KUALA LUMPUR: The recently unveiled National Automotive Policy 2020 (NAP2020) is geared towards industrial development, focusing on Malaysia in becoming a regional leader in manufacturing, engineering, technology and sustainable development.
In line with that focus, Malaysia Automotive Robotics and IoT Institute (MARii) chief executive officer Datuk Madani Sahari said the government would continue providing customised incentives under the NAP2020 to achieve core objectives of the policy.
“However, the enhanced customised incentive will not only include the green aspect of original equipment manufacturers’ (OEMs) investment into the country for their products but also manufacturing processes,” he told the New Straits Times recently.
Madani said the enhanced customised incentives under the NAP2020 would be comprehensively assessed through cost-benefit-analysis (CBA) to ensure investors can provide proper benefits to Malaysia and consumers.
“We believe the evaluation of business models must be done thoroughly. If investors do not reveal their business plans, we cannot evaluate their return on investment in the country. We (government) want to know the details of investment or business plan. This allows us to properly determine the incentives for OEMs,” he added.
Incentives are given by the Finance Ministry and the International Trade and Industry Ministry would be the conduit to give recommendations after a thorough CBA evaluation by the Automotive Business Development Council (ABDC).
CBA allows the government to assess how good investor’s investment and benefits it can give to consumers and commensurate with incentive such as exempt duty and import duty.
“CBA must be accurate in reflecting the entire business models of the investors. OEMs should give a five-year business plan to MARii so that they can be thoroughly assessed,” he said.
Under CBA, MARii assesses assemblers based on their investment involving local assembly manufacturing, level of localisation content, local job creation, export volume/market, and new technology utilisation, among others.
Local content of the assembled cars are reassesed by the government before prices are fixed.
This allows the government via ABDC to deliberate the tax incentives for new completely knocked down (CKD) or locally-assembled vehicles.
ABDC comprises representatives from International Trade and Industry Ministry, Finance Ministry, MARii, Malaysian Investment Development Authority and the Royal Malaysian Customs Department.
Madani said the NAP2020 will focus on creating spillover effect to the local economy including job opportunities and new businesses with regards to services.
Having consulted 330 various stakeholders, the NAP2020 will also promote OEMs to bring their technology (manufacturing and after-market services for vehicles and components) to Malaysia.
“The new NAP is not merely attracting OEMs to manufacture their vehicles and car components in the country but also sharing their technology with local community,” he said.
Madani said car prices under the NAP2020 would be more ‘competitive’ depending on the level of customised incentives given and local value-added activities in the vehicles manufacturing.
“Car prices are expected to remain competitive as competition intensified. However, customers can benefit from more new features that will be installed in the vehicle. This is an advantage and strength for customised incentives for NAP 2020,” he said.
Madani said the government aims to make Malaysia as a hub for the production of Next Generations Vehicles (NxGV) with level 3 autonomous capabilities under the NAP2020.
“Malaysia will be lead the country in Asean in developing the standards of autonomous vehicle by 2021 and ensure market penetration by 2025. The ground breaking will be done one month after the NAP2020 launching.
“If possible, we want to be the centre of reference for standards (testing and validation) for autonomous vehicle driving and electric vehicle as well as connected vehicle,” he said.
Madani said the NAP2020 aims to expand the export market of parts and components and aftersales and services, value chain and human capital developments.
He emphasised that the current and new strategic measures would retain and increase investment value to achieve NAP2020 objectives.
Investments in critical components will be developed in phases and expand the export market of parts and components and after sales and services.
The first phase (2020-2024) includes big data analytics, Internet of Things, addictive manufacturing, advanced material, battery management system, recycling process, cloud computing and cyber security.
The local automotive sector has garnered a total investment of RM10.5 billion between 2014 and 2018, of which RM3.64 billion foreign direct investment and RM6.41 billion domestic direct investment.