5% (Chips, 2002).
Due to the reduction of intra-ASEAN tariffs, the ASEAN countries tend to trade and import more among members. Decreasing of tariff causes the import to increase (Park & Li, 2004). AFTA indirectly causes an unfavorable effect on the competitiveness of traditional export industries. This poses a big challenge and reduces the competitiveness of local companies, Sime Darby. This is because the goods are cheaper now due to the lower rate of tax on the imported raw materials (Ghani, Zainuddin, Fereidouni, 2008).
In order to protect Sime Darby automobile competitiveness against imported product, Sime Darby Tyre Group (SDTG) set up a tyre join venture with Continental AG of Germany into a new company call SDC Tyre Sdn. Bhd in January 2002. This action causes Sime Darby to gave 30% of share to Continental because of the initially investment 31 million USD to enhance the R&D facilities and production (Albakri, 2012). SDC Tyres appear to be more efficient, lower cost and using advance technology of Continental to maintain their competitiveness and continue to have a leading position in local market (Chips, 2002). The Sime Darby's profit generated from automobile sector is decreased from RM 257.8 million in 2003 to RM 204 million in 2004 (Sime Darby annual report, 2004). However, there is a continuous profit increased for year 2005 with RM 300 million to RM 360 million in year 2006 (Sime Darby annual report, 2006).
On the other hand, AFTA also affect the plantation sector. After the tariff reduction, Malaysia palm oil price is still much more expensive than other palm oil exporter countries such as Indonesia and Thailand (Ernawati, Fatimah, Arshad, Shamsudin & Mohamed, 2006). This proved that free trade caused the domestic palm oil price increase. This makes Malaysia palm oil market share forecasted a loss of approximately 46 million USD as Malaysia is the largest producer in the world [1] . Plantation sector is the main revenue of Sime Darby. Since the palm oil market forecast a huge loss, Sime Darby will be affected. As shown in Annual report (2004, 2006), there is a drastically drop of profit in plantation sector from RM 285.1 million in year 2004 to RM 272.8 million in year 2005 followed by RM 249.8 million in year 2006.
ii) National Economic Policy 国民经济政策
Basically, National Economic Policy (NEP) is the policy that government used to achieve some objectives such as low unemployment, inflation, government borrowing, current account deficit, stable exchange rate and sustainable economic growth (Pettinger, 2009). NEP's objective can be achieved using variety of policy tools such as monetary policy, fiscal policy, exchange rate policy or supply side policies (Pettinger, 2009). For instance, government can try to boost up the aggregate demand to reach low unemployment. Since Sime Darby is a multinational corporation, different government economic policy may impact Sime Darby operations in that particular country.
In the 10th Malaysia plan, Government Transformation Programme (GTP) and New Economic Model (NEM) aim to achieve a high income and developed nation in 10 years time by solving the current issues and problems. One of the actions is to overcome the outflow of talent problem and enforce the healthcare quality of both private and public healthcare industry (Bernama, 2010). This creates an opportunity to Sime Darby Healthcare to enlarge their existing market. In 2011, the Sime Darby Healthcare CEO, Ms. Cheong said there are two new hospital projects to expand the healthcare market. One will be Sime Darby Medical Center Ara Damansara opening in January 2012 and Sime Darby Medical Center Park City will be open in 2013 [2] . In year 2012, Sime Darby healthcare division declared a 7% increase in profit compare to 2011 (Sime Darby Plantation, 2012).
Moreover, Sime Darby operation in Hong Kong and China is affected by the tightening of credit by banks and the policy implement by the government (Mrurugiah, 2011). This is because China implement a policy namely "New National Five" aim to stabilize the house sale pricing such as impose 20% tax on the house seller's profit. Other than that, the state council raises the down payment and loan rates for the buyers because the price of houses shot up too quickly (Tan, 2013). This caused the demand for houses decreased and hence, the property and construction sector in China and Hong Kong is also affected. Therefore, the operating profit in China, Hong Kong and Macau operations have decreased by 32% in the first half of 2012 (Sime Darby Platation, 2012).
iii) The emergence of China and India as economic powerhouses in the region 对中国和印度为经济大国在该地区的崛起
China and India is the two fastest developing countries in the world as per capita income for both countries are growing rapidly. However, India's economic continues to grow by open more market although its economic growth not as speedy as China (Savengsuksa, n.d.). Rowthorn (2011) predicted China will overtake US between 2018 and 2025 while India will overtake between 2040 and 2054 depend on the gross domestic product (GDP). China not only acts as an economic powerhouse but also an outstanding exporter by the increasing of USD 13.7 billion in 1979 to USD 266 billion in 2001 (Abeysinghe & Ding, 2003). Nevertheless, China and India gigantic markets provide trade opportunities to other country (Savengsuksa, n.d.).
