Proton-Adiperkasa MoU goes well with AEC spirit
The signing of a Memorandum of Understanding (MoU) between Proton and Indonesia's PT Adiperkasa Citra Lestari (PT ACL) last Friday, is a positive initiative towards extending the national car maker's automotive manufacturing outside Malaysia.
The MoU calls for a feasibility study to be conducted to explore specific areas of cooperation between both companies. The study will also to examine possible contributions, and to maximise benefits of both nations, towards developing and manufacturing cars in Indonesia.
Indeed, this is a very interesting proposal that will suit well with the spirit of ASEAN Economic Community (AEC), which will materialize on December 31 this year.
Therefore,if the MoU is effectively implemented, the outcome may lead to a significant change in the ASEAN automotive landscape in the near future.
Automotive is a complex industry requiring closely-knitted linkages between Original Equipment manufacturers (OEMs) and the multitiered parts and components supply chain.
Suppliers supplying directly to the OEMs are classified as tier 1 vendors while theirs suppliers,in turn, are tier 2 and down the hierarchy of smaller suppliers of parts and components. Some suppliers serve only one OEM while others serve a variety of customers.
Proton, since its inception in 1983, has been the prime mover towards the development of local vendors to supply numerous parts and components to its assembly outfits
These vendors now have enhanced the entire local automotive manufacturing activities.
The collaborative between Proton and its vendors over the last 30 years has resulted in the establishment of local automotive supply chain community that mostly independent from OEMs dominance.
This non-Proton-centric production among Malaysian automotive vendors will make it easy for Proton and its vendors to work with its Indonesian counterparts to develop their local component supply chain.
Contrary to vertical integration production adopted by most of OEMs, the Proton production concept and its vendors will benefit both nations from the economies of scale.
Proton with its number of vehicle platforms can expedite models introduction of models into the Indonesia market in the shortest time possible.
Joint vehicle design and development to suit the Indonesian market will reduce the assembly times and ease production.
This will help reduce some 20 to 30 per cent of expenses should the time taken to introduced the vehicles to the marketplace be 50 per cent faster than the period of car manufacturing.
Some of the reduction in expenses can be attributed to lower warranty cost, shorter engineering time, tooling availability and shorter testing period.
MAI lauds the collaboration between Proton and PT Adiperkasa Citra Lestari, which is in line with the NAP 2014 overall framework in relation to Investment, technology and engineering, market outreach and supply chain development of Malaysia's automotive industry.
MAI Automotive i-Cloud collaborative platform may be useful to assist local vendors to harness industry information in their respective future collaboration initiatives with its Indonesia counterparts.