Economist: Govt should lift automotive trade barriers and keep distance from industry

PETALING JAYA, July 31 — The government should open up the country’s automotive industry and steer clear of any direct involvement, including in the possible creation of a new national car, Institute for Democracy and Economic Affairs (IDEAS) economist Adli Amirullah said today.

He said while technical standards on imports to ensure passenger safety were welcome, other barriers to trade, including taxes and duties, designed to protect Malaysia’s domestic automotive industry should be avoided.

“The government needs to have a clear mind on which direction they are planning to go. Malaysia should be open to trade and look to competition, rather than direct government support, to develop a competitive domestic car industry,” he said in a statement today.

Reacting to Prime Minister Tun Dr Mahathir Mohamad’s plans to curb car imports and introduce a new national car, Adli refuted Dr Mahathir’s claim that Malaysia’s car industry is at an “infant” stage.

He said local car manufacturers, Proton and Perodua, have been in the market for 33 years and 24 years respectively.

“Perodua itself has grown so much that now it has the highest market share at 39.8 per cent for passenger vehicles and sold a total of 204,887 units in 2017 alone which surpasses all imported cars.

“Proton came third after Honda, with 13.8 per cent of market share for passenger vehicles and 70,991 units sold in 2017,” he said.

On the proposal for a third national car, the economist welcomed new players into the automotive industry if and only if the government itself stays away from the market.

“In principle, we should not prevent any market player entering the industry if they have the capacity to do so. But, the government needs to stay away from the market and should not involve itself directly or indirectly in the process of setting up a third national car.

“There are still many ways to ensure the current local automotive industry remains competitive, without setting up a new market player. One of the ways is to reduce excise duties on imported cars to reduce prices and motivate local car manufacturers to produce better quality products,” said Adli.