Thursday, 29 December 2016

Adapting to the new age of consumer mindsets


The first part of this series discussed the evolution and change in socio-economic norms that govern the global economy. The neo-liberal economic model which emerged as a prominent mind set for economic governance is slowly being reinvented by the same institutions that put them in prominence more than three decades ago.
This global phenomenon, seen particularly through the recent EU shake up and US presidential election, boggled the mind of political and economic analysts around the world.
While Brexit was too close to call, most of the American media could not see Trump's unconventional approach to governance ever taking mainstream, yet on the 9th of November they all woke up to a paradigm shift - the realization that our economic systems may have a new face in the future.
The signs of this change, however, didn't go unnoticed. At the World Economic Forum 2016, many experts alluded to this change. While the movement towards complete privatization and deregulation of markets gained momentum around the 1980s, the start of this decade demonstrated a shift - the economy as a whole was going through its fourth revolution, called Industry 4.0.
While discussions on Industry 4.0 focused on the rapid digitalization affecting business, it also created massive free flow of information that allowed consumers to access an unprecedented amount of information, at the tip of their fingers. They would have unlimited access to product information, global trends, good and bad reviews, and gained not just expert insight, but also moral insight of the people running the businesses that make their products.
The old saying goes, "the customer is king". Despite the advent of social media, the generation commonly known as "Generation X", are still the current true holders of purchasing power.
This generation is conservative when it comes to expressing their views online. However, they are the silent kings - the consumer generation in which their values dominate the whims and fancies of the generation they are still financially responsible for.
Rest assured that in time, a new generation will then ascend to dominate the purchasing demographic, with its own peculiarities of consumerism.
With this in mind, it is now ever more important to develop sensitivity to the dynamics of those consuming our products. We have come to that juncture in time where production efficiency should no longer be considered leaps in management, but basic foundations that allow focus on the true objective - a customer oriented workflow.
However, deeper understanding of consumer behaviour must exist at both cultural and technical form, i.e. the mind set of unidimensional consumer feedback methodology has to be challenged at its very core. The reinvention of marketing and sales must engage directly with new behaviours of the consumer, with inbound marketing taking over outbound approaches.
The new consumer can no longer be told, but must firstly be understood. They should then be satisfied through not just point-of-sales retail method, but immersive ownership experience that solidifies brand loyalty.
Consumers are not defined just the individuals that buy cars. Moving down the supply chain, vendors do not deal with individuals, but their OEM principles. However, the concept of the more-informed-than-ever customer remains the same, i.e. they are more technologically advanced and they expect vendors not to be just their part suppliers, but partners in the ever growing technological complexity the OEMs are facing. Simply put, the lines of the consumer-supplier relationship will become blurred even more because of Industry 4.0.
In the next part, we will look at specifics on how the Industry 4.0 can be leveraged to accomplish a holistic customer oriented business workflow.
"Businesses only handle the money. It is the customer who pays the wages"
The writer is the chief executive officer of the Malaysia Automotive Institute. This is the second part of a series of articles in conjunction with the arrival of the year 2017.

Read the first part of the series articles here: http://bit.ly/2jhlQOj
Read the third part of the series articles here:  http://bit.ly/2joAENP

Thursday, 22 December 2016

Facing challenges with a glass-half-full attitude


The discipline of engineering emphasizes the continuous application of the principles of science and technology to design and build solutions to problems.
Problems are also a matter of perspectives. Human civilisation was built on innovation, which throughout history has been sparked by new problems - i.e. a problem can appear and disrupt our lives, or in many cases, the innovator comes to a realisation that the current state or method is in itself problematic, spurring a need to develop better ways of doing things.
Even then, disruptive problems may also have silver linings, paving the way for arising opportunities.
2016 has undoubtedly been a challenging year, not for just the industry, but also at the domestic and international stages.

Traditionally, the US and Europe have shaped the socio-economic norms of society, founded on a firm belief of the free market and limitless equality, demonstrated through their years of global economic domination.
This year however, our norms were challenged as numerous collectives began voicing out disenfranchisement as a product of such liberal practices.
This led to two major events that challenged our conventional theories of governance - a public approval of Britain's exit from the European Union and the election of a US President with an unconventional world view of public administration.
On the domestic front, it is undeniable that just like other sectors, the local automotive industry has not been spared from the challenges posed from the current uncertain economy. Naturally, prolonged economic uncertainty will curb consumer spending - leading to the reduced figures expected by the end of this year.
Numerous articles in this column have propagated the gradual move towards a liberalised economy, as market forces are the best determinant of the power balance between the producers and consumers.
However, we are a nation developing in the shadow of more advanced countries, and this gives us the advantage of predicting the future based on the history of others.
On that note, there is much we can learn from the current state of the globalised economy. One thing we certainly have learned is that the only thing constant is change. This year was a good lesson on how products, competition, society and expectation has changed, especially as the internet has destroyed the normal rules of the game.
Taking a step back - the current uncertainty is not a recent phenomenon, it can be traced back to the last quarter of 2014 - seen through the appreciation of the USD back in January 2015. Despite this, Malaysia's Total Industry Volume (TIV) and Total Production Volume (TPV) still managed to record all-time high figures in 2015.
Furthermore, jobs in the sector have continued to increase (25,870 new jobs expected by the end of 2016), and more technology penetration is seen throughout 2016 at both the OEM and vendor levels.
These are just some of the figures that indicate that for the last three years, we have created a stronger foundation through the NAP2014 - it has developed an industry which has proven to be more resilient to economic cycles.
Resilience is an important keyword here - it means that the problems and challenges faced by the industry at this very point in time is no longer a battle for survival, but rather a stumbling block, in fact an inconvenience to an eventual success in the future.
This article is the first part in a series of articles discussing the industry's outlook towards facing internal and external challenges.
In later parts of this series, we will discuss specifics in addressing such challenges, and how as an automotive fraternity, we can face them.

"Difficult roads often lead to beautiful destinations"

The writer is the chief executive officer of Malaysia Automotive Institute.

