Malaysia’s auto sector ripe for change

 

The virtual launch of the Great Wall Motors EV, the ORA Good Cat was hosted by Thailand last week. (Screen grab of Great Wall’s virtual launch)

For Malaysians on the lookout for the smartest jobs in the world – think 5G, Artificial Intelligence – don’t give up on the domestic automotive industry just yet.

Yes, Malaysia is not in the good books of investors just yet as indicated by UNCTAD’s reckoning that the country’s Foreign Direct Investment (FDI) had dropped 68%, compared with the Asean average of 31% in 2020.

But this can change overnight because Malaysia’s automotive industry, a powerful driver of high value employment, is ripe for a disruption.

There are already two Malaysian companies with electric vehicles (EV) in Port Klang awaiting clearance for Vehicle Type Approval (VTA) by the Ministry of Transport.

Another company has cleared its EV and is awaiting VTA.

“I have the LHD versions of the ORA electric vehicle in Port Klang and we’re planning to launch five of the Great Wall EVs as soon as we have obtained the necessary government approvals,” said SM Azli SM Nasimuddin, the CEO and founder of Go Auto, Great Wall’s franchise holder in Malaysia.

“Great Wall already has all the documentation for the EV but as franchise holder and importer, we have another documentation process, the Industrial Linkage Programme (ILP), to perform. This takes time,” said Azli.

MG Berjaya Sdn Bhd has imported the MG ZS EV for VTA and is still awaiting the VTA. It has APs for another 100 units.

The MG auto brand is owned by Shanghai Auto Industrial Corp (SAIC), ranked one of China’s top three car makers.

The ILP is a contributing factor for Malaysia’s decline in the eyes of car makers and the increasing esteem with which they view Thailand and Indonesia.

While understandably the previous government wanted to ensure transfer of technology from FDIs and implemented the ILP as a tool to ensure that car companies invested in car plants, this doesn’t work with the new era of EVs where the domestic market is too small to justify the establishment of an assembly plant.

With former prime minister Dr Mahathir Mohamad no longer in a position to fund his vision of a national car at the expense of other car makers, the time is ripe for up-and-coming politicians to lead Malaysia towards a modern automotive policy that welcomes high-tech and low-carbon investors.

Furthermore, the recently signed Regional Comprehensive Economic Partnership (RCEP) between Asean and China, South Korea, Japan, Australia and New Zealand allows free trade in cars.

Before, under the Asean Free Trade Area (AFTA), Malaysia excluded cars from the free trade agreement to protect Proton, Malaysia’s national car formed in 1986.

“Under the Malaysia AFTA, the list of products was not comprehensive. We didn’t include all the products for tariff exemption. That was in 1994 and we wanted to protect Proton and we excluded cars from the Asean FTA,” said a former senior official of the Ministry of International Trade and Industry.

“But with RCEP, which is more powerful than AFTA, cars are not excluded from the list of free trade in goods,” he said, asking not to be identified because policies are for politicians to make.

Thailand last week hosted the virtual launch of the Great Wall Motors EV, the ORA Good Cat which goes on sale in April. It also announced Thailand as its manufacturing hub for the region.

China’s price for the ORA Good Cat starts from about 100,000 yuan to 140,000 yuan which is about RM63,000 to RM90,000.

It’s obvious that Great Wall’s entry into the Thai market with the fully imported EV is because of the RCEP and tax-free trade in cars.

What Malaysia needs is an inclusive and welcoming automotive policy to attract investors and fresh political leadership to drive the change.

Can the new leaders hack it? - FMT