Think tank: New national car ok, but govt should not get involved

Adli Amirullah says the government should focus on promoting competition. (File pic)

KUALA LUMPUR: The government has to be very clear as to the direction it wants to take the automotive industry, think tank IDEAS said today.

It has no objection to another national car, provided the government stays out of the business and allows new players to produce the car.

In a statement today, IDEAS economist Adli Amirullah said: “In principle we should not prevent any market player entering the industry if they have the capacity to do so. But, the government needs to stay away from the market and should not involve itself directly or indirectly in the process of setting up a third national car.”

Instead, he said, the government should focus on promoting competition.

“There are still many ways to ensure the current local automotive industry remains competitive, without setting up a new market player. One of the ways is to reduce excise duties on imported cars to reduce prices and motivate local car manufacturers to produce better quality products.

“The government needs to have a clear mind on which direction they are planning to go. Malaysia should be open to trade and look to competition, rather than direct government support, to develop a competitive domestic car industry,” he said.

Adli was commenting on remarks by Prime Minister Dr Mahathir Mohamad about plans to curb car imports and introduce a new national car in the near future.

Mahathir had said in Parliament that the government would impose stricter technical standards on the automotive industry to ensure the safety of imported cars and to protect Malaysia’s “infant” automotive industry.

Adli said: “Technical standards on imports to ensure passenger safety are welcome but other barriers to trade, including taxes and duties, designed to protect Malaysia’s domestic industry should be avoided.”

Challenging the claim that Malaysia’s car industry was at an “infant” stage, he said: “Proton and Perodua have been in the market for at least 33 years and 24 years respectively. Perodua itself has grown so much that now it has the highest market share at 39.8% for passenger vehicles and sold a total of 204,887 units in 2017 alone, which surpasses all imported cars.

“Proton came third after Honda, with 13.8% of market share for passenger vehicles and 70,991 units sold in 2017. These facts prove that there are flaws in an infant-industry argument. How long should our automotive industry be considered as an ‘infant’?”