BUNG MOKTAR WAS NAIVE, INSENSITIVE AND LACK OF UNDERSTANDING OF THE AUTOMOTIVE INDUSTRY: PEDA

PRESS RELEASE

Kuala Lumpur, “The dealers fraternity are disappointed with the remark made by BackBencher’s Club Deputy Chairman Datuk Bung Moktar Radin calling for Proton to be wound up for embarrassing the nation by producing a rebadged Mitsubishi Lanser as Proton Inspira”, said Armin Baniaz Pahamin, President PROTON EDAR DEALERS ASSOCIATION MALAYSIA.

The remark made by Bung Moktar was naïve and insensitive without a clear understanding on the automotive industry especially Proton. The introduction of Proton Inspira  is an addition into the current Proton stable of cars. The Proton Inspira created a new market for Proton to penetrate, a market that is currently being dominated by the Korean and other Japanese makes.

PROTON INSPIRA UNVEILED

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14 October 2010. Dato' Syed Zainal Abidin Syed Tahir today unveiled the new Waja replacement model code-named P3-90A. The soft-launching of the P3-90A was held at the Crystal Showroom, Proton Edar Centre of Excellent, USJ Subang Jaya. I arrived late having had to attend a dialogue with the Ministry of Domestic Trace Co-operatives and Consumerism pertaining to the HP-Act amendments. The meeting was chaired by Dato' Daud Tahir, The Deputy Secretary General (Domestic Trade) and attended by the members of the Malaysia Automotive Association headed by Dato Aishah Ahmad. The dialogue had cleared many confusions in the interpretation of the amendments but this is a story for another occasion.

After a short speech, Dato Syed Zainal revealed the name of the new Proton as PROTON INSPIRA and awarded the 'name-the-new-proton' contest winner with a big huge cheque.. size. The winner brought back RM10,000.

PROTON INSPIRA, a collaborative effort between Proton and Mitsubishi will be retailing from RM79,880 for a 1.8 manual, will penetrate a new market segment that is currently being dominated by Toyota and Honda.

PROTON LATEST PROMOTION... ONLY IN SEPTEMBER

1 SEPTEMBER 2010... PROTON EDAR had announced its latest promotion for September!!! The promotion was announced in-conjunction with the Independence Day and the Aidil Fitri promotion... up to RM3,500 on certain selected model.

Err I mean... over and above the earlier announced 20 years Anni, Aidil Fitri and Independance day promotion.

For full detail.. browse here; to book click here.

PROTON EDAR'S STRICT QUALITY CONTROL

1. There are now another layer of quality inspection and testing over and above the Quality Control (QC) check done at the Plant before distribution.

2. Every PROTON Exora and Saga have to undergo a strict inspection and testing before the vehicles are allowed to be delivered to customers. 

3. From the Shah Alam Plant, Konsortium Logistic Berhad was contracted to collect all vehicles from the plant and delivered to Sijankang. The Konsortium must observe a 3-points manual physical inspection before mobilising the vehicles up the trailer for delivery to the Central-Hub, Sijankang, Selangor.

4. The 3-Point inspections are: (1) DENTED (2) SCRATCHES (3) LOOSE ITEMS. All vehicles must passed the 3-point manual physical inspection before being transported to SIJANGKANG Central Hub.

HAPPY 25th BIRTHDAY PROTON

We received PROTON Holdings Berhad invitation card early for the celebration of Proton 25 years silver jubilee on 9 July 2010.

The celebration was held at the Kuala Lumpur Convention Centre on 9 July 2010 and 2500 guests were invited including former pioneer staff of Proton. Malaysia Prime Minister YAB Dato Seri Najib Tun Razak was the guest of Honor. Tun Dr Mahathir Mohamad and Tun Dr Siti Hasmah Ali as well as most dignitaries attended the historic event.

AMENDMENTS TO THE HIRE-PURCHASE ACT 1967

Most Recent write up:
(A) 1st day of Implementation Hire Purchase Act 1967 (amendments 2010)

(B) Implementation of HP Act amendments

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There are 26 amendments to the 43 years old Hire Purchase Act 1967 tabled in Parliament for second and third reading but the biggest concern to both the public as well as car dealers are clause 7,8,9 and 10 of the bill tabled.

Let us first see and understand those amendments. The followings are excerpts and extractions from the bill tabled in Parliament.

Clause 7 of the Bill seeks to amend Section 16 of the Hire-Purchase Act 1967 to impose new conditions on the owner in relation to repossession under this Act. Section 16 of the principal Act is amended by: 


(a) by substituting for subsection (1) the following subsection:

BSN BANK

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Together with Proton Edar Dealers Association Malaysia (PEDA) Vice-President Lee Lick Sai and exco Fathul Rahman, PEDA paid an official and friendly visit the BSN Bank. It is a regular meeting to keep ourselves updated with the on-goings in the market but part of our primary agenda was for a better financing package to both our members and for Proton buyers.

