MALAYSIA’S Automotive - Perihal MIDA

1 Business Opportunities M A L A Y S I A ' S. Automotive I n d u s t r y malaysia Your Gateway to the ASEAN Automotive Market C. entrally located in the ASEAN region with a has boosted the development of engineering, population of more than 500 million auxiliary and supporting industries and contributed people, malaysia offers vast opportunities to skills development and the upgrading of for global Automotive and component technological and engineering capabilities. These manufacturers to set up manufacturing and factors have further enhanced the attractiveness distribution operations in the country. Pragmatic of malaysia as a base for global Automotive government policies, political and economic manufacturers. stability, sound economic fundamentals, well- developed infrastructural facilities and an With a ratio of 200 cars for every one thousand educated and skilled labour force have attracted people, malaysia ranks among countries with high major international Automotive and component car ownership ratio in the region.

2 Toyota, Honda, manufacturers to invest in malaysia . Nissan, Mercedes Benz, Volvo, BMW and Peugeot are some of the global Automotive companies The rapid growth of the economy and the high which have set up operations in malaysia to take purchasing power of its population have made advantage of the buoyant consumer demand. malaysia the largest passenger car market in International component manufacturers, such as ASEAN. At the same time, the establishment of TRW, Delphi, Continental, Nippon Wiper Blade, national car projects, PROTON and PERODUA, Denso and Bosch have also made malaysia their has transformed malaysia from a mere motor car base to launch their products in the region. assembler into a car manufacturer. The industry Reaching New Heights Currently, there are 28 manufacturing and assembly plants producing passenger and commercial vehicles, composite body sports cars as well as motorcycles and scooters.

3 These plants have a total installed capacity of approximately 963,300 passenger and commercial vehicles and about 1 million motorcycles per year, with production catering primarily for the domestic market. The automobile market has rebounded impressively from the effects of the Asian financial crisis of the 1990s. Total vehicle sales reached an all-time high of 552,316 units in 2005, surpassing the previous highs of 487,605 units in 2004 and 404,837 units in 1997. Total vehicle sales in 2009 were 536,905 units. Technologically, malaysia has made significant progress, with Proton unveiling its first locally-designed model in 2000 and developing its own engine in 2002. The new PROTON plant in Tanjung Malim is highly automated, employing robotic technology, and is designed for high volume production and efficiency, using lean manufacturing processes. 1 Automotive Industry malaysia - Production and Sales of Passenger and Commercial Vehicles 487,176.

4 2007 447,536. 548,115. 2008 530,810. 536,905. 2009 497,562. National Automotive Policy The National Automotive Policy (NAP) was enhancing Bumiputera participation in the introduced on 22 March 2006 to facilitate the domestic Automotive industry;. required transformation and optimal integration of improving safety standards for consumers and the local Automotive industry into regional and promoting environment- friendly opportunities;. global industry networks within the increasingly and liberalised and competitive global environment. enhancing the implementation of current NAP's policy instruments. Review of National The new policies and measures under the NAP. Automotive Policy Review are expected to provide significant contribution to the overall growth of the industry and the country. Emphasis will be given in In October 2009, the Government reviewed the attracting investments in high value-added National Automotive Policy (NAP) with the manufacturing activities using latest and high objectives of:- technology.

5 The opening up of Manufacturing License (ML) for manufacturing and assembling ensuring orderly development as well as long activities in the selected segments particularly for term competitiveness and capability of the luxury cars and hybrid/electric vehicles will domestic Automotive industry as a result of encourage new investments and expansion of market liberalization;. existing investments in the country. creating a conducive environment to attract new investment and expand existing opportunities;. The emphasis on safety and environment aspects enhancing the competitiveness of the national under the NAP Review will ensure the continued car manufacturer through strategic partnership;. development of the domestic Automotive industry. fostering the development of the latest, more The phasing-out of imported used Automotive sophisticated technology in the domestic products and introduction of mandatory standards Automotive industry.

