In the first part, this article discussed the gradual and eventual liberalisation of the Malaysian economy, particularly the automotive industry, to ensure business sustainability and global competitiveness.
The great debate about protectionism can be generalised into two competing lines of argument.
Those in favour of protectionism look at the development of infant industries that allow national economic growth, especially in areas where comparative advantages are not present, yet vital to be developed to ensure economic upward mobility.
On the other hand, free-trade proponents argue that protectionism breeds complacency within the local industry and consumers are disadvantaged from a monopoly of businesses that are incapable of providing products and services at competitive prices.
Malaysia’s automotive industry has taken the protectionist route, and as a consequence, inhaled both pros and cons. While we have to be truthful to the fact that our domestic industry needs to revitalise itself on the global stage, one cannot deny that the automotive sector produced a significant amount of jobs, created new businesses and spurred industrialisation – all in a high-value technology sector that has taken Malaysia out of its basic commodity based economy.
A pertinent aspect in gradual liberalisation is the management of the protectionist mentality. Most importantly, our local players must grasp the thinking that the goal of protectionism is to eventually lead us to independence from the need of protection and to survive of one’s strength and capabilities.
The key question then becomes clear – what does it take to achieve such independence?
The automotive sector is steeped in sub-sectors that require a strong grasp of advanced technology. As products and processes evolve in complexity, it becomes important that businesses and its human talent are able to grasp complex engineering concepts and apply them into the numerous job scopes, such as product design, process development, quality management, procurement, marketing and sales, vehicle service, even finance and accounting.
A key element is missing from our formula of competitiveness is the element of design. In this context, design capabilities are not just relevant to those in the drawing room, but refer to the mental capabilities of developing our own specifications and nuances to uplift our products and services throughout the entire business chain, creativity and innovation, instead of simply consuming technologies and processes inherited from others.
A great example would be Apple Inc’s worldview. It is an open secret that the cost of production of an iPhone is a small fraction of the price paid at the retail outlet. However, the price of its products, i.e. the value perceived by consumers, is a product of ingenuity of its product designers, marketers, production plants and quality systems.
Ironically, there are rumours that Apple is developing an electric vehicle, which if realised, shows that high technology mindsets allow any company to expand beyond its product line into different sectors that they are not well-known for.
Liberalisation, global competitiveness, design-driven mentalities and high-value thinking are not just a burden of the national original equipment manufacturers.
It is a mindset that must be accepted and applied by the entire supply chain, the people within them and those who surround them.
It is an effort that must be a product of collaboration by all players – the industry, vendors, institutions of higher learning, research centres and government bodies.
The government has done and will continue to do all it can to ensure that opportunities to thrive in the global markets are open to all.
To survive in the liberalised market, we can no longer afford to merely consume. We must lead, create, and produce – for that is the true meaning of independence in the new age of globalisation.
The writer is the chief executive officer of Malaysia Automotive Institute,
Thursday, 25 August 2016
Thursday, 18 August 2016
In 1990, Malaysia formalised its intentions of becoming an advanced nation by the year 2020.
The central focus of Vision 2020 is to take Malaysia out of its dependence on basic raw material production and emerge as an economy that is progressive, prosperous and robust.
In 2010, the administration refined the national plan by introducing concerted road maps and initiatives and streamlining the various economic sectors to ensure that they follow a development route specific to their industrial needs, with a mind set towards becoming a high income nation.
This was the central concept behind the formation of the Economic Transformation Programme (ETP) and Government Transformation Programme (GTP) as part of Malaysia’s National Transformation Programme.
One of the transformation agendas within the ETP was the establishment of a strategic reform initiative called Competition, Standards and Liberalization (CSL).
Championed by three ministries, including the International Trade and Industry Ministry, CSL outlined the implementation of legislation, standards and practices that aimed to push Malaysia’s economy towards liberalisation to ensure our competitiveness at the global stage.
With respect to the automotive industry, a key strategic move was the establishment of the Malaysia Automotive Institute to redirect the automotive industry’s focus towards becoming a regional hub of energy efficient vehicles by 2020.
This direction was a key component of the latest revision of the National Automotive Policy 2014 (NAP 2014).
Just like the revision of the National Education Blueprint, which caters towards the development of Malaysia’s overall human capital needs, the NAP 2014 became the central direction for Malaysia’s automotive industrialization agenda.
It outlined the key areas of enhancement, such as technology acquisition, human capital development and after market reform, to ensure that Malaysia is not left behind in becoming a player in the globally liberalised arena of sustainable mobility.
Whether we realise it or not, the liberalisation has always been a central tenet of the national agendas mentioned above. They both call for Malaysia,and Malaysians to be a fully-developed economy and society.
The definition of a fully -eveloped nation or an advanced nation must be understood by all Malaysians. It must develop the strength to achieve economic, social and psychological liberation and independence, so that it has equal footing and recognition as a leader in the new world.
It entails a higher order thinking capacity that can innovate and adapt to the ever-changing complexities of global market forces.
Despite the extensively discussed benefits of liberalisation, all governments realise that we can never jump into the liberalisation bandwagon without proper planning and stakeholder engagement.
It must be carried out at a pace based on a clear understanding of each industry's scenarios and conditions, and with a detailed implementation plan that ensures no stakeholders are left out of the benefits of an economically liberalised sector.
The liberalisation of the automotive industry has been carried out gradually over the last decade.
Despite challenges of an uncertain global economy, we have seen a persevered performance of the industry as a whole, with improving capabilities of original equipment manufacturers and vendors, increased job opportunities and an unprecedented amount of choice for consumers.
