Market Watch 2012 - Automotive-1
Content
“Market Watch 2012” The Malaysian Automotive and Supplier Industry
General information about Malaysia
Malaysia is centrally located within the Association of South-East Asian Nations (ASEAN). Consisting of two regions separated by the South China Sea — the Malaysian Peninsula and the states of Sabah and Sarawak on the island of Borneo — Malaysia is a federation of 13 states and three federal territories. The former British colony gained its independence in 1957. Since Independence, Malaysia has adopted the political system of a parliamentary democracy with a constitutional monarch whose position is rotated every five years between each of the nine hereditary state rulers. The political scene has been characterized by an extra-ordinary degree of political stability and continuity through an encompassing national coalition of political parties. Its territory comprises approx. 330,000 sq km, four fifths of which are covered by tropical rainforest. Due to its bio-diverse range of flora and fauna offering excellent beaches and brilliant scenery, the country is one of the region‘s key touristic destinations. Malaysia is a multi-ethnic, multicultural and multilingual society with 28.66 million members. Ethnic Malays make up the majority of the population at 57.1% followed by Chinese at 24.6%, Indian at 7.3% and other local ethnicities at 11%. The Malaysian constitution guarantees freedom of religion, although Islam is the largest and official religion. Approx. 61.3% of the population practice Islam, 19.8% Buddhism, 9.2% Christianity, 6.3% Hinduism, and 2.6% practice Confucianism and other traditional Chinese religions. The official language of Malaysia is Bahasa Malaysia, but English as well as Chinese are the business languages.
Economical Overview
Malaysia is a dynamic country which is constantly evolving. Being a middle-income country, Malaysia has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy spurred on by high technology, knowledge-based and capitalintensive industries. Malaysia‘s Economic Performance ranking improved to 7th place out of 59 economies this year compared with 12th position in 2007.1 It is one of the 20 largest trading nations worldwide and was headed of Taiwan, Sweden, Canada, Australia, the United Kingdom
1
“Malaysia’s economy attains 7th position”, New Straits Times, 20th May 2011.
“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
and Switzerland.2 The World Competitiveness Yearbook 2011 Report released by the Institute for Management Development (IMD) continued to rank Malaysia as among the top 5 most competitive nations in the Asia-Pacific region, taking 6th position in the 20 million population category and 2nd position after Taiwan in the GDP per capita less than US$20,000 category.3 Moreover, the country is the 21th largest exporter among all trading nations worldwide. Strategically located in the heart of South-East Asia, Malaysia offers a cost-competitive location for investors intending to set up offshore operations in order to manufacture advanced technological products for both regional and international markets. In addition, Malaysia has a market-oriented economy which is supported by pro-business government policies. Last year, the Malaysian Government launched the Economic Transformation Programme (ETP) which is managed by PEMANDU (Performance Management & Delivery Unit) under the patronage of the Prime Minister.4 The ETP identifies 12 National Key Economic Areas (NKEAs) which are drivers of economic activities that have the potential to materially contribute to the growth of Malaysia. Its objective — also known as ―Vision 2020‖ — is to transform Malaysia into a ―high income country‖ by year 2020. The programme will lift Malaysia‘s Gross National Income (GNI) to US$523 billion by 2020, and raise per capita income from US$6,700 to at least US$15,000, meeting the World Bank's threshold for high income nation.5 To achieve the targets set, Malaysia needs an annual growth of GNI of 6%. There are plans to revitalize Malaysia's private sector, to grow the service sector from 58 to 65% and to create 3.3 million new jobs.6 The Government will also introduce other transformation plans in 2012.7 In Malaysia, the 2011 GDP growth edged lower to 4.0 percent year-on-year due to a weaker domestic demand. Further implementation of ETP projects and a RM232.8 billion 2012 Budget tabled by Prime Minister Datuk Seri Najib Razak will boost domestic demand, but unlikely to offset underperformance in net exports8.
2 3
Ibid. Ibid. 4 See www.pemandu.gov.my . 5 Forbes.com, 21st September 2011. 6 Ibid. 7 “Malaysia Budget 2012 Main Highlights”, www.financesentral.com accessed on 21st November 2011. 8 Malaysian Economic outlook by Malaysian Institute of Economic Research (MIER), www.mier.org.my/outlook 21.11.”