China's top growing economy have attract many foreign direct investment (FDI). Actual FDI for China between 1988 to 2000 is a cumulative total of USD 339 billion which raising 23% every year (Abeysinghe & Ding, 2003). In order to increase shareholder value, Sime Darby always looking for investment and business opportunities. In 2005, Weifanf Sime Darby Port Co. is founded (Sime Darby, n.d.). From 2007 to 2011, Sime Darby total invested RM 10 billion in China. In 2012, Sime Darby invest RM 1.4 billion to expand the operation of Weifang port. Additionally, RM 350 million will be the futher investment depend on economic factors which still under consideration (Sime Darby, 2012). In the return of 2011, Sime Darby declared a RM 600 million profit before tax from its China operations (Ali, 2012).
On the other hand, China becomes the second largest palm oil importer after US which is approximately 5.5 million barrels per day and India imports roughly 2.3 million barrels per day (Ashraf, 2013). Since India and China demand palm oil increasing yearly [Figure 2.0], Sime Darby which is one of the largest palm oil exporter in the world, hence, Sime Darby plantation sector revenue also increasing. This can be proved by Figure 2.3, the revenue of Sime Darby plantation sector is increasing sharply from RM 8,165 million in 2007 to RM 13,162 million in 2008. When the demand of palm oil increasing, the price for palm oil also increasing. This can be shown in Figure 2.4, the price of palm oil export to China is increasing every year. Therefore, the emergence of China and India as economic powerhouses brings opportunity to Sime Darby plantation sector.
iv) The U.S. Subprime Crisis 美国次贷危机
The happening of U.S Subprime Crisis 2008 has significant affect the world's economy and commodity price. It leads to the stock price of commodity base firms cannot sustain resilient from this economic turmoil and depreciated their stock price. Furthermore, this situation has lead to high unemployment rate and low demand of raw material in production. According to International Monetary Fund (IMF), performance of world economic growth was in downward trend which has declined to 3% in year 2008 [3] .
Normally, U.S. subprime crisis will caused decrease in aggregate output which has affected usage of fuel and raw material. Therefore, it will lead to economic slowdown and strongly affected crude oil price. As a consequence, the company's stock price fluctuated because of the uncertainty in commodity price. Sometimes, an overly low commodities price will pull down stock price and company's revenue [4] . As supported by Abidin and Rasiah (2009), Malaysia does not get direct impact from the crisis through currency or capital market, but financial derivatives do get affected indirectly.#p#分页标题#e#
For example, Datuk Seri Ahmad Zubir Murshid, the president of the world's largest listed palm oil producer - Sime Darby Bhd, said the US subprime crisis indeed has impacted the crude oil price but overall it will not disrupt its plantation unit's growth plans in the upstream and downstream businesses because of its strong balance sheet. The reason is Sime Darby Bhd is a multi-core business which will allow it to mitigate the effect of US subprime crisis (Damodaran, 2008). Instead of that, effect of US subprime crisis in plantation appeared to be weak because palm oil output was dropped by 3.9% because of the impact from La Nina but not this crisis (Abidin & Rasiah, 2009).
In 2008, there is slightly rising in the property price [Figure 2.1], water, electricity and gas. Basically, Sime Darby Property sales have declined since July 2008 due to some of the early monetary policy do limits the loans on the property sector and losing of consumers' confidence due to the fallen in housing loans approval [Figure 2.2] (Nambiar, 2009). According to Abidin and Rasiah (2009), the slowdowns in property sector was due to most developer keep launching property in small scale or in shelve. In other words, Sime Darby Property considered as protected from the direct effect of US subprime crisis.