Liberalisation is not to be feared, but to be intelligently embraced.
This is the first part of a two-part series commemorating Malaysia’s independence month. The writer is chief executive officer of Malaysia Automotive Institute.
Thursday, 11 August 2016
This year has been a bittersweet year for Proton. In April, the government announced conditional support to the national carmaker’s plea for assistance. Many saw this as an ultimatum – Proton must work towards business sustainability as a global brand before any government support can be rendered.
Within the same month, the government approved a soft loan of RM1.5 billion to pay its vendors, and Proton began formulating its transformation plan, starting with the announcement of numerous new models to be rolled out of its production lines within the year. The company also needed to identify a strategic foreign partner in order to bring Proton to global heights
In June, the all new Perdana was launched, which demonstrated Proton’s redefined business model. It was a model that was engineered by Proton’s research & development team based on a shared platform with a global car manufacturer. As the result, an elegant D-segment model that was based on profitable business modus operandi.
Fast forward to today, Proton has been making headlines almost on a weekly basis for the right reasons. This excitement is not just due to numerous reports and teasers on the new and upcoming Persona and Saga, but also renewed business direction from Proton’s transformation plan.
Despite being a mixture of truth and speculation, it is a sign that many Malaysians are still interested in Proton’s future – and for many, would like to predict its future as a success.
The future is predicted by learning from the past and studying the present.
I have written extensively previously on Proton’s current products. While it is true that Proton quality consistency can be further improved, it is undeniable that their recent models do not compromise on the occupants’ safety aspects. Proton models continuously receive high safety ratings for new car assessment programmes, such as Asean New Car Assessment Programme and Australasian New Car Assessment Programme, and its ride and handling is one of the best in the class.
Through the special task force, the government is there to assist Proton in ensuring that manufacturing, after-sales, branding and marketing will propel the car maker to the desired heights at the global stage.
Among Proton’s immediate initiatives are the implementation of enhanced quality control measures, extended service centre hours, and re-engineering their brand value – all to create a holistic experience for their customers’ mobility needs.
Recently, I had the pleasure to personally test the upcoming Persona and Saga. I can safely say that I have been very impressed with the overall driving experience of the car, in particular their handling, cabin comfort and very low levels of vibration and harshness.
In a way, the new models seem to mirror the personalities of the two gentleman at Proton’s helm, Datuk Fuuad Kenali and Datuk Radzaif Mohamed – open minded and attentive, yet decisive and goal-oriented.
It is important to note that despite government assistance, Proton has been the party to plan, decide and implement all activities within its transformation phase. Based on the outcomes of the last few months, I remain confident that Proton has the mettle to become a competitive player in the global automotive market.
All I have left to say is – it is time to feel excited about the future of Proton and the automotive industry.
Thursday, 4 August 2016
Conventional wisdom dictates that global automotive manufacturers maintain their strong competitive edge through establishing themselves as technological leaders, marveling consumers through the introduction of high-tech systems, gadgets and applications to the modern vehicle.
For small and medium enterprises, establishing research & development (R&D) capabilities is a daunting task, as the massive investments required can potentially harm the cash flow of even the most profiting of ventures.
However, many businesses within the industry have yet to tap the potential of the single largest resource of knowledge – the academic circle.
It is common to see the top performing automotive manufacturers integrating academia into their R&D processes.
In 2004, Audi established a strategic collaboration with the Technical University of Munich (TUM), which brought more than 100 PhD students close to Audi’s headquarters in Ingolstadt.
The collaboration, named the Ingolstadt Institute of TU Munich, led to a steady flow of innovations into the carmaker’s products and production lines, including lightweight constructions, suspension technologies and innovative management solutions.
The company doubled its car production volume between 2006 and last year changed perceptions of being the “Poor man’s BMW”, to becoming a strong contender within the global luxury segment.
Industry-academic collaboration creates a much needed symbiosis, particularly when the working styles of both sectors defer, but may develop stronger results when synergized appropriately.
The academics’ training make them well versed in the methodology of scientific study, which is vital to fill in the knowledge gaps of the fast paced, high intensity working style seen in the industry.
More importantly, the collaboration benefits both parties from the perspective of cost barriers. Many universities are publicly funded, or receive grants from public sources – which means many problems faced by the industry can be solved through budgets that are pre-approved, further reducing the costs and risks of investing into R&D.
Another key aspect is human capital development. Recent opinions from the industry allude to the notion that university graduates are not meeting the expectations of the industry, and that these graduates are an “over-academic” product that needs to be upskilled to meet these expectations.
Industry-academic collaboration tackles this problem at its root, as university syllabus is constantly matched to industry needs through constant input between the collaborating parties.
These collaborations may eventually lead to industry-led apprenticeship programmes – where a student is as much an employee of the industry as he or she is a student. This double exposure model is best seen within the German automotive industry today, which boasts more than one million apprentices currently developing careers in the country that is responsible for the global marques of BMW, Mercedes-Benz, Audi and Volkswagen.
The Skill Development Fund under the 11th Malaysian Plan has been given an allocation of RM1 billion to develop the targeted 1.5 million skilled jobs in Malaysia by 2020.
Through the National Automotive Policy 2014 (NAP 2014), Malaysian Automotive Human Capital Roadmap and Malaysia Automotive Technology Roadmap, MAI is constantly engaging with both industry and academia to boost collaborative efforts between these parties with the aim of expediting the technology and human capital development within the domestic automotive ecosystem.
MAI is willing to facilitate all automotive related technology collaboration between industry players and academic circles, and I urge all parties to heed the call to make technological leadership a priority at all levels within the industry.