Our meeting was attended to by two of the three deputy Chief Executives, the senior Vice-President and the Head (See: BSN organisation chart) namely, BSN Deputy Chief Executive Office for Credit Management & Business Support Winston E. Jeyaprakash, Deputy Chief Executive for Consumer banking & Business Development Yunos Abd Ghani, Senior Vice President Akhsan Zaini and Head of Credit Management Department Abdullah Aziz Buyong.

MOTOR INDUSTRY: Reinstate cash-for-clunkers

MOTOR INDUSTRY: Reinstate cash-for-clunkers
Submitted by Izat @ Malay Mail on Tuesday, January 12th, 2010

THE Proton Edar Dealers Association Malaysia (PEDA) is positive about this year's outlook despite its many challenges.

Proton car sales will be affected this year by three government policies – spillover from the Second Financial Stimulus introduced last March; the revised National Automotive Policy announced last October; and Budget 2010.
proton

WALK THE TALK: Government needs to go the extra mile to help new car buyers — Filepic

This year will be tough without stimulus or direct policies to support Proton car sales despite the economy being not fully recovered.

However, PEDA is positive about car sales from support extended by Bank Negara and members of the Association of Banks in Malaysia.

Since last July, PEDA has had discussions with both bodies on the approval and disbursement period for car hire-purchase loans, and to alert the authority of any increase in rejection percentage or discrimination on buyers' loan applications.

Proton’s car sales were badly hit in the first quarter of 2009 when the rejection rate for buyers was at an alarming 70 per cent.

They improved after PEDA met with Bank Negara and the banks. Since then, car loan approval and disbursement are made within 36 hours. Proton car sales has been positive and encouraging, despite the recession.

With continued support from Bank Negara and the banks, PEDA is confident that 2010 will be a promising yet challenging year.

The Second Financial Stimulus helped to sustain car sales in 2009 despite the recession through a policy to scrap cars of 10 years or more with a RM5,000 voucher to buy a Proton car which attracted 32,000 applications.

However, funds for the scheme were exhausted by October, seven months after its launch, resulting in only about 15,000 applications being approved while the rest were given an alternative, less attractive offer, which led to a drop of 30 per cent in bookings, especially for Proton Saga.

On top of this, the RM5,000 vouchers for scrapped cars had only been partially disbursed by the government to dealers, further exhausting the latter's working capital.

Momentum gained from the scrapping programme will be lost without any continuity, especially with Malaysia's relatively high average vehicle age. There are two ways that may positively affect the Proton ecosystem from the revised National Automotive Policy.

Firstly, the phasing out of imported used parts and components, including the half-cut, will strengthen the automotive ecosystem. Though cheaper, they come without warranty and many customers have been cheated when the parts they bought did not work easily.

However, the phasing out mechanism is still unknown. The discontinued mandatory annual inspection for vehicles of 15 years and above would have become a platform to ensure a minimum safety standard for Malaysia's relatively high average vehicle age.

The public may have changed or upgraded their cars once they were made aware of their vehicle's condition via the mandatory checks.

This, in turn, would support new car sales.

Steps can also be taken to do away with various charges from becoming a burden to the public, such as allowing insurance or finance companies to pay for car inspections which is in their best interest to protect their exposure.

In the UK, independent workshops can register with the authority to conduct inspections. In Malaysia, Puspakom should not be made the only centre for inspection if mandatory checks are re-introduced.

PEDA urges the government to plough back some of the revenues collected from the automotive industry into the system by re-introducing the car scrapping policy.

With RM5,000 per car collected through sales tax and excise duty, the government would get about RM750 million annually from Proton domestic car sales.

With an average total industry volume of 500,000 passenger car sales a year, the gross revenue contributed by this sector is estimated at RM2.5billion (from sales tax and excise only assuming a RM5,000 average, excluding other indirect contributions).

Except for R&D grants, revenue collected is not ploughed back into the ecosystem to address our stagnant and saturated market.

Malaysia registered almost the same number of passenger car sales in Thailand although our population is four times smaller.

Our population is also smaller than Indonesia and the Philippines, but we registered higher sales than both countries.

If we do not address this issue now, we will not be able to sustain our future sales.

Armin Baniaz Datuk Pahamin
President
Proton Edar Dealers Association Malaysia (PEDA)

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Temubual Bersama Akhbar Kosmo (un-edited version)

Wawancara bersama Hisham Idris Wartawan Meja Am Kosmo bertempat di kediaman Armin Baniaz di Sungai Penchala.

Pendahuluan Wartawan.