Read the second part of the series articles here: http://bit.ly/2j48xmV
Read the third part of the series articles here:  http://bit.ly/2joAENP

Thursday, 15 December 2016

Push for environmental agenda needs participation of all parties


The first and second parts of this series discussed the economic prioritisation and technological areas for an environmental agenda to materialise.

However, public awareness and green technology within the automotive sector is only part of the equation, as the automotive industry has an undeniable interdependence with various industries and  sectors – due to the vastness of technology, human talent, materials and policies that affect the automotive ecosystem.

In general, carbon emissions are a factor of engine efficiency, as well as the pollution resulting from the numerous processes utilised in vehicle production.

For example, material usage must be viewed from its volume of consumption, its type, process and disposal methodology and in-process energy consumption.

To increase energy efficiency in vehicles, the introduction of alternative powertrain vehicles, such as plug-in hybrids, battery electric vehicles (BEVs) and fuel-cell vehicles (FCVs) have showed a lot of promise and has excited public awareness on green initiatives. The success of these new technologies is however subject one major caveat – the infrastructure and ecosystem in the management and running of such vehicles must be regulated and developed with a built-in eco-friendly mindset and approach.

As a vehicle unit, there is definitely a reduction of carbon emissions due to the reduction or elimination of fossil fuels to power the vehicle. However, one needs to take a bird’s eye view of the entire carbon footprint of the entire vehicle life cycle, in order to claim successful carbon reduction.

The manufacturing process of lightweight materials and batteries must be consistent with the environmental intentions of the vehicle design. Current battery technology, for example, rely on the extraction of rare metals, which if not managed properly, will merely balance out the gains in reducing pollution.

Similarly, the electricity used to charge electric vehicles must come from greener sources. If polluting energy generation is utilised to cater to the higher power grid demands due to the use of electric vehicles, then a net reduction in carbon emission will not exist - carbon emissions are merely transferred from the motorist to the power plant.

The quality of fossil fuels should also be a subject of great interest for industry players and regulators. As the dependance on fossil fuels will still be present in the foreseeable future, energy efficient engines will also rely on fuel quality to ensure they meet the targeted emission requirements.

In order to push the environmental agenda forward, it therefore requires participation of industry players, technologists as well as regulators and policy makers – crossing the numerous ministries and agencies that are tasked to regulate the different sectors that contribute to vehicle manufacturing, usage and consumption.

Although the National Automotive Policy 2014 was initiated as a roadmap towards achieving competitiveness in 2020, the Ministry of International Trade and Industry is working through MAI and in collaboration with numerous ministries and agencies to chart and forecast vehicle technology penetration and consumption patterns up to the year 2050. This project will provide a bird’s eye view for the planning, formulation and implementation of eco-friendly policies for the decades to come.

In conclusion, the efforts towards sustainable mobility is not just a burden of the automotive industry. While the demand for green initiatives have centred around vehicles, transportation is not just a concern for vehicle producers and industry regulators. The entire ecosystem has an impact which is far reaching beyond the production floor, and into all sectors within the economy.

“We do not inherit the earth from our ancestors, we borrow it from our children”

The writer is the chief executive officer of Malaysia Automotive Institute. The is the third and final series on the environmental agenda of MAI.

Read the first part of the series articles here: http://tinyurl.com/zbmj2jc
Read the second part of the series articles here: http://tinyurl.com/jt2nzsg

Thursday, 1 December 2016

Cradle-to-cradle mindset key to preserving environment


The first part of this series discussed global trends pertaining to environmental agendas, and its challenges in relation to economic prioritization. As a significant portion of carbon emissions are products of transportation and related industries, it therefore becomes a moral responsibility of the automotive industry to lead eco-preservation efforts, utilizing the same technological and engineering approaches it is well known for.
The vehicle life process is conventionally viewed from its factory approval stamp, its purchase, life-in-use and finally its disposal.
While this overview may be accurate from the consumer point of view, the actual vehicle life cycle goes through a longer course of events.
At its basic form, a vehicle's actual life cycle starts at the design & development stage, followed by its manufacturing, after sales and its end of life.
Perhaps the most crucial point of the vehicle's life is the product design & development stage, where design considerations and decisions taking place upstream affect the entire value chain. It is at this point that materials and functionality of products receive meaning and specification - defining the intended level of eco-friendly features to roll out at the final assembly line.
Numerous OEMs have initiated the use of recycled and non-virgin (i.e. not extracted from the earth) materials into their design programs, such as the use of bio-plastics or water based paints. At the same time, energy efficiencies policies, such as the NAP2014, expedites the penetration of carbon reducing powertrain technology, further impacting the environment positively.
It is also important that energy efficiency is built into the manufacturing processes of vehicles and components. While green manufacturing technologies are becoming ever so common in today's competitive world, the application of Design for Manufacturing also plays an important role in product and process development of automotive products and components.
However, environmental management becomes more complicated beyond the point of purchase. While complexities can be managed before this point through efficient standards and best practices, consumer awareness towards environmental efforts pose a large problem - behaviour and attitudes become difficult to manage and are multi-factorial in its root cause.
As mentioned in the first part, economic balance is usually the reason for a digression in eco-friendly attitudes. Perhaps the best way to enhance public participation in the environmental agenda should be derived through the economic route.
Through the NAP2014, two roadmaps were formulated specifically to tackle issues within the aftermarket sector. The first, named the Authorised Treatment Facility Roadmap (ATF), aims to enhance standards and practices among workshops and service centres. Simply put, ATFs are not only responsible to keep vehicles running, but ensuring the consumer is given the safest, most economical and participative experience throughout the service life of the vehicles they own.
The second roadmap, the Malaysia Remanufacturing Roadmap (MRR), serves to guide Malaysia's automotive industry towards an advanced stage of reintroduction of used parts into the vehicle and component replacement market (REM). Imagine the potential when owners are able to trade-in their used parts, and these parts are then "remanufactured" into parts that are as good as new, with the same warranties and safety assurances.
This cash trade process becomes an incentive for the consumers to participate in the eco-friendly automotive value chain. Most importantly, the system allows the reuse of materials - ensuring that the use of virgin materials are further reduced.
In conclusion, the processes that make up the vehicle life cycle, from product conceptualisation all the way to remanufacturing, have significant impacts to environmental preservation. The mentality change from "Cradle-to-grave" to "Cradle-to-cradle" would help tremendously in ensuring sustainable development of the automotive industry.
Most noteworthy, is that environmental consciousness must be an in-built factor into all activities and decision making process within the entire value chain.
The writer is the chief executive officer of Malaysia Automotive Institute. This is the second article in a series on the environmental agenda of MAI.

