KUALA LUMPUR: Malaysia should not embark on a new national car project unless there is a strong partner with modern technology, design and production capabilities, as well as solid financial support.
Sunway University Business School economics professor Dr Yeah Kim Leng said the idea would not be feasible given that the global automotive industry is highly globalised and competitive.
"The trend is changing from internal combustion engine to hybrid and electric vehicles. The technological trend does not favour those (players) without deep pockets to undertake the technological shift,” he told NSTP Business today.
Prime Minister Tun Dr Mahathir Mohamad in Tokyo today indicated at forming the country’s third national car project with other countries in the region.
Speaking at the 24th Nikkei Conference, Dr Mahathir said Proton was no longer a Malaysian national car as a substantial stake in the company is now owned by China's Geely.
Yeah said the plan to set up the third national car would only be feasible if Malaysia was able to produce a car that is cheap and reliable as well as high quality to compete with both existing domestic and international brands.
“The third national car should be able to compete not just on price but technology and features,” he added.
Yeah said the government was undertaking various measures to reduce its RM1 trillion debt level and the local automotive market is too small to support another national car project, which could potentially weighing down Malaysia’s plan.
“Malaysia has already two national cars – Proton and Perodua, which are now still in existence. The third national car will be competing for smaller share of the national market.
“It will be highly competitive unless the company can target the regional car market like the Asean Economic Community,” he said, adding that the automotive market is very competitive, deemed as 'red-ocean' industry.
The entry of the third auto player would intensify competition and create a healthy environment that will benefit consumers by having cheaper car prices, Yeah pointed out.
However, the aforementioned benefits would be viable as long as there is no tariff protection or industry protection for the new car.
He said the third player should also position itself in terms of changing the car trend by offering unique proposition with more choices.
Yeah said the new administration should focus on improving the country’s investment environment and attractiveness, and encouraging both domestic and foreign direct investments in the country rather than embarking on another industrial project.
“If the government can provide necessary incentive and supports for a joint-venture utilising a private-sector, then it is fine, as long as there is no government’s money is involved,” he said.
Yeah said the Japanese party is likely become the partner for Malaysia’s third national car project to create a joint-venture in Malaysia.
“Our ambition is to start another national car, perhaps in partnership with other countries in the region,” Dr Mahathir said during a dialogue session at the conference.
He said Thailand and Japan were some of the countries in the region that had expertise in manufacturing automobiles.