What’s Covid-19 got to do with the price of cars?

 

Let’s talk about new cars. An imported new car, known in the trade as a completely built-up (CBU) car, will generally cost twice as much as a locally-assembled car, because import taxes raise the price of the CBU car and conversely, makes locally assembled cars more affordable.

Essentially, local assembly happens because emerging nations recognise the auto industry as being a source of employment and economic growth.

In most cases, locally assembled cars would cost more than CBU cars if not for import taxes.

An automotive industry based on local assembly of completely knocked down car parts is less efficient. The cars end up as being comparatively more expensive, but buyers accept the higher price as a contribution towards nation-building and the promise that the motor industry will eventually grow and make products at a competitive and sustainable price.

Local assembly is inefficient unless there is scale such as in Britain, Indonesia or Brazil.

It must be asked if the Covid-19 vaccines filled-and-finished by Pharmaniaga are competitively priced against the same product imported from the supplier in the principal country, in this case China. Again, it’s a matter of scale.

The price of the Sinovac vaccine is expected to be cheaper when the fill and finish process is carried out in Malaysia, science, technology and innovation minister Khairy Jamaluddin said on Jan 12.

“The price (of the vaccine) that we purchase from Pharmaniaga Bhd is way cheaper than the purchase of the finished product from China. This is because the fill and finish process will be carried out in Malaysia and we are going to get a good price out of this,” he said. “We want to encourage technology transfer and local manufacturing capacity for the future so this is the opportunity for us to buy at a good price.”

But what if this is not the case in Malaysia now after MCO 3.0?

Transfer of technology and encouragement of local manufacturing capacity are desirable when the country is flush with funds and the economy is thriving. That’s not the case with Covid-19 and the steep learning curve that nations face in handling the pandemic.

The micro-SME companies in the automotive sector have seen their owners sacrificing company funds and personal savings to survive 17 months of three MCOs, lockdowns and conflicting interpretations of SOPs. They have received insignificant one-off subsidies.

To ask them now to pay for vaccines, for which the government has already allocated funds, is akin to asking taxpayers to pay twice as much tax.

If the cost of the locally filled-and-finished Sinovac vaccine is significantly higher than the one from China, the government should use its powers under the state of emergency to enable Malaysians to buy directly from Sinovac Biotech and to allow the Chinese company to sell directly to Malaysian companies.

All car companies operating in Malaysia should also be allowed to choose from among the vaccines allowed by the health ministry and relevant government agencies and to buy directly from the principal. Similarly, the government should also allow the approved vaccine makers to supply directly to Malaysian businesses based on competitive pricing.

The pandemic is not a time for a government-anointed monopoly to develop its business and enhance its profits at the cost of lives and a broader Malaysian economic recovery.

On this note, there is already an initiative to offer mass screenings at workplaces to prevent the spread of Covid-19. Factories in Selangor especially in Klang are already participating in this mass screening programme. The factory owner can choose from among two brands that were approved this month by the Medical Device Authority Malaysia.

The programme consists of a workplace Covid-19 assessment, risk prevention including screening, onsite and remote training including screening, and online charting of test results with a web app at a price of RM100 for eight tests a month per worker.

The rationale behind a high frequency screening for virus shedding at workplaces is to eventually identify and isolate the infected worker before he spreads the virus to others and allowing the factory to continue operating uninterrupted.

The CEO of a car assembly plant, who declined to be named, said: “We want to open the factory. Those who test positive should be quarantined and the place of work sanitised as per SOPs. Then everybody can work safely and economic recovery is possible.

“Those not vaccinated or who refuse vaccination must not be allowed to work if there is already an established programme for vaccination.”

The programme has just started and some of the pages of the website are still under construction. Check out the information on this programme for Malaysia Covid-19 Mass Screening Service (MyCMSS).

And on another note, micro-SMEs in the automotive sector which are still experiencing difficulties with their CIMS application for Miti approval letters are requested to WhatsApp their details to 012-317 2676. They will be attended to by Madani Sahari, CEO of the Malaysia Automotive, Robotics and IoT Institute (MARii). - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.