Thursday, 25 August 2016

Redefining true independence through liberalisation

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,

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