Secara mudah wawancara ini bakal dimuatkan di dalam kolum Kosmo! edisi harian yang disiarkan di dalam kolum wawancara berbentuk Q&A pada setiap Rabu. Sehubungan itu tujuan saya ingin mewawancara tuan ialah bagi mengupas isu berkaitan pemberian skim baucar RM5,000 ke atas kenderaan berusia 10 tahun ke atas.

Beberapa hari lepas Timbalan Menteri Kewangan, Datuk Chor Chee Heung berkata, kerajaan bersedia mengkaji semula pemberian baucar tersebut sekiranya terdapat alasan kukuh mengenainya.

Sehubungan itu, saya memerlukan pihak tuan dalam memastikan tuntutan oleh timbalan menteri tersebut di samping ingin memaklumkan pendirian Persatuan Pengedar Proton Edar Malaysia yang diwakili pihak tuan sebagai Presiden. 

Di bawah saya sediakan beberapa soalan yang diharap dapat membantu pihak tuan. sekian.

(Armin Baniaz: Maafkan saya jika jawapan saya dicampur dalam kedua-dua bahasa iaitu bahasa malaysia dan juga bahasa Ingeris.)

1. Wajarkah pemberian skim baucar RM5,000 ke atas kenderaan berusia 10 tahun  diteruskan?

Untuk menjawab soalan ini, kita barus menilik kembali objektif asal Skim Pelupusan kereta yang menawarkan baucer RM5,000 untuk kenderaan berusia 10 tahun keatas. Objektif asalnya ialah untuk merangsangkan jualan kereta nasional pada kegawatan ekonomi sekarang yang perkenalkan dibawah bajet Rangsangan Kewangan 2 (“2^nd financial stimulus”). 

Objektif ini sedikit sebanyak telah dapat dicapai dengan sokongan yang padu dari pihak Bank yang meluluskan pinjaman sewa-beli pelanggan untuk membeli kereta baru Proton dengan cara menebus baucer tersebut.  

Skim ini telah dapat mengurangkan kesan akibat dari kegawatan ekonomi dan juga dapat mempertahankan jumlah jualan kereta dari terus jatuh. (The scheme was able to minimise the effect from the economic downturn and was able to sustain if not improve the national car sales).

Jika  objektif tersebut telah dicapai dan kerajaan juga yakin keadaan ekonomi Malaysia telah kembali pulih, skim tersebut boleh lah ditamatkan. Terutamanya jika kita berpandukan pada OBJEKTIF ASAL skim tersebut di perkenalkan. 

Walau bagaimanapun, objektif skim pelupusan ini tidak seharusnya terhad bagi  jangka masa pendek sebagai rangsangan ekonomi (semasa kegawatan ekonomi) sahaja tetapi harus dijadikan satu objektif jangka masa panjang bagi mengatasi :

1)       Masa depan pasaran kereta dan industri automotif yang tepu di Malaysia

2)      “Road-worthiness’ bagi kenderaan di Malaysia yang berumur 10 tahun keatas dan keselematan pengguna jalanraya yang lain  

Polisi pelupusan ini haruslah di perkenalkan sebagai satu polisi jangka masa panjang. 

Jadi, skim boucer ini patut diteruskan jika keadaan ekonomi kita masih belum pulih untuk mengelak dari kemelosotan jualan kereta.

2. Apa signifikan sekiranya ia diteruskan dan bagaimana ia membantu merangsang jualan kereta terutama membabitkan kereta buatan nasional?   

Jumlah kenderaan yang berusia lebih dari 10 tahun dianggarkan melebihi 2 juta kenderaan. Jika skim ini di teruskan, ianya akan menolong pemilik pemilik kenderaan untuk menukar ganti kereta mereka dan seterusnya mempertingkatkan jualan kereta nasional.

3. Jika perkara itu diteruskan kerajaan mungkin mengalami kecairan wang kerana membantu pemilik kenderaan lama, apa cadangan program atau kaedah lain untuk tidak membebankan mana-mana pihak tetapi tetap menguntungkan pengguna? 

Ianya bergantung kepada objektif Skim…. Objektif pertama dan utama baucer dan juga Skim Pelupusan kenderaan ini diperkenalkan ialah untuk merangsangkan jualan kereta nasional yang mendokong lebih dari 70% jumlah jualan kereta kesuluruhan (Total passenger car sales)  di Malaysia dan secara tidak langsung, ia membantu juga pemilik kenderaan lama (untuk memiliki kereta baru). 

Secara majority, pemilik kereta kereta yang berusia lebih dari 10 tahun sudah tidak mempunyai sebarang pinjaman. Pinjaman sewa beli kereta itu telah habis dibayar. Pada hakikatnya, penebusan baucer untuk membeli kereta baru akan lebih membebankan pembeli kereta yang kini terpaksa menanggung kos hidup tambahan untuk membayar pinjaman setiap bulan untuk kereta baru mereka. 

