Business

Wednesday September 16, 2009

NAP review to encourage new technology and investment

By JAGDEV SINGH SIDHU and YEOW POOI LING


PETALING JAYA: The review of the National Automotive Policy (NAP) will see big changes to the way the industry is structured.

More leeway could be given to companies to establish manufacturing and assembly operations and the policy may also include steps to improve and assist the auto component industry.

It is learnt that incentives would likely be given to companies to manufacture green, eco-friendly vehicles in Malaysia.

The International Trade and Industry Ministry last month said in a statement that the review of the NAP would focus on ensuring orderly development of the local automotive industry.

The review which will be released next month is intended to create a conducive investment environment not only to attract new investments but also for expansion of existing investments.

NAP review expected to do away with national and non-national makers.

The Government also wants to enhance the usage of the newest and latest technology for the local automotive industry and increase bumiputra participation in the sector.

Industry players said the NAP review would do away with the distinction between national and non-national makers. Instead, companies may be classified as local or non-local.

A local company would be one that manufactures or assembles cars in the country regardless of ownership origins. Licences to companies wanting to set up manufacturing or assembly operations would be more freely given, which could lead to more investments in the segment.

To assist component companies, there will be moves to encourage the use of genuine parts. Here, the importation of “half-cuts” could be done away with.

Implementation of standards on vehicles could also be enforced.

The move to encourage the manufacture of zero or low emission vehicles is part of the Government’s effort to bring the latest auto technologies into the industry in Malaysia.

Such incentives would mirror the effort by Thailand to attract manufacturers to locate their green car projects in the country.

Analysts contacted by StarBiz said the review was timely to take stock of the sector’s progress and derive incentives that would propel the industry further.

They expect the review to provide a clear and transparent framework that would position Malaysia in a niche market in the region.

“The manufacturing capacity in Thailand is very well developed. But if Malaysia can leverage further on its R&D (research and development) capabilities, it can be a competitive niche,” said an analyst of a local brokerage.

She added that Malaysia was the only Asean country with a national car manufacturer and Proton’s R&D centre, including the crash test course, was on par with international standards.

A second analyst shared similar views, adding that making Malaysia as a hybrid car hub could be another niche area.

“The initiatives will take a while to have an effect on the sector but most importantly we need to think out of the box on how to take hold of the Asian market,” he said, adding that the review of NAP was likely to address the issue of approved permits and the prospects of auto parts makers.

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