Thursday, 1 February 2018

LIBERALISATION - Policy endurance key to economic progression

For quite some time, the Malaysian economy has taken a sharper turn towards gradual economic liberalisation. In the early part of this decade, the administration began numerous, albeit unpopular decisions that lifted the nation’s veil towards a more realistic adaptation to the global economy.
While the automotive industry began its transition towards gradual liberalisation, from what was more than three decades of untethered protectionist policies, the economic policies on a macro level changed to prepare the nation and its people for an economy that was more resilient to global shifts.
From tax restructuring, public service delivery transformation to a remodel of subsidy rationalisation, the nation reshaped itself into a more competition based economic model.
The strategy was simple. Short term consequences were expected, but became a necessary cost to the strengthening of economic fundamentals – no successful transformation can take place without sacrifice.
What mattered was how hardships were addressed, especially for those who needed help more than others.
The automotive sector was not spared from such administrative demands. The NAP2014 placed a high premium on competitiveness, in which businesses that had suffered from sustainability were obliged to rethink their business models.
The government insisted on assisting those who committed to value enhancement through energy efficiency, technology investments and human capital development.
In 2015, we saw the the first test of our economic transformation. The US dollar appreciated, and the signs of economic uncertainty began to loom. At its peak, the appreciation was recorded close to the RM4.50 mark, or about 18 percent increase. Rising costs took a toll on both consumer and business to keep prices at bay, as we braved through the uncertainty.
Recently, the economy began to see a rebound – this time, without any drastic measures at the time of highest impact. With the USD currently floating closer to 2014 figures, along with increasing exports and expected growth, it is evident that the sacrifices we took to form sound economic fundamentals is starting to bear results.
The continuity of such policies is key – admittedly we still have many issues to weed out, and the capabilities of local businesses, despite tremendous in-roads achieved in recent years, need to take advantage of the positive short term that lies ahead in order to fare much better in the long term.
While public buy-in to energy efficient transportation has been significant, a grander scale of energy efficient mobility is taking shape before our very eyes.
We are now aware of the government’s plans to update the current national automotive policy, termed NAP2018. It will be an upgrade to the current policies in place, in view of the trends in mobility emerging before our eyes around the world today.
To be clear, energy efficient vehicles are still a key component of the NAP2018, as alternative powertrains will mostly likely take a larger portion of the current automotive market share, which is currently dominated by internal combustion engines.
On top of that, emerging technology that alters the driving lifestyle will start merging into the industry.
A mid to long term scenario will most likely integrate lifestyle and connectivity into our vehicles, in fact removing the act of driving from the transportation equation.
The government’s perspective is simple – a technology driven economy is must adapt to current disruptions, to sustain itself in the long run.
Businesses must be nurtured not with continuous handouts, but with long term solutions that breed sustainability.
Long term solutions require long term commitment and investments – and long term commitment can only come about from long term, enduring economic policies that are consistent with global business practices.
Some say that the only constant is change. However, adapting to change requires strong, consistent fundamentals that will remain in the long term, based on wisdom and far-sightedness.
The writer is the chief executive officer of Malaysia Automotive Institute.

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