Don’t reject Dr M’s automative strategy for Malaysia

“Why we should say ‘no’ to a third national car”, published on Aug 4, is a fair comment as far as Proton, or Proton as a national car, is concerned.

However, the industry yardstick is not dictated by Proton. We are all aware and understand that Proton is not an industry leader in the automotive sector.

In fact, this is precisely what Dr Mahathir Mohamad, our current prime minister, has been harping on. This is exactly the point he was making before Proton was established, during the peak of the Proton car era and after Proton was sold and taken over by Geely. His strategic thinking has always been consistent.

Mahathir always wanted Malaysia to be an industry leader in the automotive industry. This statement has been repeated many times at many different events over the years.

Due to many different reasons – economic, technical and financial – this objective of being an industry leader may not be achieved by Proton, which he readily accepts.

But there are many automotive vendors (component manufacturers) out there that have been groomed, sponsored and partly financed by the government. Their business survival partly depends on Proton and the success of Perodua, our second national car. They still have the chance to excel and become successful.

Having said that, there are also many Malaysia-based vendors who have started to supply their products (vehicle components) to other assemblers in the country as well as vehicle manufacturers outside of Malaysia.

Mahathir espoused the belief that Malaysia has to be involved in the high technology sector and identified the automotive industry as one component. As a result of his industry, today, we have more than 550,000 people who are engaged in the automotive industry, including after-sales and services employees.

The National Automotive Policy

In the current scenario, it is expected that about 20,000 to 30,000 new job opportunities will be created by the automotive sector every year. There are colleges in the country now that are specialised in training and providing basic education in the field, not only for Malaysians but also foreign students.

Mahathir’s main criticism, which has not been highlighted by the media (as most press people are obsessed with the national car issue and quick to pounce on him saying he wants to re-enact Proton or something similar) is that our National Automotive Policy (NAP) developed after he left the government in 2003, in a nutshell, is crap.

This is the key point that should emerge in the media and act as a pointer for a balanced discussion on this topic.

He actually mentioned in Parliament last week that the previous government failed to fund research and development for the automotive industry to grow and develop to a higher level as a sustainable industry. Somehow, that was not reported either; quite likely anything to do with research is not media savvy.

The truth is, the NAP 2014 was nothing more than a poorly conceived policy document. Almost unknown and infrequently referred to, even by its own industry, the NAP 2014 is seen as 29 pages of words and sentences strung together, bundled into a document with “Miti” stamped on it.

Clearly, it was not done by specialists or experts in the auto industry. It contains no in-depth research on future market directions or world-wide development trends for Malaysia to emulate or base their domestic industry upon.

It contains some historical statistics and superficially talks about energy efficient vehicles (EEV). That’s why it was described as such by our prime minister.

New venture

It is true that the automotive industry has moved on since the Proton Saga was first rolled out from the Shah Alam factory in July 1985. Today, the market hype is about autonomous or driverless vehicles.

There is an ongoing debate about a market leader for electric cars. Between Nissan Leaf and Tesla, who has the edge? Forget about hybrid. The market has gone fully electric. Renault-Nissan Alliance and Mitsubishi are not far behind, either.

China’s motorbikes market has gone 80% electric too. (While we still struggle with mat rempits, going fully electric for motorbikes might actually solve this ageing issue!)

Perhaps before we embark on a new strategy that will take us into the 2020 decade and beyond, a new automotive strategy (NAS) should be formulated and properly documented. A clear blueprint is needed to guide the industry and its stakeholders.

The NAS should re-examine worldwide trends and directions for the automotive industry instead of basing our domestic industry purely on hearsay and market talk.

While liberalisation of the industry has been fiercely demanded by those who wish to fulfil their import car sales quota, ministries like Miti still talk about manufacturing licences, procedures (read: red tape) and import duties and taxes.

There is an obvious mismatch between what the car buyers (users) demand and what the current car manufacturers want to push and promote. Suddenly, internal combustion engine vehicles seem to have a short sell-by date.

There also seems to be a big gap in terms of technology differentials between established manufacturers and new vehicle designers who talk about small-scale manufacturing to serve a small, localised mobility market, a type of vehicle that would cost a fraction of the price we pay today.

Without taxes, a mobility unit rather than a car could actually be produced very cheaply and made easily accessible, especially for rural communities. And the world is still full of rural communities while public transport is actually meant for urban dwellers.

So there is a gamut of opportunities available today that continue to expand and increase in demand. The needs for connectivity and mobility will also continue to rise, and the new Pakatan Harapan government needs to consider and evaluate this.

As such, an outright rejection of a new venture into the automotive industry is certainly not an option.

Rosli Khan has spent over 30 years in the transport industry managing more than 100 consultancy projects.

The views expressed are those of the author and do not necessarily reflect those of FMT.