Read the third part of the series articles here: http://tinyurl.com/zrqhkk7

Thursday, 24 November 2016

Automotive sector must play lead role in environment agenda


Malaysia is expected to ratify the Paris Climate Agreement by the year end.
The agreement, signed by almost 200 countries, aims to limit global temperatures to well below two degrees Celsius through an international deal that will come into force by 2020.
The issue of environmental protection standards had gone through many challenges in the last few decades.
In fact, the latest summit in Paris went through a long and arduous process spanning 24 years, since the United Nations Framework Convention on Climate Change was adopted and opened for signatures in Rio de Janeiro, Brazil in 1992.
It is however important to note that environmental agendas are one of the most contentious and politically diverse, particularly due to its success, or failure, depends largely on economic priorities.
In general, environmental policies usually take a back seat to the economic situation of the public at large.
Despite Malaysia’s continuous commitment to global environmental initiatives, many nations are unwilling to prioritize environmental policies when its implementation affects the costs of living for its citizens.
The case for "climate change deniers", which have seemed to receive significant airtime in recent global political movements, have also contributed to this contention.
Nevertheless, it is quite reassuring to see an equal, even arguably stronger, political will from a large portion of nations in support for the implementation of a standardized eco-policy that benefits all players following the summit in Paris.
Regardless of political progress or digression, the automotive sector must play a leading role in environmental preservation.
Undeniably, carbon emissions from vehicles have been reported as a major contributor to air pollution globally.
Although most calculations point to vehicles on the road, it is also important to look at the vehicle manufacturing process and aftermarket activities -  which undoubtedly, also contribute to carbon emissions in addition to the aforementioned above.
Numerous articles in this column have pointed to the vastness of the automotive industry, consisting not only of OEMs, vendors and raw material producers, but also the after market sectors of vehicle service, recycling and remanufacturing.
While technology has been utilised to produce more fuel efficient and experientially immersive transportation, the same technology, and development approach must take into consideration its impacts to the ecosystem.
As mentioned,  economic conduciveness must be present to allow existence of the will to preserve the environment.
These conditions are most prevalent in the within the automotive industry, as it is one of the few industries that has created an ecosystem where the talents are not only scientifically equipped, but also have the necessary framework of standards and technology to create a sustainable environment.
This is proven through the rapid introduction of eco-friendly vehicles, seen in the development of hybrid, electric and fuel cell technology within today’s global automotive market.

Despite still being a relatively small player, Malaysia is still one of the few nations in the world with full fledged vehicle design and manufacturing capabilities.
As awareness of environmental protection agendas grow within the global community, it is important for the domestic automotive industry to play a strong participative role in leading the environmental agenda within the region and the world.
After all, this is not just a good cause, it happens to also be an economic activity of the future.
The writer is the chief executive officer of Malaysia Automotive Institute. This is the first part of a series articles on the environmental of the MAI.

Read the second part of the series articles here: http://tinyurl.com/jt2nzsg

Thursday, 17 November 2016

Sales Environment Completes NAP 2014 Framework


THE turn of global events in the past year will become an interesting subject of study and forecasting in the years to come.
This year, the world was rocked by the United Kingdom populace's consent to Brexit, triggering the process of the UK's withdrawal from the European Union.
Apart from impacts to the UK itself, the EU will lose a major contributor to its budget, as well as a precedence for more potential withdrawals from the two-decade-old regional block.
Against all odds, last week the United States created history by voting in a president-elect with first-time experience in government ad-ministration. Countless theories were offered to understand such a shift in American politics.
Although it is still too soon to predict the course of economic policy and governance of these global giants, it is important to note that as a sign of change to come and the acknowledgement of arising opportunities as a result of this wave of change.
These recent developments have demonstrated that perceptions towards the globalised economy have surpassed rules of conventional wisdom, moving into an era where the competitiveness of players will centre around solid analytics of the vast information available, while never forgetting the fundamental building blocks that allow quick adaptation to change in global trends.
As a relatively smaller player within the global automotive industry, it is key that sensitivity towards global shifts is developed within our ranks. Despite our three decade-long effort and established domestic manufacturing base, we must also ride the tide towards higher level of automotive design, processes and technology penetration.
The National Automotive Policy 2014 was designed with adaptability in mind. While gradually liberalising the market. It aims to prepare the domestic industry for global competitiveness, through identifying and development of key areas within the industry, such as manufacturing, research and development, design and process validation, after-sales standards and remanufacturing.
On top of this, this gradual liberalisation must be felt by the consumer, realised through the ever growing range of choices that are available, in particular for vehicles
certified as energy-efficient vehicles (EEVs). This in turn completes the much needed ecosystem of high value, technology and opportunity for businesses and human talent alike.
As the National Automotive Policy (NAP) 2014 materialises over the years, consumer participation and awareness on the quality, safety, security and environmental impacts of EEVs must be ensured as consumption of EEVs by the regional market increases.
For the second year running, the Malaysia Autoshow, formerly known as the Asean Autoshow, has managed to capture the attention of the public through it successful organisation on November 10-13. It has continuously brought in more than 100,000 visitors, showcasing more than 60 models from numerous carmakers operating within Malaysia.
The key feature of this year's event was the launch of the BAIL EV200, the first electric vehicle to be assembled in Malaysia. This is a significant milestone in the EEV policy. as well as the start of the local industry’s venture into alternative powertrain vehicles.
The show has also opened the public eyes to the benefits of EEVs as well as enhancing public awareness on new employment and business opportunities through information booths by Malaysia Automotive Institute, original equipment manufacturers, vendors and other transport-related agencies.
It has been an immersive experience for all, and I'd like to take this opportunity to thank everyone for their participation. I hope that the autoshow has served its purpose as a strong close to a challenging year for the industry and nation.
"Find out what the customer wants, then make it better."
The writer is chief executive officer of Malaysia Automotive Institute.

