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NEWS UPDATES Asean Affairs        25  February 2011

Proton, Perodua need to plan future

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National car companies Proton and Perodua have been asked to plan how they plan to be competitive once the auto industry undergoes wide-ranging liberalisation from 2015.

Those plans are essential as import duties and approved permits are to be cut and removed from 2015 until the industry is fully liberalised in 2020.

"At the end of the day, we want our automotive industry to remain and be competitive,'' said Malaysia Automotive Institute (MAI) chairman Datuk Kamaruddin Ismail in said.

"We have asked Proton and Perodua to present their competitive roadmaps and from there, we will chart it."

MAI is an agency under the International Trade and Industry Ministry (Miti) that was established to be the focal point and coordination centre for the development of the local automotive industry.

The agency studied the proposed consolidation between Perodua and Proton, and from there drew up a number of scenarios highlighting the benefits and costs of such a merger.

With both companies now left to plan their future independently as the government will not force a consolidation between Proton and Perodua, MAI CEO Madani Sahari said the study, nonetheless, looked at the options both companies could draw on as they prepare their strategies ahead of full liberalisation.

"They are putting a target of 2015 to reduce costs by a certain percentage and to improve quality to a certain level," said Madani.

"They have certain targets and, in a way, it is fast-tracking their competitiveness." He said such forward planning is not only required by the national makes but also by their component vendors as the MAI felt no competitive plan could be wholesome without the support of the component makers.

The fast tracking of the 5 and 10-year plans for both national car companies is to ensure that those companies become competitive when barriers and duties are further liberalised.

The National Automotive Policy (NAP) outlines the long-term policy changes that will take place and has laid down the initial steps the country will take as it moves toward full liberalisation The Asean Free Trade Area (Afta) has seen import duties levied on cars made in South-East Asia drop and under the NAP, open approved permits will be the first to be done away with from the end of 2015, followed by franchise APs. The importation of used cars will cease in 2015.

Eventually, manufacturing licences, which are now granted for the production of cars that do not compete with Proton and Perodua, could be given for the make of any automobile.

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