Jadi, sebenarnya, jika baucer ini diteruskan, bukan sahaja kerajaan akan kecairan wang, tetapi juga pembeli kereta yang menebus baucer tersebut akan kecairan ‘disposable income’ mereka kerana kini terpaksa menanggung pembayaran pinjaman bulanan sewa beli kereta baru itu (berbandigkan sebelum ini, tiada apa apa pinjaman). 

Tetapi jika Objektif skim dan baucer tersebut ialah untuk jangka-masa panjang demi keselamatan pengguna-pengguna jalan raya dan juga untuk mengatasi masa depan pasaran kereta yang tepu, program yang diperkenalkan (dan kemudiannya ditarik balik) di bawah Dasar Automotif Nasional untuk Pemeriksaan Mandatori Tahunan (untuk kereta berusia melebihi 15 tahun) akan memberi lebih kesan yang lebih berfaedah kepada pengguna secara keseluruhan. 

Apabila pemilik kenderaan (yang berusia melebihi 10 tahun atau 15 tahun) terpaksa melalui Pemeriksaan Mandatori Tahunan, kos kos membaik-pulih untuk mencapai tahap ‘road worthiness’ bagi mendapat kelulusan pembaharuan cukai jalan kereta akan mempastikan keselamatan (akibat dari keadaan kereta yang tidak terjaga) pengguna jalan raya lain terjaga. 

(Senarai atau semakan untuk "Road-Worthiness" ini tidak pernah diumumkan. Senarai dan semakan inilah yang patut dikaji sepenuhnya atau dibahaskan oleh pihak-pihak yang membangkang akan pemeriksaan mandatori ini) 

Pada satu tahap, kos untuk membaik-pulih kereta ini akan membebankan pemilik kereta (tetapi penting untuk keselamatan mereka & pengguna jalan raya) dan dengan adanya pilihan untuk melupuskan kenderaan (melalui skim berasingan dari pembuat kereta nasional), beban pemilik kereta akan dapat dikurangkan. 

Terdapat pelbagai cara yang boleh diperkenalkan supaya tidak membebankan pemilik kereta untuk menjalani Pemeriksaan Mandatori Tahunan. Contohnya, kos ataupun yuran Pemeriksaan itu boleh dibiayai oleh syarikat-syarikat insurans am kerana, syarikat insuran juga akan mendapat faedah dari kekurangan kadar kemalangan (akibat dari kereta yang tidak terjaga). Lagipun, pembaharuan insuran juga adalah mandatori dan perlu sebelum pembaharuan cukai jalan. 

Syarikat yang melupuskan kenderaan tersebut juga boleh membayar pampasan kepada pemilik kereta lama (sebagai boucer) untuk pelupuskan kereta mengikut harga pasaran besi buruk atau pendapatan dari ‘recycle’.  
Di negara-negara maju, pemilik kereta terpaksa membayar syarikat swasta untuk melupuskan kereta mereka. Pemilik kereta dengan relanya menyerahkan kereta mereka untuk dilupuskan kerana kos penyelengaraan kereta yang tinggi.(Car owners voluntarily surrender and pay for their car to be scrapped due to higher cost of maintenance).

Jadi kaedah yang lebih berkesan ialah melalui Pemeriksaan Mandatori Tahunan (yuran yang ditanggung oleh samada syarikat insuran atau sebaliknya) yang juga akan menjaga keselamatan pengguna-pengguna jalan raya lain. Pemilik pemilik kereta boleh membuat pilihan untuk melupuskan kereta lama mereka dan mendapat bayaran yang setimpal dari Syarikat yang di iktirafkan oleh kerajaan untuk melupuskan kereta atau membeli kereta baru yang ditawarkan oleh pembuat kereta seperti Proton dan kerajaan tidak perlu menanggung kos baucer. Dengan cara ini, tiada pihak yang dibebankan. 

5. Jika sebelum ini Persatuan Automobil Malaysia pernah mencadangkan skim tersebut turut diberikan kepada kenderaan impot, apa pandangan tuan mengenai perkara tersebut? 

Saya tidak bersetuju. Kenapa kerajaan kita patut membelanjakan wang rakyat untuk dengan menawarkan baucer kepada syarikat asing yang tidak pernah melaburkan keuntungan mereka dalam melahirkan kereta mereka melalui infrastruktur tempatan seperti dalam teknologi tempatan, R&D tempatan dan tidak juga manjadikan Malaysia sebagai HUB untuk mengimpot kereta mereka? 