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Economical Key facts Malaysia
Currency: Exchange rates: GDP (billion RM): GDP - real growth rate: Inflation rate: Exports: Exports - commodities:
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1 Ringgit (RM) = 100 Sen 1 EURO = RM4.3; 1 US$ = RM3.2 (17.11.2011) 2009: 679.94; 2010: 765.97; 2011: 829.34 2010: 7.2%; 2011: 4.0%, 2012: 5.0% (est.)10 3.3-3.5 % (est. 2012 IMF) RM513.59 billion (Jan- Sep 2011) Electronics 34.5%; petroleum & products 9.9%; palm oil 9.3%; chemical products 6.9%; machinery 3,4%; manufactures of metal 3.0%; rubber products 2.6%
Exports – partners: Imports: Imports - commodities:
Singapore 13.3%, China 12.5%, Japan 10.5%, USA 9.5%, Thailand 5.3%, Hong Kong 5.1%, Germany: 2.7% RM424.37billion (Jan – Sep 2011) Electronics 31.2%, petroleum & products 10.1%, chemical products 9.2%, machinery 8.0%, manufactures of metal 5.9%, transport equipment 5.1%, iron & steel products 4.3%, optical & scientific equipment 3.2%, processed food 2.2%, other products 20.8%
Imports - partners: Unemployment rate: Average wage 2011:
Japan 12.6%, China 12.6%, Singapore 11.4%, USA 10.6%, Thailand 6.2%, Germany 4.0% 3.0% (2011)11 Project manager IT: RM8,415, lecturer/speaker: RM3,459, mechanical engineer: RM3,070, account executive: RM2,572, plantation worker: RM85012
Population below poverty line:
3,6%13
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Malaysia External Trade Development Corporation (MATRADE), www.matrade.com.my . Malaysian Institute of Economic Research (MIER), www.mier.org/outlook/ accessed on18th November 2011. 11 Bank Negara Malaysia, Economic and Financial Data for Malaysia, last updated on 14th November 2011. 12 www.payscale.com/research/MY/Conutry=Malaysia/Salary accessed on 21th November 2011. 13 Index Mundi, www.indexmundi.com/g?r.aspx?v=69 accessed on 18th November 2011.
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Bilateral Trade: Malaysia & Germany
Malaysia is EU‘s second largest trading partner inside ASEAN, behind Singapore, with bilateral trade in goods reaching 31.9 billion Euros in 2010 and the EU‘s 22nd largest trading partner. Germany enjoys intensive trade relations with Malaysia and is one of the main foreign investors in Malaysia, while among members of the European Union, Germany is Malaysia‘s leading trade partner.14 Besides, Malaysia ranks 2nd as a consumer of German products among the ASEAN countries. As the automobile sector is the largest German export industry, the car and respective component exports to Malaysia account for a large part of the German commodities that are sold in Malaysia. Description Parts & Components Passenger Cars and Camping Vans Commercial Vehicles & specialized Vehicles Other vehicles Total
Table 1 - German automotive industry exports to Malaysia January to November 2011 Source: Federal Statistical Office Germany (2011)
Exports in thousand € 221,397 177,875 3765 3116 406,153
In comparison to German exports to Malaysia, the imports remain on a rather low level as the following table shows: Description Parts & Components Passenger Cars and Camping Vans Commercial Vehicles & specialized Vehicles Other vehicles Total
Table 2 - German automotive industry imports from Malaysia January to November 2011 Source: Federal Statistical Office Germany
Exports in thousand € 64,446 181 0 1,980 66,607
Several German automobile manufacturers have already engaged in the Malaysian market, but most of them operate only in the segment of luxury cars of the automotive sector. Companies such as BMW and Mercedes Benz use assembling facilities provided by their local partners. For
14
http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/malaysia/ accessed on 21st November 2011.
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
models that are not assembled locally but imported, local partners with approved permits (APs) are used. The distribution is conducted by the brand owners (for example BMW or Mercedes Benz) and sold through various dealers. Components and spare parts manufacturers can either go on joint venture like Continental Sime Tyres or set up their own manufacturing facilities like Malaysian Automotive Lighting, Robert Bosch, Schmitter Automotive, Vogel Sitze, ZF Steering excetera.
