Thursday, 28 July 2016

Formulate long-term strategies to stay competitive


The world has recently been rocked by many global shifts. The Trans Pacific Partnership Agreement will open doors to more than a billion people within the next few years. 
 
More recent is the unfolding events of Brexit, which may see a shift in British trade patterns from regional-based markets to more traditional bilateral and multilateral trade relationships. 
 
Across the Atlantic, the United States is in an election year. Both presidential nominees – Hillary Clinton and Donald Trump have diverse views on how the American economy should move forward, particular in its policies towards the global economy. As America’s foreign and economic policies affect the world, the US elections must be an important point of discussion for the long term planning of our own domestic business environment. 
 
History has shown that despite numerous talks and trends pointing towards a unified market, it is no secret that governments around the globe will prioritise the most important demographic – the citizens. An example is the Kyoto Protocol, an international treaty to reduce greenhouse emissions, signed by the US during the Clinton administration but was never ratified.
 
This somewhat affected the global automotive industry, as standardised carbon emissions of complying nations rendered them less competitive when a huge market such as the US decides to withdraw.
 
The aforementioned series of events have also shown that the roadmap towards a free market, an idealised form of market  that has been glorified by the West for centuries, can be circumvented when the interests of the majority vote are at stake.
 
Just as businesses compete to emerge in their market, nations also compete to ensure that their domestic economies are competitive. Nations employ different strategies to ensure that their local industries are provided the fairest chance to gain access into larger markets. 
 
These strategies can be direct, such as trade policies, regulations and agreements; or indirect, such as political alliances, military partnerships, and other administrative strategies. It is therefore important that as a nation, we approach global events with a sound, fair and unbiased mind while analysing its impacts and effects to our sovereignty, security, peace and stability.
 
To compete at a global level, all stakeholders within the economy must develop long-term strategies, both at the macro and micro levels. With these strategies, we must then be resourceful in dealing with internal and external factors that can impact us socially, economically and politically.
 
Finally, being competitive requires building a high resilience to external forces, and remaining adaptive to global trends and changes. This is done through a high degree of innovation based on well synthesized and analysed information, as well as a widespread and comprehensive enrollment of solutions across the ecosystem. 
 
The most successful person in life is the person with the best information.

Thursday, 21 July 2016

Adapting to global economic shifts to enhance exports


Within the span of half a year, we have seen major shifts within the regional and global economies, which affect Malaysia both directly and indirectly. 
 
The most recent being Brexit – in which the British people voted in a referendum to exit from the European Union.
 
At the same time, the Trans Pacific Partnership (TPP) agreement and the formation of the Asean Economic Community (AEC) created a need for significant changes in the way in which Malaysian companies conduct businesses. 
 
The world also saw numerous economic issues raised during the latest round of the World Economic Forum, including climate change, economic and social inclusion, sustainable development and the Fourth Industrial Revolution.
 
Although it is too soon to predict the impact of Brexit, some reports suggest that the post-Brexit era will see more direct engagement between the UK and the world’s economic powerhouses, such as the United States, China, India, Japan, Australia and Canada. 
 
Coincidentally, these countries also cross economic paths with Malaysia, as many of them are signatories to the TPP, providing Malaysian businesses with numerous opportunities from these string of events. 
 
Economic shifts, events and policy changes will always create impacts on the business ecosystem, be it the automotive sector or otherwise. Naturally, there will be more discussion on the negative impacts, as the fear of the uncertain tends to create discomfort. 
 
However, we should also be aware than any shift will also have a positive impact, and there is a need to analyse and take advantage of it in order to remain competitive.
 
It is, therefore, important for Malaysian businesses to keep abreast with global economic shifts, with global scenario planning and internal development carried out with the ever-changing global economy in mind. At the heart of this global drive is the emphasis on capability and capacity enhancement to achieve global competitiveness and export readiness.
 
Since the National Automotive Policy 2014 was announced, Malaysia's automotive sector has been vigorously preparing itself for global competitiveness. 
 