Ya, saya tidak menafikan masih terdapat banyak kekurangan dalam proton.. tetapi perubahan telah dapat kita rasai dan nikmati.. ini terbukti dengan pengurangan komplen dari 5 komplen setiap kereta kepada sekarang hanya 0.6 komplen setiap kereta. Ini bermakna tidak semua kereta yang mempunyai masalah kerana  kualiti kereta proton telah banyak diperbaik pulih. 

6. Sampai bila kerajaan perlu memberikan skim baucar ini dan sejauh mana sambutan para pemilik kenderaan pada perlaksaan skim tersebut yang telah berakhir pada 1 November lalu? 

Baucer ini harus diteruskan sehingga keadaan ekonomi kita terutamanya industri automotif telah pulih. Rakyat kita hanya baru memahami sepenuhnya polisi ini semenjak ianya di perkenalkan dahulu. Semasa polisi ini diperkenalkan, ramai yang tidak berapa faham, jadi sambutannya kurang memberangsangkan. Tetapi semenjak kebelakangan ini, sambutan polisi ini menjadi amat menggalakkan. Jika kerajaan yakin, keadaan ekonomi kita telah pulih, baucer ini boleh ditamatkan.  

Tetapi jika skim ini ditamatkan semasa keadaan ekonomi belum stabil, kita akan rugi dari segi momentum yang telah ada dan akibatnya, jualan kereta mungkin akan kembali merosot. 

7. Timbalan Menteri Kewangan, Datuk Chor Chee Heung berkata, jika ada sebab yang kukuh, baru kajian akan dibuat oleh  pihaknya, apa alasan pihak tuan jika mahu ia diteruskan jika tidak kenapa? 

Kenyataan terbuka beginilah yang akan lebih membebankan para pengedar dan juga rakyat. Setiap polisi baru Proton atau kerajaan yang diperkenalkan akan membabitkan para pengedar sebagai pihak pertama yang akan diserbu oleh pembeli yang tidak puas hati atau marah. 

Sebelum program ini ditamatkan, sepatutnya kajian yang mendalam telah dibuat terlebih dahulu. Berdasarkan kajian yang mendalam itu, kerajaan sepatutnya membuat pengumuman kepada rakyat dengan penjelasan terperinci kenapa polisi ini ditamatkan dan juga pencapaian yang telah dicapai.

Bukan hanya dengan cara membuat kenyataan: jika ada alasan yang kukuh baru kerajaan akan buat kajian dan memberi Harapan Palsu kepada rakyat. Ramai pembeli berpendapat dengan cara mengamuk di Pusat jualan pengedar, pihak pengedar dan juga Proton akan lebih cepat bertindak dan memaklumkan kepada kerajaan. Apabila kerajaan tidak mengambil apa-apa tindakan, pengedarlah yang akan menjadi mangsa dan akan mengalami kerugian.

Seperti yang saya maklum, buat masa ini momentum terhadap Baucer & skim pelupusan berada ditahap yang sungguh menggalakkan. Tetapi samada objektif skim tersebut telah dicapai dan jualan kereta nasional tidak lagi memerlukan skim ini, maka skim ini boleh ditamatkan. 

Tetapi pada pendapat PEDA, keadaan jualan kereta kita masih belum pulih dan belum stabil. Dengan menamatkan baucer ini, kita akan kerugian momentum yang telah ada dan seterusnya akan mengakibatkan kerugian jualan.

8. Kenapa di negara kita kenderaan lama seperti dimanjakan dengan pemberian skim baucar bagi menggalakkan pemilik untuk menukar kenderaan baru? 

Pemilik kenderaan lama tidak dimanjakan tetapi keadaan kereta lama yang bernilai kurang dari RM5,000 ini bukan sahaja membahayakan pengguna jalan raya lain tetapi juga membebankan pemilik dengan perbelanjaan penyelenggaraan (repair & maintenance) yang tinggi.

Inilah sebenarnya sasaran pasaran skim baucer ini.

9. Ada suara-suara kecil menyatakan, pemilik kenderaan enggan terlibat dengan skim tukaran baucar kerana memikirkan nilai kenderaan mereka di pasaran lebih tinggi dari jumlah wang yang ditukar ganti, kenapa ada pandangan sedemikian?

 
Ini pendapat peribadi setiap pemilik kereta. Skim tukaran baucer atau skim pelupusan adalah sebagai pilihan yang ditawarkan oleh kerajaan. Jika pemilik kereta berpendapat kereta mereka bernilai lebih dari nilai baucer, mereka tidak perlu memohon untuk melupuskan kereta mereka. Skim ini bukanlah skim mandatori.

Kebiasaannya, pemilik kereta yang yang menilai harga kereta mereka dengan harga yang lebih tinggi (dari harga baucer) itu menjaga kereta mereka dengan lebih baik dan kereta tersebut juga berkeadaan lebih baik. Ini bukan lah sasaran pasaran bagi skim ini.

