After Proton and Perodua, third national car should go electric, say financial pundits

Ranjit Singh
Malaysia should consider building electric cars if it wants to re-enter the globally competitive automotive industry, financial experts told Malay Mail. — AFP Relaxnews pic

KUALA LUMPUR, June 14 — Malaysia should consider building electric cars if it wants to re-enter the globally competitive automotive industry, financial experts told Malay Mail.

Yeah Kim Leng, economics professor at the Sunway Business School, said Malaysia stands a chance for success if it enters the nascent electrical car market.

“Malaysia must find a niche as the traditional car market is saturated. It must find a strong technology partner and explore export markets as the domestic market is just too small. Concentration in the domestic market will make it lose economies of scale,” he told Malay Mail.

He pointed out that the global auto market has evolved from internal combustion engines to hybrid and electrical cars since Tun Dr Mahathir Mohamad came out with Proton, the country’s first national car, in the 1980s. Last year, 49.9 per cent of its shares was sold to China’s Geely Automobile Holdings.

The second national car project was Perodua, launched in the early 1990s with the aim of cornering the compact car market in South-east Asia but its target market later overlapped with Proton. The biggest stake, 38 per cent, is currently held by government-linked UMW Holdings.

Back as prime minister for the second time after retiring in 2003, Dr Mahathir recently mooted another national car plan as a means to boost the economy.

But Yeah, who is also a member of Bank Negara Malaysia’s Monetary Policy Committee, said the government must allow the private sector to lead the initiative this time while it provides fiscal and market incentives.

He also made the case for private investments into the proposed new national car project, saying capital expenditure for the auto industry is huge.

Innovation, research and development costs can often run into billions of ringgit, he said.

“Domestic and foreign investors must be allowed to provide the capital and the know how to handle the project,” he added.

Phua Lee Kerk, the chief strategist at financial services firm Phillip Capital, expressed a similar view when contacted.

He said Malaysia stood no chance if it entered the manufacture of fossil fuel vehicles as the market direction had shifted to electric vehicles (EV).

“The EV market is a blue ocean market and Malaysia would do well if it entered the market now. The planning and execution of the project is pivotal to its success as it has to harness the power of new technology,” said Phua.

But Pong Teng Siew, head of research at Inter Pacific Securities, said Malaysia has to find export markets for its national car industry to survive.

He said one of the reasons Proton failed was because it could not penetrate foreign markets.

“It won’t be easy for the proposed national car to explore overseas markets as car are imposed with significant tariffs all over the world,” he told Malay Mail.

Pong also said that car manufacturing was a tough business and the odds were stacked against Malaysia in establishing a successful national car.

“There are far too many players in the industry and Malaysia lacks the competitive advantage,” added Pong.