The gradual liberalisation of the automotive sector has created an unprecedented level of choice for the consumers, while the automotive supply chain has seen tremendous development in the areas of production efficiency, technology acquisition and human capital development.
 
To date, we have seen more than RM11 billion and RM2.6 billion in investment for the manufacturing sector and after sales sector, respectively. Around 60,000 people have also been recruited into the automotive industry over the last two years. 
 
Malaysia Automotive Institute's Automotive Components Export Enhancement Programme (PEKA), developed with Malaysia External Trade Development Corporation, further enhances the export capabilities of component manufactures. 
 
PEKA assists manufacturers in identifying potential export markets and bridge relations gaps between local vendors and the vast global automotive market. 
 
Barriers to exports are also addressed through Distribution Infrastructure Networks, to be set up collaboratively by the government and the industry to further enhance export activities. 
 
Despite these developments, sound business planning and foresight is still required. At the end of the day, it is important for these business entities to analyse and smartly react to global economic shifts to maximise all positive outcomes. 
 
“Luck is merely a matter of preparation meeting opportunity.”
 
 
The writer is the chief executive officer of Malaysia Automotive Institute

Thursday, 14 July 2016

Consumers play important role in enhancing local automotive sector


In general, the costs of purchasing and ownership of vehicles in Malaysia are becoming ever more affordable. 
 
Since the National Automotive Policy 2014 was announced more than 2 years ago, the domestic automotive ecosystem has seen a more competitive sales environment that has undeniably benefited the consumer.
 
Despite the uncertain economic climate and the appreciation of the US dollar against the ringgit, original equipment manufaturers (OEMs) operating in Malaysia have significantly adapted to the market forces.
 
Although some carmakers were forced to adjust prices due to stiffer exchange rates last year, sticker prices of passenger cars have overall reduced, with their best performance at the end-2014 (with a 16 percent average reduction).
 
Furthermore, added factors, such as relatively lower fuel prices, road tax, insurance, maintenance costs and hire-purchase policies, have made the cost of vehicle ownership in Malaysia one of the most competitive in the region.
 
As we move moves forward through with the industry, it is noteworthy that consumer awareness and behaviour has played an important role in its development. 
 
Transportation is a key factor to self-actualisation, taking us to points of daily needs - to the workplace, school, and other places of economic activity, worship or recreation – which, in turn, enhances our daily lives.
 
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. 
 
Knowledge of maintenance and safety aspects of vehicles contributes tremendously towards productivity, well-being and environmental protection.
 
For example, the strong automotive culture in United States has created a culture of vehicle self-maintenance within consumer homes. 
 
The knowledge gained by consumers through performing basic maintenance procedures, such as changing engine oil or spark plugs, on their own has spurred better awareness among the public.
 
As a result, the US market provides one of the widest choices of variants - creating a competitive environment for the manufacturing sector.
 
Additionally, economic situations fluctuate in cycles, potentially causing hire-purchase policies to change accordingly. 
 
Consumers that protect their credit worthiness are less susceptible to these changes and would still be able to purchase vehicles even in slow economic tiles. 
 
Finally, it is imperative that purchasing decisions are not made based on speculation. Consumers should buy cars based on their current need as the indirect costs associated with delays in the purchase would offset any gains from future changes in price. 
 
An example would be the loss of trade-in value of a used car as time passes. Therefore, if a consumer needs a car now, he or she needs not wait for prices to reduce further as the losses from the trade-in value will not result in much gain.
 
Since the National Automotive Policy 2014 was announced, we have seen an increasing number of communication outlets, be it news portals or social channels, that focus on the automotive sector. 
 
This should be seen as a positive step towards increasing consumer awareness regarding transportation in general. 
 
It is, therefore important for OEMs, the after-sales sector, government bodies and, especially, the media to play a more aggressive role in enriching the public with awareness on vehicle ownership practices.