This is the third and final part of a series of articles written in conjunction with the Malaysia Autoshow 2016. 

Thursday, 10 November 2016

Enhancing regional recognition for Malaysian brands


The first part of this series discussed the importance of matching actual quality to perceived quality in the minds of consumers.
Despite all efforts in design and manufacturing of vehicles and its components, it is equally important to ensure efforts at the point of sales, as well as years of after sales service is given enough attention - to complete the longevity and sustainability of brands.
In general, all brands have a certain “promise” attached to them. This promise may apply to a specific brand, but can also be derived from the attachment to a particular nationality or region.
For example, the Toyota brand is synonymous with the consistent quality derived from the Toyota Production System (TPS), high technology is often associated with German cars, while “Continental” cars, i.e. cars originating from Europe have, at least up to the turn of the century, traditionally been perceived as having superior build quality compared to its counterparts from the rest of the world.
As the national automotive industry braves its continued attempt towards global competitiveness and regional exportability, we have come to a crossroads in developing marketing strategies in defining the brand that represents our industry.
While global market borders become ever more difficult to draw, global car makers have shifted to product development strategies which are peculiar to their own comparative advantages.
Traditionally, Malaysia’s national brands, Proton and Perodua, have had successful ventures within small and medium engine capacity markets (between 660cc to 1600cc), in particular within the A and B segments.
At the same time, global brands operating within our domestic ecosystem have also seen relative success within these markets, reflecting the tastes and demands of our local consumers.
As these segments generally comprise entry and mid range models, it is therefore highly strategic for Malaysia to focus on the strongest appeal of these segments in the minds of consumers – producing cars that are safe, secure but most importantly fuel efficient.
This rationale was a major factor in the government’s strategic formulation of the National Automotive Policy 2014, i.e. a holistic framework towards making Malaysia a regional hub for Energy Efficient Vehicles (EEVs).
The EEV policy streamlines the efforts of industry players, research institutions and government initiatives towards product and process technologies that are relevant to global trends of future powertrains, fuel consumption patterns and emission requirements.
While the policy framework has been enhanced through the numerous programs developed by MITI, MAI and other agencies for OEMs, vendors and after sales businesses, an important step in developing a unified branding framework is the organisation of the Malaysia Autoshow.
The show, to be held at the end of the year, aims to showcase the efforts in the development of the EEV ecosystem in Malaysia. To spur the EEV showcase at the regional level, the Malaysia Autoshow recently signed an MoU with the Bangkok International Motorshow (BIMS), to collaborate in the promotion of energy efficient vehicles within the ASEAN region.

As Thailand also has a similar framework in their Eco-Car policy, it is an excellent avenue to enhance awareness of fuel efficiency and eco-friendliness in automotive technology among the two countries as well as the region.
This article is the second part in a series of articles written in conjunction with the Malaysia Autoshow 2016.
The writer is the chief executive officer of Malaysia Automotive Institute

Thursday, 3 November 2016

Need for exciting sales environment to rev up sector


The Malaysian automotive industry has established a significant and robust manufacturing base, with more than 25 original equipment manufacturers and 700 parts and component manufacturers operating nationwide.
As one of only a handful of nations with automotive design and manufacturing capabilities, it has created an ecosystem in which strong fundamentals in automotive processes are practiced, based on quality management systems that are on par with global standards.
However, the design and manufacturing formula needs to be utilised in the grander equation that does not just meet consumer expectation, but changing consumer perception of local brands.
Unfortunately, consumers are not privy to the intricacies seen within the walls of the factory or the styling room. Consumer perception takes place mostly at two stages - the "purchasing decision environment", followed by the years of service when using and maintaining the vehicle they own.
In many advanced countries, consumer awareness surrounding vehicle ownership, particularly in the areas of vehicle maintenance, safety, and economic literacy, has demonstrated somewhat symbiotic relevance to the competitiveness of their domestic automotive sector.

Consumers having such awareness tend to make better decisions with regards to vehicle purchases, especially in terms of features that best fit their needs and use.
Therefore, despite the best enhancements initiatives at the upstream levels of design and manufacturing, the rejuvenation of the automotive industry must come hand in hand with reinvigorating excitement among consumers, ensuring they are abreast with new market introductions, and eager to invest their attention towards future trends in vehicle technology.
Since the NAP 2014 was announced, the automotive industry has seen an unprecedented level of consumer choices in car purchases.
We have seen competition among car makers through the numerous promotions given to the consumers during festive and year end promotions. The internet has allowed an elevated purchasing environment, with instant car price comparisons and "virtual showrooms" fast becoming a common sight.
To further spur this excitement, MAI will be organising the Malaysia Autoshow 2016 from the 10th to 13th November 2016. The Malaysia Autoshow is set to become the biggest composite annual automotive show in Malaysia with manufacturers and distributors of cars, bikes, trucks as well as aftermarket dealers exhibiting their products.
Last year, 32.6 percent of cars registered in Malaysia were certified as Energy Efficient Vehicles (EEVs), demonstrating not just a strong reaction from the industry in the production of EEVs, but also increased public participation and market consumption of vehicles with a higher degree of fuel efficiency and environmental friendliness.
With more than 60 new models on display at the Autoshow, it aims to spearhead the showcase of future trends in the auto industry, especially among the latest EEVs which also include electric, hybrid and diesel powered vehicles.