For automotive industry, the Automotive of Malaysia (AAM) reported a fall of 12% in the demand of cars during 1Q 2008 to 2Q 2009 from retail sector. Thus, AAM concluded that US subprime crisis does impact most of the dealer in Malaysia's automotive sector (Abidin & Rasiah, 2009). However, from the annual report 2008 of Sime Darby Bhd, its automotive sector is growing in revenue [Figure 2.3]. Therefore, we can make assumption that disadvantages of US subprime crisis do not happened on Sime Darby.
v) Collaborative Agreement with China and United States 与中国和美国的合作协议
Palm oil's market share has grown strongly in China because of high demand in palm oil consumption. China chooses palm oil because it is cheaper compared to soy oil and palm oil is easily available. Moreover, China's currency, Renminbi (RMB) has appreciated to 0.3% far by 2009 where appreciation had improved the purchasing power of Chinese people, and thereby higher demand for vegetable oil which included soft commodities, palm oil and soy oil. From the data, palm oil's market share in China has growing between 2000 and 2009 [Figure 2.4]. As a result, Sime Darby's stock price has appreciated overtime since it is one of the largest exporters in the world (Tan & Oetomo, 2011).
Apart from that, China Engineers Limited (CEL) which under the Sime Darby Industrial Division was first appointed as the Caterpillar dealer in Hong Kong and Macau in 1962. Since then, it has expanded its territory to doing business with Chinese company. Because of the advantage of CEL's Caterpillar, equipment is widely used in various industries such as road/highway construction, railway construction, mining and many industries have boost up Sime Darby's reputation [5] . Due to its strong sales in China, Australia and Malaysia, Sime Darby becomes the fifth largest dealer in the world (Thomas, 2011).
Cisco Systems Inc is working with Sime Darby Property to transform the way cities are developed, achieving economic, social and environmental sustainability, changing the way people work, live, play and learn in Malaysia [6] . As an example, they partner in an Idea House Project which Cisco is committed to operating in an environmentally-responsible manner, incorporating and choosing the energy-efficient products. It is to help Sime Darby Property to meet its environmental goals. Another partner, Home Research Inc which supports Idea House Project with Sime Darby Property provides superior products, full design consultancy and applications for quality residential interior. Because of its advantage to represent high end brand product with latest design innovation and greater understanding on ecological sustainability, so Sime Darby Property select to doing business with Home Research Inc. As consequences, Sime Darby Property has been awarded as the Green Builder (Gold) in 2010 [7] .
Other than that, Sime Darby Motors retail renowned brand such as Ford (US) Chevrolet (US) and Jeep (US). Sime Darby Motors import and distributes Ford, Chevrolet and Jeep cars in certain markets in the Asia Pacific region. Sime Darby Motors functions as a bridge between brand partners and customers. The close relationship with customers allows Sime Darby Motors to have a better understanding of the local market's tastes. Role of Sime Darby Motors is to build partners' reputation and are committed to the long term growth of the brand. From their practices, profit of Sime Darby Motors has rising overtime [8] . It is supported by Thomas (2011) where motor division posted a 64% increase in profit before interest to RM 633 million.
vi) The Oil Price Swings 石油价格波动
Crude palm oil has becoming important nowadays and got a potential in replacing crude oil as the raw material in fuel production. When the crude oil price increases, it will benefit the revenue of a company and rise in the stock price as well [9] . Business Times reported that Sime Darby Bhd has facing losses from the sale of palm oil to China because of the decline of commodity price. The commodity price goes down sharply over the past six months (April-October 2008) from RM 4000 per tonne to RM 1800 per tonne. Its profit was just RM 1.8 billion compared to last year's RM 3.7 billion profit (Damodaran, 2008).
Apart from that, palm oil price will swing depend on the information on weather since plantation sector highly relies on weather condition but it will only sustain in short run as it will be impact by demand. During the 4Q of 2010, the palm oil price is at the peak because of effect of La Nina (heavy rainfall in Malaysia and lead to flooding) has destroyed the fruit production or harvesting of palm oil in Malaysia. Thus, Sime Darby's output has fall by 7% [Figure 2.5] and the palm oil price at a level of RM 4000 per tonne due to the weather vagaries (Tan & Oetomo, 2011).
Palm oil price has increased during December 2010 to March 2011 because of palm oil production picks up in March for seasonal reasons. In contrast, overly supply where there is reversal of tree stress, increased in new planting during 2007 and rising output from higher rainfall could lead to decreased in palm oil price. In 2007, farmers plant more palm trees due to palm oil price was spiked in 2007 (Tan & Oetomo, 2011). It has affected Sime Darby's operating profits which dropped by 18% to RM 683 million (Adnan, 2011).
Another factor that affect palm oil price when there is excessive speculation in commodities. It is very hard to measure how much speculation goes in commodity exchanges. The Chicago Board of Mercantile Trade has set up a joint venture with Bursa Malaysia to develop a dollar denominated palm oil future contract which has promoted speculation in palm oil future and increased volatility of palm oil price (Tan & Oetomo, 2011).
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