Skim ini juga sepatutnya melupuskan kenderaan yang tidak dijaga yang membahayakan pengguna jalan raya yang lain dan mengurangkan beban pemilik yang terpaksa berbelanja tinggi untuk membayar kos penyelenggaraan kereta lama mereka

10. Jika diteruskan, berapa banyak kenderaan yang masih belum ditukar ganti yang berusia 10 tahun ke atas dan jangkaan berapa jumlah dana bakal dikeluarkan selepas ini?

Kerajaan kita lebih mengetahui keadaan sebenar ekonomi di negara kita. Jumlah dana yang patut dibekalkan terpulang kepada keadaan ekonomi kita sekarang. Jika industri automotif masih berada dalam tahap kritikal, mungkin lebih banyak dana diperlukan, tetapi jika industri automotif kita telah lebih stabil, dana yang diperlukan mungkin hanya sebahagan dari dana yang dibajetkan dibawah Ransangan Kewangan 2 (2nd Financial Stimulus).

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National Automotive Policy – still stuck in neutral

Saturday October 31, 2009
National Automotive Policy – still stuck in neutral
By JAGDEV SINGH SIDHU

The National Automotive Policy has been revamped to now include several new measures. But are they enough to move Malaysia’s auto industy ahead of its regional rivals?

WHEN International Trade and Industry Minister Datuk Mustapa Mohamed admitted at a press conference on Wednesday that Malaysia was behind Thailand in the auto industry, there were no gasps of disbelief nor expressions of shock.
However, there must have been a reflection of regret that Malaysia has lost much ground after it had stormed into the lead in the regional auto business when it launched the national car project in the mid-1980s.
Now, we have been overtaken by a neighbouring country that has basically given its investors the very things that have been asked of the Malaysian government all this time.
The “loss” to Malaysia may amount to billions of dollars and employment opportunities many times the size in Malaysia that have migrated northwards. This time around, though, the Government intends to rectify the situation.
Although the broad objectives of the national auto policy (NAP) review do not deviate much from the original policy announced in 2006, the Government has spelt out its intention of growing the industry and developing its long-term competitiveness with a slight twist.
“Given the strengths and weaknesses of the Malaysian automotive industry, the Government’s move to focus on high value added segments makes sense,” says Kavan Mukhtyar, partner and head of automotive and transportation practice, Asia Pacific, Frost & Sullivan.
“By focusing on the luxury vehicle, electric vehicle/hybrid/precision engineering segments, the Government hopes to attract high value added new investments without competing directly with Thailand, and at the same time continuing support for the national car makers that focus mainly on the compact and sub-compact vehicle segments.
“The NAP review has also clearly signalled that Malaysia will go through the process of gradual rather than rapid liberalisation. The clear timelines attached with the liberalisation process give enough time for the domestic players across the value chain to become regionally competitive or to diversify into other businesses.”
One of the main differences between the 2009 auto policy and its predecessor is the granting of full-fledged manufacturing licences to foreign auto companies, in categories that do not compete with the national passenger car players.
“Considering the competition from Thailand, which has firmly established itself as the ‘Detroit of Asia’, the lifting of the freeze on manufacturing licences is a good move that puts Malaysia on the right path to attracting foreign direct investments by global carmakers wishing to expand their operations in the region,’’ said CIMB Research in a note.

Turning to Europe
The carte blanche given for new manufacturing operations of certain type of cars, such as those above the 1,800cc and RM150,000 in value, is a start, but the issue is, will manufacturers bite?
There is a school of thought that foreign car companies from Europe may pay a little more attention to the measured liberalised environment in Malaysia.
OSK Research, in its note on the NAP, points out that Thailand trumps Malaysia on incentives as it offers lower excise duties on vehicle prices and the exemption of import duty on plant machinery, in addition to having an already established supply chain.
The only problem is that to qualify, investors need to fork out a huge sum of money, the minimum being RM1bil.
“To date, Thailand has seven global OEMs (original equipment manufacturers) and a few smaller ones that have set up plants with capacity totaling 1.625 million units as of 2008. These are mainly OEMs from Japan (Toyota, Mitsubishi, Isuzu, Honda, Nissan) and US (Ford and General Motors).
“As none represents the European region, we may potentially see Malaysia trying to attract global OEMs from this region instead. This was hinted in the announcement, with respect to relaxation of the ruling on foreign manufacturers in the luxury passenger car segment,’’ said the research house.
Having competitive incentives is one thing, but the years of distrust and doubt that foreign players have built up against the direction of Malaysian auto policy, is working against the possibility of them committing huge sums of money in the future.
“Fiscal incentives and flexibility in ownership are just a few factors to attract FDI (foreign direct investment). Foreign investors will evaluate the entire ecosystem in Malaysia, including the availability of supporting supplier industries, access to regional markets, domestic demand, availability of human resources,’’ says Kavan of Frost & Sullivan.
“For example, to become a manufacturing hub for hybrids/electric vehicles, Malaysia also needs to have an attractive home demand for such products. Follow-on measures will be critical in creating an attractive ecosystem for foreign investors in the high value added segments.’’
He feels Malaysia’s biggest challenge is to strengthen the supplier base and help those suppliers develop competitiveness.
“In summary, the NAP review will definitely attract attention from the foreign investors but actual flow of investment will depend on how the entire automotive ecosystem responds to this opportunity,’’ Kavan says.