Overview of the Automotive Market
Malaysia: The biggest automobile customer market in South-East Asia
The history of the Malaysian automotive industry dates back to the early 1960s, when the Malaysian government developed a policy to promote an integrated automotive industry to strengthen its industrial base and reduce its dependency on the agricultural sector. The main objective of the promotion of the automotive industry constituted the limitation of imports, the reduction of expenses in foreign exchange, the creation of employment and the development of the industrial sector. Even nowadays, the automotive industry is designated to boost the country‘s industrialization process and to enable it to reach the status of a developed nation by 2020. The Malaysian national automotive industry is not only one of the major industrial sectors, but also represents a matter of national pride. In terms of fact and figures, the sector ranks amongst the top 20 in the world and disposes of the largest passenger car market in the ASEAN region. In the 1960s and 1970s, the industry was fragmented and consisted of inefficient assembly plants. The industry‘s progress to a well-developed manufacturing sector with regards to motor vehicles as well as components can be traced back to numerous government incentives that were initiated in the mid-1980s and remain until today. As a result of this policy two national car projects – Proton, which commenced operation in 1985, and Perodua, which was founded in 1994 – dominate the automotive industry commanding 26% and 30 % respectively of the local market. In the non-national car segment, Nissan held 6.5% of the market, while Toyota held 18% and Honda 6%.15
15
The Financial Edge, Mo. 1st of Dec. 2008
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
The entry of Proton into the local automobile market resulted in massive structural changes in the industry. The industry shifted from assembly activity to manufacture of vehicles and automotive parts. The sales and the market share of Japanese cars, which had dominated the market prior to the launch of Proton, were reduced as Malaysians bought their national car. The success stories of Proton and Perodua were positively influenced by high tariffs imposed by the government. Many analysts viewed the protectionist policies implemented by the Malaysian government as the most intervening among ASEAN countries. As a consequence, national cars‘ market share amounted more than 59% of the total sales in 2009 and the market share of the two big Malaysian car manufacturers Proton and Perodua still accounted to 59% in February 2011.16 In 2006 the government introduced the National Automotive Policy (NAP) that envisions the progressive liberalization of the car market through strategic tie-ups and alliances in order to eliminate competition.17 Today, with the opening of the market due to the ASEAN Free Trade Agreement (AFTA) the national cars domestic market share has dropped to less than 60%. In ASEAN Malaysia is the third biggest car market with 3 car manufacturers, 8 car assemblers, 9 motor assemblers and more than 800 component manufacturers and employs more than 300,000 people.18 National car dominance is expected to decline further with more liberalization in the near future. In the Government‘s 2012 budget, several incentives for further development of the domestic automotive industry were announced to be continued. Following global trend of environmental friendly vehicles and fuel efficiency, 100 percent exemption for import and excise duties was proclaimed to be continued until 31 December 2013.
Car imports and protectionist policies
To protect the local automotive industry, a number of import restrictions were imposed on foreign vehicles. With more than half a million sales per year, Malaysia is the biggest market for automobiles in South-East Asia. For a long time Malaysia's government has protected its auto industry from
16 17
MIDF Equity Beat (2011): “Automotive Sector” MACPA (The Malaysian Automotive Component Parts Manufacturers), March 2009 18 MAI (2011)
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
foreign competition by introducing an Asian material content policy, which included imposing high tariffs as well as non-tariff barriers. "National autos", those manufactured by Malaysian producers such as Proton and Perodua, benefit from preferential treatment compared to "nonnational" autos. The latter category includes even those automobiles that are manufactured in Malaysia by foreign-owned companies. High excise duties, import duties of about 30%19 (nonASEAN) and so-called Approved Permits (APs) also belong to these restrictions. The Ministry of International Trade and Industry (MITI) issues the latter only to ‗qualified‘ local personnel and companies, which is the main reason for foreign companies to cooperate with local partners. However, measures have already been undertaken to reduce trade barriers, as the government is forced to abolish this policy within the near future due to its obligations in the World Trade Organization (WTO) and in the ASEAN Free Trade Agreement (AFTA). So far duties are defined separately for Motor Cars, Four Wheel Drive Vehicles, others (like MPVs and Vans and Commercial Vehicles) and whether the cars are from ASEAN or non-ASEAN countries. The duties can vary and depend on the engine capacity as well as if the car was imported in CBU (Completely Built Up), CKD (Completely Knocked Down) or MSP (Multi-Sourcing Parts) form. Irrespective of the form of import, local taxes (Excise Duties and Sales Taxes) are imposed even on cars from ASEAN countries.