While consumers can expect to test drive the latest EEV models and receive special discounts at the Autoshow, more than 150 exhibitors from renowned vehicle brands, aftermarket and accessory products will lay out their extensive product range - making the showcase a year end milestone and significant closing to the year.
"Competition does not only provide choices to the consumer, but is the incentive to progress"

The writer is the chief executive officer of Malaysia Automotive Institute.

This is the first part of a three-part series of articles in conjunction with the Malaysia Autoshow 2016.

For the second part of the series, click here

Thursday, 27 October 2016

Focus on fundamentals key to competitiveness


Previous articles in this column have focused on the need to increase accessibility of the automotive industry to more players, to allow higher penetration of technology based jobs and businesses throughout the nation.
To spur such penetration, government policies need to be structured to reduce economic barriers of entry into the automotive sector, especially for those with  capital disadvantages. The increase of business participation will then further increase employment opportunities and career advancement within the automotive industry.
The 2017 budget has taken the timely direction of strengthening the fundamentals of the economy, with strong focus on the development of skilled talent, as well as small and medium enterprises (SMEs).
Businesses, in particular SMEs, will benefit most from next year's budget through allocations for entrepreneurship, export enhancement and the digital economy. A significant allocation has been announced to make 2017 as the Startup & SME Promotion year.
A key incentive from the budget is a corporate tax rate reduction for SMEs between 1 to 4 points for companies with significant increase in taxable income, and overall reduction by 1 point for the first RM500,000 of taxable income.
This is a significant cash saving measure for companies with an expanding revenue base to further enhance their capabilities in the near future, especially in technology based investments.
Agencies under the Ministry of International Trade & Industry (MITI), Matrade, MIDA and SMECorp will offer RM130 million worth of export promotion programmes under the 2017 budget. Coupled with financing, insurance credit facilities and interest rate rebates mentioned in the budget, a total allocation of RM350 million is available to the advantage of SMEs.
This is a timely announcement to assist Malaysian automotive component manufacturers to initiate their export readiness programmes.
The RM4.6 billion allocation for Technical Vocational Education and Training (TVET) is a good move to strengthen skill based education, essential in enhancing the talent needed within our techno-centric industries, in which the automotive industry is a beneficiary of.
This announcement is a key for the automotive sector, as this is not just a signal of renewed government support for skills development within the industry, but sends a strong message that the key to success is defined by the talents that are unique to individuals. It recognizes that the academic route, albeit very important, is not the only pathway towards career advancement and success.
Specific to the automotive industry will be the Automotive Industry Development Programme (AIDP), which aims to create 7,800 new job opportunities, 190 new businesses, enhance 1,440 existing companies and further develop 5,950 careers within the industry.
The programme, which will work hand in hand with the numerous capacity building programmes developed by MAI since the announcement of the National Automotive Policy 2014 (NAP 2014) will strengthen the wide array of competencies and capabilities of OEMs, vendors, and after sales businesses - addressing core corporate governance and career development in automotive product and process design, manufacturing productivity and quality assurance.
These programmes will push the industry closer to its target of making Malaysia a regional hub for EEVs by the year 2020.
"In a world of constant change, success is the natural consequence of consistently applying the basic fundamentals."
The writer is the chief executive officer of Malaysia Automotive Institute.

Thursday, 20 October 2016

Plenty Of Opportunities In Automotive Industry


Historically, Malaysia's automotive industry began as part of a grand industrialization plan envisioned by the administration of the day.
At the time, there was a huge influx of Malaysian graduates returning from their tertiary studies abroad with qualifications in various engineering disciplines. This spurred the need to place them in key technological positions so that their talents were put to good use.
More than three decades later, the industry has had its ups and downs but nevertheless has bloomed into an industry with more than 20 OEMs, 700 vendors, dealers and distributors, and hiring more than 600,000 workers throughout the automotive supply chain.
It is clear that the tables have turned since the old days - the industry has now come to a point where opportunities within the industry have outnumbered the talents we have to fill them.
The National Automotive Policy 2014 (NAP 2014) was developed with four pillars in mind - job creation, new business opportunities, career advancement and business enhancement. These pillars coincide with the policy's aim for Malaysia to produce 1 million vehicles by the end of this decade.
Since the announcement of the NAP2014, we have seen much traction from local players to strengthen their in-house capabilities in product design, manufacturing and after sales.
As cars and automotive components become more complex, the enhancement of the entire supply chain becomes vital for businesses to compete at the global level. The targeted expansion of market size will also require the participation of more business entities, both in the manufacturing and after sales sectors of the industry.
This drive towards higher value activities naturally creates higher demand for skilled talent, and this goes beyond those well versed with technical knowledge. As the automotive sector is vast and multi-disciplinary, opportunities exist not only for designers, engineers and technicians - but also for logisticians, accountants, procurement executives, salesmen, human resource developers, craftsmen, and computer programmers, just to name a few.
Furthermore, extensive expertise will be needed in jobs and businesses with a more "hands-on" nature, such as welding, machine controls, vehicle and component assembly, quality control, vehicle servicing, production maintenance and remanufacturing, also just to name a few!
To ensure that opportunities in the automotive industry reaches all levels of the country, MAI has established numerous activities and programs for individuals and businesses to enhance their capabilities in automotive specific disciplines. The Industry Professional Certificate (IPC) and Automotive Industry Certification Engineering (AICE) programmes train school leavers, fresh graduates and experienced workers in the knowledge and skills relevant to the needs of the industry.
The Design Engineering & Prototyping (DEP) program, coupled with the MAI Intelligent Technology Systems (MITS) will enhance OEM and vendor capabilities through an integrated technology solution for both the manufacturing and after-sales sectors, from product conceptualisation to vehicle after-sales support.
Programmes such as the Bumiputra Workshop Transformation Program (BWTP) and Dealers Entrepreneurship Enhancement Program (DEEP) are created to enhance the sales and after sales experience of the consumer.
In 2017, MAI aims to further strengthen the automotive industry to create 25,000 new jobs in the automotive sector. 
This also comprises training for 10,000 existing workers, enhancing the competitiveness of over 400 local vendors, upgrading 800 existing workshops, and developing new entrepreneurs in sales, distribution, services, repair, manufacturing, remanufacturing and recycling.
"Development is about more than money, machines or good policies - it is about real people and the lives they lead"
The writer is the chief executive officer of Malaysia Automotive Institute.

