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  November - December 2009


Tribute to His Majesty King Bhumibol Adulyadej of Thailand,
the world’s longest reigning monarch. Blessed are all Thais to have a King of sincerity, compassion and plain common sense. For all those who respect His Majesty for his integrity, it was an immense relief and joy to learn that the great monarch is convalescing from his recent illness. In this humble tribute, commemorating His Majesty’s 82nd Birthday, AseanAffairs presents a snapshot of His Majesty’s life and works.

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Aye KoKo

Malaysia is the only country in Southeast Asia that can boast of having a home-grown car, and never regrets losing the opportunity to turn itself into a regional manufacturing hub.

The latest National Automotive Policy (NAP) caused little surprise when it was unveiled late October. The revised NAP has broad objectives that do not differ much from those in the original policy announced in 2006, except for a few changes that do not translate into lower prices for car buyers. The new policy does not create a level playing field for market players, either.

There is one noticeable addition, though: the granting of full-fledged manufacturing licences to foreign auto companies, without exposing national brands to tough competition from foreign marques.

The grant covers categories that do not compete with the national car makers, such as those above the 1,800cc with a minimum price tag of 150,000 ringgit. (approx. $43,800). Besides it requires a minimum investment of one billion ringgit to qualify for a licence to manufacture mid- to high-end luxury cars that belong to a small market segment.

When the NAP was first introduced in March 2006, there were two main objectives: to promote a competitive and viable domestic automotive sector, in particular the national car manufacturers, and to do away with the approved permit system under which preferred holders are given the right to import cars.

Unfortunately, those objectives have never been met.

The government still finds it necessary to support and extend the protection given to the local car industry by retaining the high import and excise duties on mass market cars manufactured by non-national car makers.

The new policy continues to maintain the so called approved permit (AP) system. There are two different APs. The Open APs are those given to bumiputra (ethnic Malay) entrepreneurs to import any vehicles from overseas. And there are Franchise APs (restricted according to models and brands) allocated to car distributors.

Instead of doing away with the Aps, the new NAP allows them to go on, until 2015 for Open Aps and 2020 for Franchise APs.

The AP system, introduced in the 1970s as part of a strategy to encourage bumiputra participation in the automotive industry, also helps the government control imports of foreign vehicles by adding or reducing the number of APs allocated.

Besides, the government, struggling with the budget deficit, is imposing a 10,000 ringgit charge for every open AP awarded, starting next year.

According to the Ministry of International Trade and Industry, the number of APs issued account for 10 percent of the total industry volume (TIV) recorded the previous year.

Assuming that the total vehicle output this year reaches half a million units as forecast by the Malaysian Automotive Association (MAA), about 50,000 APs will be issued next year. Of this amount, 60 percent will be allocated for Open APs - a windfall for AP holders considering each AP has a street value of about 40,000 ringgit.

For the motoring public, the new NAP is a disappointment. Certainly, car buyers will have to continue shouldering the financial burden of ensuring that domestic car makes remain competitively priced.  
The move to stop the import and sale of second-hand parts will push up the cost of replacing parts for a range of models. Besides, the measure to scrap cars over 15 years old, starting with inspections before road tax licences are given, is a further burden to the public and forces them to change cars even if they are still roadworthy.

While the new policy brings little incentive for local consumers, the protection it gives to national car makers will upset fellow Asean members, especially Thailand which expects Malaysia to open its automotive market in 2010.

In announcing the NAP, Malaysia’s International Trade and Industry Minister Mustapa Mohamed said the government was committed to honouring all its international obligations, including those under the Asean Free Trade Agreement (Afta).

However, the minister fell short of spelling out how Malaysia would meet the Afta rules while it continues to favour national car manufacturers.

Asean is scheduled to eliminate tariffs on imports including CBU (completely built up) vehicles produced in the region, starting January 1, 2010, in line with the Afta agreement. Currently, there is a 5-percent import duty imposed for CBU cars and motorcycles under Afta.

The Afta was launched in 1992 along with a scheme called Common Effective Preferential Tariff, or CEPT, calling for the six original members to reduce tariffs on goods made in Asean to between zero and 5 percent by 2003 and remove non-tariff barriers.   ....

Car Sales in Asean Big-4 (units)
Country Jan-Sep 09 Percentage Change 2009 Full Year*
Thailand 366,484 -20.5 520,000
Malaysia 397,619 -7.5 500,000
Indonesia 337,470 -27.0 450,000
Philippines 93,385 0.8 125,000
Note: * Forecasts           
Source: Industry associations  Read the Complete Article Subscribe to ASEANAFFAIRS Magazine

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