The Malaysian government announced a second update to its National Automotive Policy (NAP) in January. Tony Pugliese provides an assessment of a policy that looks ambitious.
The revisions are aimed primarily at speeding up modernisation and technology transfer within the country’s automotive industry, providing better quality and lower priced products to domestic consumers and improving the industry’s competitiveness in export markets.
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The NAP was originally launched in 2006 to encourage greater efficiency in the country’s automotive industry, increase value-added and local technology content and improve the industry’s potential to compete on a regional and global stage.
The first update to the original NAP was made in 2009, to provide further opportunities to enhance the industry’s competitiveness through increased foreign direct investment. National car assemblers Proton and Perodua now face greater competition from foreign brands and prices have come down slightly, albeit from very high levels. Perodua, with its easy access to Daihatsu’s technology, has coped better than Proton in this environment.
Last month’s key revisions include tax incentives for locally-assembled energy-efficient vehicles (EEV) in the form of excise tax exemptions. The description of EEVs is based on international standards and covers vehicles powered by fuel-efficient internal combustion engines, hybrids, electric vehicles and vehicles powered by alternative fuels such as hydrogen, CNG, LPG, biodiesel and ethanol.
The excise tax exemptions and duration vary according to vehicle type, but all vehicles have to be assembled locally to qualify. Incentives for locally-made hybrid vehicles are available immediately and will expire in December 2015, while for electric vehicles the expiry date is December 2017.
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By GlobalDataPrevious tax exemptions awarded to imported hybrid and electric vehicles have been withdrawn, with dealers having to collect full taxes on new hybrid vehicles imported since the publication of the new regulations. Excise taxes in Malaysia vary between 60%-105% depending on the vehicle type.
Last year, a total of 18,967 hybrid vehicles were sold in Malaysia, up from 15,355 units in 2012, according to the Malaysia Automotive Association. These were a mixture of imported and locally assembled models and were mostly Toyota and Honda branded cars, with Tan Chong also selling the imported Serena hybrid.
The two electric vehicles currently on sale here are the Nissan Leaf and the Mitsubishi i-Miev.
Toyota has said it will assemble the Camry Hybrid locally by the end of the year, while it will continue to import the Prius. Honda already assembles the Jazz hybrid and has indicated it may add local models. The Civic and CR-Z hybrids and the Insight are currently imported.
For internal combustion-engined vehicles, the most stringent maximum fuel consumption standard of 4.5L/100km is applied to mini-cars weighing up to 800kg. The standards rise gradually according to vehicle weight – to as high as 12L/100km for the largest passenger vehicles weighing between 2,351kg and 2,500kg.
In terms of emissions standards, these will initially be based on Euro II due to the fuel quality currently available in the country. So not that stringent really. The government will issue a new licence for each EEV model to be produced locally.
The revised NAP sets out ambitious medium-term growth targets for the automotive industry. By 2020, its wants the industry to add some 150,000 new jobs and account for 10% of the country’s GDP, up from 3.2% in 2012.
The new NAP also calls for vehicle production, excluding motorcycles, to rise to 1.35 million units by 2020, more than twice last year’s levels. While the domestic market, at 655,793 units in 2013, will likely account for some increased output – with the help of more competitive prices and tax incentives, it is difficult to see how anywhere near these output targets can be achieved.
Malaysia is drifting further and further behind Indonesia and Thailand as a vehicle production hub. Its domestic market last year was half the levels of Indonesia and Thailand and the gap can only get larger in the long term.
Malaysia’s two larger neighbours have already implemented energy-efficient small car policies which depend on local production. Most of these export-hungry plants are already operational, with more to follow in the next two years. Malaysia will have to look much further afield if it is to achieve its 250,000-unit export target by 2020.