Thursday, 13 October 2016

SME evolution vital for automotive industry growth


Since the National Automotive Policy 2014 (NAP 2014) was announced, the local automotive scene has been abuzz with recent developments, from increasingly competitive pricing to enhanced value from players.
Last year, a record total industry volume of 666,674 units was achieved by the original equipment manufacturers (OEMs), supported by the 700-strong vendors, dealers and distribution in the country.
While business performance at the top of the value chain is important, there is also an important demographic that must be addressed to make the automotive industry inclusive to all levels of business - the Small and Medium Enterprises (SMEs) of Malaysia.
According to the Economic Census 2011, SMEs account for 97.3% (645,136) of total business establishments in 2010. Only 6% of total SMEs (37,861) are in the manufacturing sector.
SMEs constitute micro-enterprises - with five or fewer employees and a turnover less than RM300,000, small enterprises - with fewer than 75 employees with a turnover less than 15 million, and medium enterprises - having fewer than 200 employees and a turnover less than 50 million.
Interestingly, most SMEs were micro-enterprises, forming 77 per cent of total SMEs in Malaysia in 2010. Small SMEs accounted for 20 per cent, while medium SMEs made up the balance 3 per cent.
The current figures above demonstrate a significant participation of Malaysians in automotive ventures, but these businesses remain small within the rungs of small revenues and profits.
At the same time, more effort are needed to increase the inclusion of SMEs in car or parts manufacturing.
While we have made significant progress in discussing the high value potential that can be garnered through ventures in the automotive industry, it is also important to dispel the myth that the automotive sector is a "big boys' club", i.e. only large corporations with large investment capital are able to participate in the industry.
It is true that in any sector, larger entities (such as OEMs and major component vendors) have the financial advantage to dominate the top of the value chain.
However, they still depend on a large supply base to ensure the sustainability of their operations. There is no single entity in the world that has the capability to produce every single component in a car, let alone the vast efforts and capital needed to run its sales and after-sales services.
It is within these pockets and gaps in which SMEs can penetrate the automotive sector, in hopes that these ventures grow and gradually join the ranks of larger companies within the value chain.
Business operations such as small component assembly, contract manufacturing, vehicle repair services, body & interior repairs and refurbishing, freelance vehicle sales and automotive recycling are just a few examples of business uptakes for those with smaller working capital.
Nevertheless, the most important aspect when venturing into the industry is a passionate understanding of the required technology, knowledge and skills to produce highly competitive products and services.
There is no amount of capital or equipment that can replace the human capabilities of those working in the company, despite its size.
In enhancing the domestic automotive industry, it is hoped that government expenditure and financial assistance for SMEs to be continued and further expanded in 2017 to accelerate development and growth of SMEs within the automotive sector.
This in turn will contribute to the competitiveness of all businesses in the industry, including the OEMs and Tier-1 vendors.
I also urge all stakeholders to develop those at the lower tiers in ensuring that Malaysia's automotive sector emerges not just a high value sector, but an inclusive one as well.
"Whenever you see a successful business, at some point in the past someone made a courageous decision".
The writer is the chief executive officer of Malaysia Automotive Institute.

Thursday, 6 October 2016

NAP 2014: Industry Growth Goes Beyond Sales Figures




In the previous parts, this series discussed the rationale and framework of the National Automotive Policy 2014 (NAP2014), towards making Malaysia a regional hub for Energy Efficient Vehicles (EEVs) - to further spur investment, technology acquisition and market expansion within the domestic industry.

The direction towards EEV production streamlines efforts towards a unified development strategy for the entire industry. To meet the capacity requirements of an EEV hub, the infrastructure, human talent, production base and after-sales capabilities in the country must be able to cater to the new technological complexities surrounding EEV production and services.

Last year, 32.6 per cent of cars registered in Malaysia were certified as EEVs, which demonstrates not just a strong reaction from the industry in the production of EEVs, but also increased public participation and market consumption of vehicles with a higher degree of fuel efficiency and environmental friendliness.

Despite uncertain economic times, the domestic industry proved stable last year, against all odds, with a total industry volume (TIV) of 666,674 units. Along with TIV, total production volume (TPV) recorded its highest numbers in history with 614,664 units.

Nevertheless, it is important to note that TIV and TPV trends are expected to fluctuate based on the economic situation of the day. The prolonged foreign exchange phenomenon has admittedly affected the industry performance, just like the previous economic crises in 1985, 1997 and 2008.

It is therefore important to fairly assess industry growth beyond sales and production figures, to include its direct and indirect impacts towards higher value gains to the nation as a whole.

In terms of local capacity, the automotive industry has since grown to house more than 700 local vendors, dealers and distribution centres operating in Malaysia, with a total workforce of more than 600,000 talents.

Through the Malaysian Automotive Technology Roadmap, 16 research and development (R&D) projects are currently underway in areas of battery technology, electric bus system, and advance manufacturing. Nine of these projects have completed their respective research phases and are ready for commercialization.

While production centralises around the peninsula due to logistic advantages, we have seen numerous initiatives that serve as in-roads to increase participation of East Malaysians in the automotive industry.

These initiatives include the recent establishment of the Transport Innovation Centre in Kuching, as a node office for R&D activities for sustainable mobility to take place. This year alone, Malaysia Automotive Institute's Bumiputera Workshop Transformation Program and Industry Professional Certificate provided new jobs and business enhancement to more than 100 workshops and 900 semi-skilled workers in Sabah and Sarawak.

These figures, which are merely the tip of the iceberg, demonstrate an increasing, holistic value of the automotive industry based on a design and innovation doctrine, as enshrined by the NAP 2014.

However, the path to success is still long and winded, and it will take more collaborative efforts to fully realise the potential that Malaysians have towards achieving competitiveness in the global automotive markets.