Time to change
The main thing the NAP has failed to do is to cut tariffs and consequently, the price of vehicles in the country. Maybe this is due to the already huge strain on the government budget, which has been running deficits for more than a decade now.
“Most of the consumer-centric measures are more towards improving safety standards and the environment friendliness of the vehicles. In the short term, imports of used CBU (completely built up) imports may be constrained as gazetted prices will be used for duty computation,’’ says Kavan.
“Consumers in the luxury segment may benefit in the medium term if foreign automakers make Malaysia their hub for vehicle manufacturing.”
The NAP also manages to liberalise the auto sector while still giving protection against the national car makers, a stance the Government has not wavered from, since starting the national car policy in the mid-1980s.
Whether that is an acceptable to the rest of the industry is moot, but there are quite a number of people who feel that is not the right way to go.
“(There is) still ample protection for national producers, including maintaining high excise and import duty structures, extension of freeze on assembly of rebuilt commercial vehicles such as trucks and buses. And, the liberalisation of manufacturing licences does not encroach into the mass market segment, which the national producers currently serve,’’ UOBKayHian points out in its note.
And there are people in the industry who feel the time has come for that to change.
“We have to look at the national auto industry in particular and not only focus on the national car company alone,’’ says DRB-HICOM Bhd group managing director Datuk Mohd Khamil Jamil.
“Having the technology and product for the domestic market alone is insufficient. We must also be accepted by the market overseas, at least regionally.’’
Khamil feels that a collaboration with a strategic partner is important in promoting and enhancing the capabilities and opportunities of Proton and the industry.
Malaysia is a country that has a long history of making cars. Notwithstanding the national makes, the employees of the industry are widely regarded as trainable and skilled. Just ask Mercedes Benz.

Its plant in Pekan, Pahang, started out making four units a day of just one model. Today, it assembles the S-class, E-class and C-class Mercs, and annual volumes has now reached 5,000 units. That makes it the largest CKD (completely knocked down) assembly outside Germany.
“Consolidation and strategic alliances within the industry is important as many major manufacturers are moving towards multiple brands sharing the same engineering platform,” says Khamil.
“Asean is a high-growth region for the automotive business. There are threats of new markets like Vietnam and the Philippines. So we have to entrench our position.”
Changed, but still the same
The crux of the issue in Malaysia has been overcapacity, competitiveness and the lack of exports. Khamil feels that future growth will have to be export-led, and Malaysia needs to establish its position as an auto manufacturing hub.
“There must be a balance between the national car brand and enabling a sustainable auto industry,’’ he says.
While the auto parts manufacturers would welcome the NAP, the other winners from the entire review would surely have to be the national car makes,” he adds.
The greater tax exemption for exports of vehicles will benefit Proton and Perodua, but analysts feel those companies would need to produce cars that are competitive on a global scale in order to greatly gain from such incentives.
That will entail additional costs to engineer such cars, making it essential for Proton to form a strategic partnership with a larger foreign player. Proton and Volkswagen are engaged in talks to reach such an arrangement.
While the NAP review is a step in the right direction, many things need to be in place for the measures to materialise into something significantly tangible.
“On a whole, the measures are unlikely to have much immediate impact on the auto sector. Most of the measures announced – albeit being positive in navigating the industry towards greater liberalisation and competition – are not significant enough to alter the prevailing industry dynamics. In a way, the scenario, duties and ultimately, car prices, have not changed,’’ said Affin Investment Bank in a research report.
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The Chronicle of Malaysian Automotive Industry

The Chronicle of Malaysian Automotive Industry

I was first exposed to the automotive industry during my tenure with the Commerce International Merchant Bankers Berhad (CIMB) in 1995. I was in Corporate Finance and had to write various sectoral studies amongst thick full of other documentations for submissions to the Securities Commission for various companies undertaking mergers & acquisition and IPOs. Those companies in my portfolio were mostly in automotive... probably the reason being why i am still passionate about the automotive industry 15 years later.

I summarised as follows the evolution of the automotive industry in Malaysia that will probably answer various public critics (in cyber space or the media) in my call to de-regulate the hire-purchase commission, de-regulate the fix motor tariff as well as the establishment of an AUTOMOTIVE COUNCIL as the custodian to the automotive eco-system.

