This article appeared in a guest column on paultan.org on August 17, 2018
When asked about his numerous shortcomings, Thomas Edison was quoted as saying, “I have not failed 700 times. I’ve succeeded in proving 700 ways not to build a lightbulb.” While many have resorted to debate the exact number in his quote, it is best we look through the key message of perseverance enshrined in the inventor’s words.
The largest part of my work is the implementation of government framework and policy specific to developing the Malaysian automotive industry. In this context, implementation is based on clear strategies that are coherent with the macro-economic direction of our government.
One thing I’ve learned in my line of work – one I consider a great honour and challenge – is the elimination of preconceived bias and assumptions to any issue. As a nation that is itself on a learning curve, we too must look at issues from both sides of the divide before forming an opinion.
With that said, let me delve into the debate on the new national car project. However, to fairly look at this massive complex issue, there are certain prevalent assumptions that should be clarified.
Firstly, it is important to establish the facts about the state of the current automotive industry. To date, there are more than 25 OEMs and around 700 vendors that are part of the ecosystem of the domestic industry.
The keyword here is “ecosystem.” While OEMs and vendors are the parties most likely to be discussed within the public sphere, the ecosystem is wider and deeper than we can imagine.
Just to name a few, the automotive sector has developed tool and die makers, raw material producers, machine builders, part distributors, accessories, workshops, recyclers and remanufacturers. This employs a workforce of more than 700,000 Malaysians as designers, engineers, technicians, production operators, servicemen, and many non-technical positions – all equipped with skills and talent in a sector of high technology.
While an OEM is part of the ecosystem, the discussion about industrialisation should not only revolve around OEMs alone. It should be viewed holistically, to also include the entire value chain that makes up the industry.
Secondly, while there are valid points on both sides of national car issue, they are often convoluted by the assumption that it is a repeat of previous attempts, including its historical parameters and strategies.
This has led to unnecessary speculation on future car prices, market fluctuation, trade policies, accusations of anti-liberalisation, and so on so forth, while the entire decision has thus far merely been subject to its impact studies and consultation to move forward in the economic direction set by the government of the day – on a macro level.
To fairly look at the national car issue, we must take a holistic view at the economic goals of the nation. Despite having a comparative advantage in agricultural and commodity-based industries, we decided that being a consumer nation was not enough for us, and we needed to industrialise in order to become an advanced nation.
Industrialisation in this context is not merely about having factories. It is about being free and independent, at the very least sufficiently co-dependent, on ourselves in key technology areas. Any advanced nation in the world would demonstrate such as trait.
In Malaysia’s case, the automotive industry was chosen to spur that independence. Full-fledged automotive design capabilities – from the drawing board to the final production – was to be created in order to develop an advanced economy, spinning off to other industries.
For example, if we can engineer automotive plastic components, then the same engineering knowledge and skill will trickle down to other plastic based industries. Without an automotive industry, we would still be able to manufacture plastic products, but would be limited to producing low yield, low barrier items.
As we all know, low barrier markets are highly volatile markets which bear high risk for all those within them. The fall of Malaysia’s dominance in the world tin market, circa 1985, is a good lesson to us all.
This is where the idea of a new national car comes into the picture. Just like how Proton spurred our first industrial phase, it can spur the next phase of industrialisation for Malaysia.
The world automotive market, interestingly, is now going through a transition. As technology develops away from fossil fuel dependence towards electrification and autonomous driving, it is slowly becoming a blue ocean for new market players. Who knew that Apple and Google would even consider entering the automotive market as a manufacturer, but recent news is rife with speculation that this is in the pipeline.
To keep up, Malaysia must consider all options to spur the next stage of our industry. I have written numerous pieces in my column (for the MAI website), in which, while the final equation for our automotive goals is a work in progress, the elements of success are becoming more and more defined.
The new national car would firstly hinge on the experience built from our current automotive ecosystem, adapting to the backdrop of global trends in the global automotive markets. The blue ocean mentioned above opens the gate for the transformation towards next-generation vehicles and connected mobility, in line with future trends.
In keeping with global trade norms, options may include supporting the expansion of existing national brands, leveraging on partnerships between local and foreign OEMs that currently exist, or even direct international collaboration between Malaysian OEMs and major automotive market players around the world.
This must include the optimisation of current and future investments of domestic and foreign direct investments (DDI & FDI), to strike the balance of mutual interests between investors and meaningful participation of Malaysians within the automotive industry.
While technology has evolved, so has Malaysia’s position as a regional automotive hub, in particular with regards to energy efficiency. Despite its smaller industry volume, it has attracted billions in investment to allow Malaysians to participate in higher value activities within the automotive value chain – making us a nation of choice for regional collaboration in automotive development.
For example, the recent announcement of the revival of the ASEAN car project was followed by an agreement between MAI and Institut Otomotif Indonesia (IOI) to enhance collaboration between automotive vendors of both neighbouring countries, gearing towards developing the ASEAN car.
With the advantage of hindsight, experience and new opportunities, a national car project is a strong option to spur the next phase of automotive development. Let a healthy debate take place – we should allow time and space for ideas to manifest themselves by putting aside our preconceived bias.
Madani Sahari is CEO of the Malaysia Automotive Insitute (MAI).
*The views and opinions expressed in this article are those of the writer and do not represent or reflect the views of paultan.org.
This article appeared originally at: https://paultan.org/2018/08/17/opinion-the-new-national-car-project-the-real-issues/