"Coming together is a beginning, keeping together is progress, working together is success"

The writer is the chief executive officer of Malaysia Automotive Institute.


Thursday, 29 September 2016

NAP 2014: Towards a design, innovation-based economy


In the first part, this article explained the historical rationale and general framework of the National Automotive Policy 2014 (NAP2014). At the heart of the policy was the propulsion of a design and innovation based automotive economy, working towards global competitiveness through the gradual liberalisation of the automotive sector.


The formulation of the NAP2014 was done through an arduous consultation process with all stakeholders of the automotive ecosystem. The engagement, performed over a three-year period, took into account inputs, views and interests of industry players, academic circles, government bodies and public participation.
This allowed for a fair assessment in the formulation of key development areas within the entire ecosystem, covering missing industry linkages, technology and human capital gaps, as well as innovation capacities across from the economic, policy and societal points of view.

A key lesson from the consultation process was the overwhelming clamour for a streamlined direction in allowing innovation to realistically materialize. Investment in technology and the necessary human capital development, is not a straight forward process, albeit a decision that all stakeholders were prepared to make to stay competitive, despite its high cost.

The automotive sector is extremely diverse, not just in its product range, but also the quantity of manufacturing process specializations it requires.
Furthermore, the infrastructure, manpower and skill levels were vastly different when comparing the manufacturing sector against the after sales sector.
It only made economic sense when technology goals are streamlined in a clear direction – allowing capacity building to take place based on an educated assessment of market opportunities and the risks associated with them.
This was one of the main reasons the NAP2014 was focused towards the creation of a regional hub for Energy Efficient Vehicles (EEVs).
It is now common knowledge that EEVs focus on any vehicle that meets a set standard of fuel consumption and carbon emission level.
The NAP2014 would allow business incentives to be directed towards technology and talent development that centres around energy efficient products and processes.
This would further spur targeted research and innovation led by the industry, in turn allowing increased participation from academia, research institutions and the public.

As mentioned in the first part of this series, the EEV policy was also tailored towards future demands in vehicle technology – fuel efficient, safe, secure and environmentally friendly.

The NAP2014 was not just formulated for innovation, but a business driven venture, with its first penetration point being the ASEAN region – a base of more than 600 million people which until today, had developed automotive industries with only cheap labour and commodities as its competitive advantage.
Overall, the policy was designed to allow Malaysia to emerge as a champion for sustainable mobility solutions in ASEAN.
It aims to further strengthen the current manufacturing and after sales sectors of the industry, tapping the wealth of skilled labour created by our education system, and streamlining research and innovation from the various institutions that has been set up in the country, through both public and private initiatives.

To make Malaysia a high income economy, it must provide high value jobs coming from high value businesses. High value businesses can only be created though policies that drive high value.

For Part 3, click here

The writer is the chief executive officer of Malaysia Automotive Institute.

Thursday, 22 September 2016

NAP 2014: Its roots and future


GOING GLOBAL: Automotive policy to spur country’s industrialisation

In 2006, the National Automotive Policy (NAP) was announced as a policy review for the three-decade-old industry that was created to spur Malaysia’s industrialisation.

The policy was necessary to keep up with shifts in the regional and global automotive industry networks. It was further reviewed in 2009 to create a more conducive investment environment in the domestic industry.

As the Malaysian automotive industry entered the 21st century, there was a key realisation – automotive industry was in the midst of globalisation, and that business practices and consumer purchase decisions were rapidly taking a different shape compared with previous business models.

Firstly, advances in production efficiency saw the influx of cheaper, more fuel-efficient models from Japan. This caused disruption in global markets, especially in markets traditionally dominated by continental and American models.

Secondly, the rise of oil prices created an urgent need for alternative powertrains in order to reduce dependency on fossil fuels.

Coupled with stronger demand for environmentally-friendly vehicles, the popularity of hybrid and electric vehicle technology increased, causing global car makers to quickly implement alternative powertrain programmes to keep abreast with latest trends.

As technology demands became more complex, carmakers soon realised that no single company could stand on its own feet, and that collaborative development of vehicle platforms and powertrains were the only way forward to stay ahead in the industry.

This led to numerous partnerships, such as the General Motors Group, Hyundai-Kia, Peugeot-Citroen and Renault-Nissan alliances, allowing cross-platform sharing and technology collaboration in a more cost-friendly environment.

The Malaysia automotive industry has established a significant and robust manufacturing base, with more than 10 original equipment manufacturers and 700 parts and component manufacturers operating nationwide.

However, the next step is braving the new economic order requires enhancement of in-house product designs and process development capabilities through out the supply chain.

Hence, the NAP 2014 was conceived as an update to the achievements in the industry so far.

The policy was announced under targeted approach that focused on Energy Efficient Vehicles (EEVs). This was to streamline the efforts of industry players, research institutions and government initiatives towards product and process technologies that were relevant to global trends of future powertrains, fuel consumption patterns and emission requirements.

This was done through six roadmaps that supplemented the NAP 2014 - containing guidelines to enhance technology, supply chain, human capital and after-market sectors.

It has been almost three years since the NAP 2014 was announced, resulting in tremendous excitement for both industry and consumers. The domestics industry continues to be robust despite the recent economic uncertainty.

There are now numerous new models assembled by Malaysian hands, and more vendors are proficient in lean production processes and soon will be establishing in-house product and tooling development capabilities, performed through collaboration in cyberspace. Consumers have wider choices in the cars they are purchasing today.

Most importantly, at the heart of the NAP 2014 is the drive towards a gradually liberalised, global mindset - as technological penetration moves at its fastest rate when the playing field is open to all players.

It will take time for us to transition from the clutches of protectionism, but it is designed to allow us to fly when we are free. "change is difficult but often essential for survival".

For Part 2, click here

The writer is chief executive officer of Malaysia Automtive Institute.

