What to expect from the revised national automotive policy?

The Minister of International Trade and Industry, Datuk Seri Mustapha Mohamed will unveil the much awaited revised National Automotive Policy (NAP) today. Many quarters have kept on speculating on what the government will present in its revised NAP.

The government had underlined the automotive sector as it has been recognised as one of the major thrust to propel the nation towards achieving Vision 2020. It is also seen as a catalyst to boost other local industries such as primary and intermediate resources and support.

The Head of Research at Inter- Pacific Securities Sdn Bhd , Pong Teng Siew expects little changes from the much awaited NAP.

“Malaysia’s industrial sector has been quite lethargic of late and I think the government would not want to implement major changes that could have unknown results. Some degree of protectionism for local players would be maintained.

“I think that the government would not want to introduce major changes at this juncture,” said Pong.

One of the main challenges of the NAP is the local automotive sector lacks the scale and volume and this have caused unit costs to remain high. Another issue that the NAP must address is that the local automotive sector is not export driven.

One of historical focus of the NAP has been on developing a core competency in manufacturing which has neglected the supporting, intermediate, primary and resource sectors. These structural inefficiencies have hindered the ability of the automotive industry to maximise its ability to compete with its regional peers.

The new NAP is expected to address the automotive ecosystem as a whole in an effort to boost the automotive sector rather than focusing on developing and protecting national automotive manufacturers. If the government does this, the revised NAP will focusing on the development of the weaker or missing linkages needed to form a near self sufficient ecosystem.

“The revised NAP is also expected to emphasise on the concept of End of Life Vehicles (ELV) in an effort to resuscitate the manufacturing and recycling industry and revive the ‘after market’ going.

“The cycle is deemed completed when the recycled or remanufactured parts are channelled back into manufacturing,” said MIDF Research in a report.

The major end assemblers in Malaysia are currently only producing for domestic consumption which is relatively a small market if viewed from a global scale. If further linkages are established through the revised NAP, cost of production may be reduced and this could enhance the attractiveness of Malaysian vehicles on the global platform.

The NAP is also expected to address the establishment of Malaysia as a hub for regional Energy Efficient Vehicles (EEV’s). This has been identified as the way forward for the Malaysian automotive industry as Original Equipment Manufacturers (OEM’s) move towards the production of EEV’s.

The revised NAP needs to steer the Malaysian auto industry towards higher level of exports and promote an ecosystem that supports export growth. In addition, the NAP has to introduce concrete measures to make Malaysia a hub for the production of Energy Efficient Vehicle’s (EEV).