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New NAP strategies to turn Malaysia into an energy efficient vehicle hub

The National Automotive Policy (NAP) that was reviewed in 2006 and 2009 had been widely scrutinised by industry observers and experts for not detailing guidelines and strategies of what it had initially set out to achieve turning Malaysia into a regional, if not global automotive hub.

The question is, will the revision of the new NAP, which is ready to be announced, deliver what its predecessors did not?

“When the NAP was reviewed in 2009, it was a time when the world was in a recession and the global automotive industry was hit quite hard,” Malaysia Automotive Institute (MAI) chief executive officer Madani Sahari tells StarBizWeek.

Following the impact of the financial crisis, he notes that the global automotive industry has since have to adapt to the latest industry challenges and standards.

“Everyone was affected. The crisis created a rise in development costs. However, the price of cars did not commensurate with this increase (in the development costs). So we looked at our 2009 (NAP) policies and felt that we didn’t address several factors after the crisis that year,” says Madani.

The MAI is an agency under the International Trade and Industry Ministry that was established as the focal point and coordination centre for the development of the local automotive industry.

Madani says the objectives initially set out in 2006 and 2009 to make Malaysia into an automotive hub will remain under the revision of the upcoming NAP.

However, with Thailand and Indonesia already automotive powerhouses in their own right, Madani says the strategy for Malaysia is to be able to offer something different from its competing neighbours.

“There’s no point competing with Thailand and Indonesia. What we need is to find a niche, but with economies of scale. We need to enhance our competitiveness through the resolution of structural issues,” he says, adding that strategies have been set under the new NAP to turn Malaysia into a hub for energy efficient vehicles (EEVs).

To make this an eventuality, Madani says incentives will be provided to all companies that are develop EEV-related products and technology, be it local or foreign.

“EEVs are vehicles that meet a set of defined specification in terms of emission level and energy usage including fuel efficient vehicles, hybrid, electric vehicles and alternatively fuelled vehicles such as compressed natural gas (CNG), liquefied petroleum gas (LPG), biodiesel, ethanol, hydrogen and fuel cell.

“The goal is to make Malaysia into a regional hub for EEV with high technology uptake among industry players for domestic and regional and international exports,” says Madani.

To be able to attract foreign original equipment manufacturers (OEMs), particularly in EEV-related products and technology, Madani points out that the local automotive industry will have to be ready for liberalisation.

“We also need to get players already in Malaysia to be EEV-ready as foreign OEMs come into Malaysia with the latest technologies,” he says, adding that there will be a roadmap set under the next NAP for local players to be up-to date with the latest global standards.”

Madani hints that there will be a deadline set for local companies to reduce the carbon emissions and fuel consumption of their vehicles. A deadline for the implementation of Euro 4 fuel has also been set.

Separately, Madani notes that the appeal of Asean as an export market cannot be denied.

“Today, about 180 million people in Asean are within the upper-middle-income category. This is the group of people that can at least afford a car of a certain level of technology.”

He says that the Asean market was currently dominated primarily by Japanese marques such as Toyota and Honda.

“There is an absence of European brands leveraging on Asean as a hub. In fact, there are a lot of OEMs that have not invested in Asean, like the Koreans,” says Madani.

With that begs the question of why foreign OEMs would want to invest in Malaysia - especially with Thailand and Indonesia already providing a huge base for would be investors.

“Thailand is more of a pick-up truck market while Indonesia is more for multi-purpose vehicles (MPVs). Neither of those countries are true passenger car markets. Rather, Malaysia is more of a true passenger vehicle market,” he says.

Looking ahead, Madani says that even with a handful of foreign OEMs investing locally, Malaysia still has the ability to become an EEV hub.

“This new NAP has specific targets to achieve. And this include export outcome, employability creation, number of companies to achieve global level capability and etc.” Madani says.

To support the initiatives to make Malaysia an EEV hub, Madani says efforts will also be made to beef up the local workforce to be “EEV-ready.”

He says initiatives are already being undertaken by various local universities to develop the working capital as Malaysia targets itself to become a hub for EEVs.

“By 2020, the Malaysian Government expects to generate about 180,000 new jobs within the local manufacturing and after sales sector,” says Madani.

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