Thursday, 15 September 2016

Malaysia - A nation geared for competitiveness


Malaysia has come a long way, from a nation that achieved independence six decades ago, to what it is today – one of the fastest growing economies in the region, emerging as a high-tech industry-based economy, from its roots as a basic commodity producer of petroleum, tin and agro-based products.
Since independence, Malaysia’s gross domestic product(GDP) rose from merely US$1.9 billion (RM7.85 billion) in 1960 to US$296 billion in last year.
We are within the world’s 35 largest economies by GDP and also within the top 20 countries in terms of ease of conducting business, recording a trade surplus of RM94.3 billion last year with a total trade of RM1.47 trillion.
A significant factor for this growth has been sound economic policies that were geared towards global competitiveness through gradual liberalisation of the economy and the automotive industry is not spared.
The recent 2015-2016 Global Competitiveness Report (GCR) published by the World Economic Forum ranked Malaysia as the 18th most competitive economy in the world (6th in the Asia Pacific region).
Through the Global Competitiveness Index, it measures the economic institutions, policies and factors within countries that set the sustainable current and medium-term economic prosperity levels.
Interestingly, the GCR showed that Malaysia is among the top 10 countries in terms of goods market efficiency and financial market development.
Other notable pillars are our business sophistication, innovation and labour market efficiency.
Despite our overall high ranking, we must strive to improve our ability to compete in the globalised world.
It is noteworthy that despite upward trends in the GCR, we must improve in the areas of technological readiness and human capital development, especially within enrolment rate into secondary and tertiary education, as well as use of information and communications technologies.
The world is moving through the fourth industrial revolution in which competitiveness does not only require intellectual capital, but also a unified intellectual capital – one that must penetrate all corners of the nation and provides each member of society access to social upward mobility, while harnessing all forms of expertise.
From a strategic point of view, Malaysia’s automotive industry has evolved in function from merely spurring local production to becoming the final baton holder in creating a Malaysia that is a worthy contender in the high-technology industrialisation process.
Since the formation of Proton, which was centralised in Shah Alam, automotive industrial zones have been operational across the country, in Melacca, Kedah and Pahang.
There are more than 500 vehicle parts and components manufacturers nationwide.
Automotive technology has also started to penetrate Sabah and Sarawak, through the recent establishment of the transport innovation centre in Kuching, which will allow stronger participation in automotive research and development activities.
However, in the age of the Internet of Things (IoT) and Big Data, one factor must be managed - perception. As Malaysians, it is our duty to have a fair world view to remain competitive as the ability to make fair assessments as where we are and where we need to be will ensure that our relevance within the world’s economy is sustained.
Lastly, we must realise that no person, business or industry can survive alone in a vacuum.
To propel the nation forward, we recognise that each member of society, from all walks of life, levels and backgrounds – contribute to the nation’s wealth and knowledge in their own unique way.
I urge all Malaysian citizens to strive and excel in their own area of expertise and contribute to the pool of excellence that we have built since independence and for many years to come.
In order to ensure the continuous growth and prosperity of the nation and its citizens, let us iron out our differences and work together to make Malaysia the advanced nation it deserves to be.
The famous saying goes “Ask not what your country can do for you, but what you can do for your country.”
Happy Malaysia Day!
The writer is the chief executive officer of Malaysia Automotive Institute.

Thursday, 8 September 2016

Ecosystem sustainability key to economic prosperity


It is common that in uncertain economic times, there will be discussions and debates on the robustness of the economy and the future.
The fear of the unknown ahead naturally triggers the popularity  of polemic-based analysis towards economic administration during downward trends in the economic cycle.
The old adage that "to predict the future, we must look at history" becomes a relevant mind set in these times.
Throughout our history, Malaysia has survived numerous economic downturns.
Despite three major crises in recent decades, our economy had shown an overall upward trend over the last 40 years, recording a gross domestsic product of US$9.3 billion (RM37.8 billion) to US$296 billion in 1975 and 2015, respectively.
Interestingly, the gross domestic product increase was most rapid after the materialisation of the nation's industrialisation agenda, rising from US$72 billion in 1998 and continuing its rapid upward trend to what we see today.
Furthermore, our gross national income (GNI) per capita rose from US$3,420 in 2000 to US$10,600 last year - which is close to the World Bank's technical definition of a high income nation (US$12,475).
The key factor for economic prosperity is the sustainability of the business ecosystem.
Malaysia has enjoyed an 18-year trade surplus, at RM94.3 billion last year, with a total trade value of RM1.47 trillion.
This has created career enhancement for employees, better livelihood for families and increased government revenue that further strengthens the structural value of the business and social ecosystem.
Administrative costs, such as government expenditure and natioal debt may be argued as indicators towards future economic trends.
Despite its convenient polemic use, these figures do not often paint a holistic picture of the current state of the nation .
For example, higher government expenditure and sovereign debt may indicate increased efforts to stimulate the economy, and not reduce cost efficiency.
When the business ecosystem faces difficult times, it becomes strategic and natural for governments to play a more active role in business facilitation as this not only keeps businesses afloat, but also helps maintain stability of government income streams.
It is imperative to realise that Malaysia has come a long way since it moved from a commodity-based economy in the 1970s to what is wants to be in the future - an industrialised nation with high value income.
As we move closer to our 2020 deadline, the next key agenda is to enhance our exports growth by introducing more competitive, high value products and services into the global market.
The National Export Council, chaired by the Prime Minister, was set up to formulate strategies and measures to boost Malaysia's exports.
With respect to the automotive industry, the Automotive Export Enhancement Programme was introduced with the aim of exporting 150,000 vehicles by 2020, along with more than RM9 billion worth ox exports of new and remanufactured automotive parts and components.
This economic goal is meant for all Malaysians - to ensure that all of us participate in an economic growth that encompasses not just higher revenue, but higher value employment, localisation of industry as well as expansionof the market through exports.
In conclusion, it is important to realise that economic prosperity fluctuates in cycles, but holding the course and the strong belief in the industrialisation agenda is key to achieving such prosperity.
"A smooth sea will never make a skilful sailor"

The writer is chief executive officer of Malaysia Automotive Institute