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.