6 For parts and components and standards for fuel developing high value- added manufacturing and quality will spur the development of the activities in niche areas;. Automotive industry in the long run. Automotive Industry 2. Regional Opportunities Trade liberalisation within ASEAN has opened up a vast regional market, providing export under the ASEAN Free opportunities for Automotive and component manufacturing companies. Carmakers will also Trade Area be able to source cost-competitive components from ASEAN countries and benefit In line with malaysia 's commitment under AFTA. from potential economies of scale. and to encourage competitiveness in the Automotive industry, import duties on CKD and The elimination/reduction of tariffs on motor CBU vehicles from ASEAN countries have vehicles by the Malaysian government, levelled been reduced to 0% and 5% respectively.

7 For the playing field for all Automotive industry vehicles from non-ASEAN countries, the import participants. This is clearly an important step duties on CKD vehicles have been reduced to undertaken by the government towards trade 0-10% while import duties on CBU vehicles liberalisation. were reduced to 30%. To maintain government While malaysia has no commitment to reducing revenue, excise duties are imposed on all import duty for vehicles imported from non- vehicles, both locally manufactured/assembled ASEAN countries, in order to be equitable, the and imported. The import and excise duties Government has also reviewed the import duty imposed are as follows: structure on vehicles that are imported from Non-ASEAN countries. Imports from ASEAN countries Import Duties Excise Duties A Growing Components CKD vehicles 0% 60 - 125% Sector CBU vehicles 5% 60 - 125%.

8 The development of malaysia 's Automotive CKD motorcycles 0% 20 - 50%. industry has made the country a production CBU motorcycles 5% 20 - 50% centre for major Automotive component manufacturers. Today, there are more than 690. Imports from non-ASEAN countries Automotive component manufacturers, producing a wide range of components, such Import Duties Excise Duties as body panels, brake parts, engine parts, CKD vehicles 0 - 10% 60 - 125% transmission and steering parts, rubber parts CBU vehicles 30% 60 - 125% and electrical and electronic parts. In 2009, the sub-sector generated sales of RM CKD motorcycles 0 - 10% 20 - 50%. billion, while imports amounted to RM CBU motorcycles 30% 20 - 50% billion and exports RM billion. 3 Automotive Industry Sales, Imports And Exports Of malaysia Motor Vehicle Components and Parts (RM billion). Among the major component manufacturers are foreign multinationals, such as Delphi Automotive Systems, TRW, ZF, Continental, Bosch and Nippon Wiper Blade while local companies include APM.

9 Automotive , Sapura, Delloyd and Ingress. In addition to supplying to the local original equipment market, an increasing number of component manufacturers are exporting their products, especially to ASEAN countries. China and Thailand are also among the major export destinations. The global trend in Automotive manufacturing . the modular system is also fast gaining prominence in malaysia . Proton has taken the lead in implementing this modular system with the manufacture of the Proton Waja model. Some of the module manufacturers include Hicom Teck See Manufacturing, APM. Industries Holdings, Delphi Packard Electric, Denso, Autoliv Hirotako Safety and Sapura Automotive . 2007 2008 2009 7. Automotive Industry 4. Benefiting from capabilities to machine minute precision gears and shafts for tempering for a diverse range of products. Heat treatment Strong engine and transmission parts.

10 Services for high carbon steel and alloy steel materials, such as Engineering Metal Stamping critical parts for bearing and Supporting Automotive components, are the Metal stamping, another latest addition to the range of Industries important supporting industry for services provided. the Automotive industry, is a The engineering supporting industries have developed in well-established industry in A Conducive malaysia , with over 300 companies tandem with the development of in operation. A number of these Investment the manufacturing sector. The rapid development of the mould companies undertake secondary Environment processes, such as electroplating and die, metal casting, or spray painting and surface Against a backdrop of steady machining, metal stamping, finishing treatment of stamped economic growth, highly surface treatment, finishing and parts and components.