The automotive eco system should be defined as all relevant sectors that is instrumental to the the stability of the automotive industry, such as the automotive manufacturers, assemblers, suppliers, vendors, distributors, dealers, banking institutions and insurance institutions.

The Chronicle

1963- Malaysia began to encourage the establishment of the automotive industry based on recommendations of the Colombo Plan

1964- Policy of encouraging the assembly of automobiles and the manufacture of components parts was announced

1967- Government approved the operation of six (6) assembly plants mainly joint venture projects between European automobile manufacturers and local partners

1982- Cabinet approved the National Car project

1983- Heavy Industry Corporation of Malaysia (HICOM) signed an agreement with Mitsubishi Corporation to manufacture Malaysia national car

1984- Launch of National Car Project- Perusahaan Otomobil Nasional (Proton) to increase level of technology and develoment of intellectual property in the automotive industry. In line with the national car project, Malaysia Ministry of International Trade and Industry (MITI) determine the Nett Selling Price (NSP) of BOTH national and foreign cars.

1985- Production of 1st national car Proton Saga began. MITI approved the NSP taking into consideration various factors including the income (1) received from previously Hire-Purchase Commission (now replaced by Handling Fees) paid by banks to the car distributors and dealers as the intermediary between the customers and banks; (2) insurance commission received (Insurance agent commission was 25% of premium paid. The participation of Bank & financial institutions and Insurance companies supported and ensure the viability of the newly-born national car project.

1992- Perusahaan Otomobil kedua (PERODUA) was established primarily to complement Proton and expand local automotive product range (supplying smaller and more affordable vehicles) as well as support the vendor for component and parts manufacturing.

Both Proton and Perodua are now in direct competition in the same market segment and had driftered away from the objectives of the 1st and 2nd national car project.

1996- The Insurance Act 1966 superceded the Insurance Act 1963. Agency commission is now revised to a fix 10%.

The support by via the insurance agency commission that determined the low NSP for the national car project was ignored.

1997- Hire-puchase commission and additional incentives for salesmen paid by banks were abused and offered for all car make & models (not restricted to proton).

2000- Bank Negara Malaysia revoked the hire-puchase commission after being proposed by the association of finance companies/Banks. Bank Negara Malaysia introduced handling fees with effect from 13 July 2000 after various appealed by PEDA, EDAM and PDA. The handling fees is regulated with a maximum ceiling.

The hire-purchased commission was revoked without any reference to the NSP that was kept low (by MITI) to ensure the viability of the national car project. In year 2000- the NSP was still determined by MITI.

2003- MITI no longer determined the NSP and only acknowledge and monitors the price set by the car manufacturers. The Policy change was to aid liberalisatoin and development of the automotive industry in Malaysia.

2004- Influx and abused of Authorised Permits (APs) and under-declared imported cars. Malaysian public was cheated of billions in taxes and import duties. There were many duplications of resources from the under-utilised assembly to manufacturing plants (approved by MITI).

This had drastically and substantially affected the national car project project.

2005- Announcement and launching of the Malaysia National Automotive Policy.

The NAP was constructed and launched by the previous 4th floor (was not even launched by any Minister), with negligible consultation with any stakeholders in the automotive eco-system.

2009- Proposal by PIAM and approved by Bank Negara Malaysia for Motor Insurance mandatory direct commission rebate to customers.

If the move was proposed and approved for the benefits of Malaysians then PIAM and Bank Negara should de-regulate the current tariff instead. Malaysia will benefit better from a de-tariff or variable tariff similar to other neighbouring and developed countries. Currently, low risk customer such as female car owners are being discriminated and are paying hefty premium similar to the high risk customers.

Sadly, there is no 'Driver' and/or custodian for the automotive eco system although the automotive industry was earmarked to boost the industrialization process to enable Malaysia to be a developed nation by the year 2020 (Ref: here).

Bank Negara Malaysia, Ministry of Finance, Ministry of International Trade & Industry, PIAM (General Insurance Association of Malaysia), Association of Banks, Ministry of Domestic Trade and Consumer Affiar have all proposed, implemented, revised and introduced policies and instructions that will be instrumental to the downfall of automotive industry and its eco system in Malaysia. Without a custodian or a statutory body to drive and spearhead the automotive in Malaysia, there will be more adverse policies being introduced by different Ministries and statutory bodies.

The national car project, the automotive industry as well as various government policies introduced, must be rationalise, consolidate and review under a statutory body, the proposed MALAYSIAN AUTOMOTIVE COUNCIL. A rationalisation of the many automotive assembly and manufacturing plants and a more structured eco system could provide better stability to the automotive industry.

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