• Madani Sahari

NAP, FTAs to drive automotive sector's competitiveness

The recent signing of the Trans Pacific Partnership Agreement (TPPA) has sparked debates and dialogue about the future of Malaysia’s economy. The automotive industry has not been spared of such discourse, mainly in questioning the ability of our local players to compete in the global automotive marketplace.

Malaysia’s 30 million population is too small a market for us to rely on an inward-looking economy to develop and expand the local automotive industry. It is important to embrace the change that is taking shape at the global stage – the world market is more open, consumers are more demanding, impact to environment is becoming more pertinent, etc. The underlying factor to be in control of this change is none other than to enhance competitiveness in all aspects, be it social, economic or governance.

In 2014, the third revision of the National Automotive Policy, NAP2014, was announced with extensive focus to enhance the global competitiveness of not just car and component manufacturers, but the entire ecosystem of the Malaysian automotive industry.

The grand design of the NAP2014 centralizes around three core thrusts – Incentivising investments, Technology development, and Market Expansion. The breadth of this policy covers all areas in the manufacturing and after market sectors, while the depth of the implementation cuts across the development of the supply chain, human capital and technology.

These three core thrusts promote an interdependence with global market forces to enhance domestic automotive players, towards becoming a greater force on the global stage.

Increased investments, from both domestic and foreign direct investments open up opportunity for local players to mobilize their talents and capabilities. Technology penetration is more efficient when our local talent work together with experts from around the world. Finally, market expansion is only possible when export barriers for local players are removed to create a level playing field.

The development of the Malaysian automotive industry must come hand in hand with our participation in the global economy, and Free Trade Agreements (FTAs) open up opportunities for such participation.

For example, it is noteworthy that Malaysia’s vehicle component sector has been fully liberalised – Malaysia’s vehicle component exports have risen from RM1 billion in 2005 to RM12 billion in 2015.

Another recent milestone was the introduction of Malaysia’s first electric bus, which will be soon be commercialized – a product of collaboration between Malaysian and Australian companies through the Malaysia-Australia Free Trade Agreement (MAFTA).

At the same time, we are fully aware of potential threats a liberalised market may pose to local players. It is important that the gradual liberalisation of the domestic automotive industry be supplemented with programs that enhance competitiveness of local players.

Six roadmaps were launched alongside the NAP2014 in order to ensure an effective implementation towards transforming the domestic automotive industry and to reach a level where its benefits trickle down to all levels of the society. These roadmaps, focusing specifically on Energy Efficient Vehicles (EEVs), chart a path towards Malaysia’s globalisation of the automotive sector – covering the development of human capital, technology, supply chain, after sales, environment and safety. The roadmaps also look beyond current demands of the automotive sector, but also future demands of sustainable mobility, such as the reduction of fuel dependency, new powertrain technologies and environmental protection.

To implement these roadmaps, numerous programmes and initiatives have been established to enhance the competitiveness of all stakeholders within the industry – including OEMs, vendors, workshops, employees, students or anyone interested to be part of Malaysia’s automotive industry.

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