2006 Total Trade Import Export
Source: MIDA
2007 RM5,945.00 RM4,005.00 RM1,940.00
2008 RM6,689.30 RM4,625.10 RM2,064.20
2009 RM6,408.20 RM4,423.90 RM1,984.30
2010 RM4,947.20 RM5,498.40 RM2,573.20
2011 (Jan-Aug) RM6,666.10 RM4,487.70 RM2,179.40
RM5,460.00 RM3,860.00 RM1,600.00
Table 3 - Auto Parts and Components Industry in Malaysia (in RM mil)
Production
Malaysia has now become one of the region‘s largest auto markets with vibrant production activities. Currently, there are four National Automotive Projects in Malaysia: Perusahaan Otomobil Nasional Bhd (Proton) Perusahaan Otomobil Kedua Nasional (Perodua)
19
MAA (20.12.2010)
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Industri Otomotif Komersial (Inokom) Malaysian Truck and Bus (MTB)
Furthermore nine assemblers settled down in Malaysia, among them the Naza Automotive Manufacturing Sdn. Bhd (NAZA) and Hinda Sdn. Bhd. Renowned international brands, such as BMW, Landrover, Mercedes Benz, Peugeot, Renault, Scania from Europe and Nissan, Toyota, Mitsubishi and Mazda from Japan are contracting and operating through the local Manufacturing and Assembly Plants in Malaysia in order to fulfill the local content requirements. For more specific cars, Bufori Motor Car Co. Sdn. Bhd. (www.bufori.com), TVR Sports Sdn. Bhd. And TD Cars Sdn. Bhd. are manufacturing handmade sports cars. As the volume is less than 400 units per year the company is not regarded as commercial producer. An overview about the development of the volume of vehicles produced and assembled is given in the following table.
Year Passenger Vehicles Units % Change Commercial Vehicles Units % Change 4x4 Vehicles Units % Change Total Vehicles Units % Change
2000 2005 2006 2007 2008 2009 2010 2011
295,318 422,225 377,952 403,245 484,512 447,002 522,568 488,261
– 43.0% -10.5% 6.7% 20.2% -7.7% 16.9% -6.6%
36,642 95,662 96,545 38,433 46,298 42,267 45,147 45,254
– 27,235 161.1% 45,623 0.9% 28,551 -60.2% – 20.5% – -8.7% – 6.8% – 2.4% –
– 67.5% -37.4% – – – – –
359,195 56,351 503,048 441,678 53,081 489,269 567,715 533,515
– 56.9% -10.7% -12.2% 20.2% -7.8% 16.0% -6.0%
Table 4 - Motor Vehicle Production Source: Malaysian Automotive Association
In 2011 the total production of motor vehicles amounted to 533,515 units, comprising 488,261 units of passenger vehicles and 45,254 of commercial vehicles. At present the automotive industry employs 47,574 workers, with 25,111 workers employed in the motor vehicle assembly industry and 22,463 workers employed in the motor vehicles parts and accessories industry.
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Market shares
Considering the market shares in February 2011 both national carmakers continued to dominate the market with a total share of 59%. Foreign company Toyota was outperforming against its two other major non-national peers (Nissan, Honda) with 5600 units sold despite a decrease of its sales volume. Meanwhile Honda increased its sales volume to 2254 units while Nissan‘s market share maintained at 6% with a smaller increase rate of the sales volume. All companies are using a significant proportion of components in their local assemblies from other ASEAN countries, such as Thailand and Indonesia.
YTD 2011 Market Share (March 2011)
16% 29% 6% 7% 13% 29% Perodua Proton Toyota Honda Nissan Others
Source:MIDF EQUITY BEAT
Investments
Investments from Jan-Aug 2011 in the automotive sector amounted RM1,929 million with a total of 61 projects approved compared to 62 projects approved investments of RM1,914.6 million in 2010. Domestic investments amounted to RM1,350.4 million which contributed 70% share of the total investment and increased during the last year (share of 79% in 2010) while foreign investments totaled RM578.6 million (30% share of total investment).
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Sales
The Malaysian Automotive Association (MAA) registered from a marginal decrease of 7.5% in sales of vehicles in 2011 to 599,887 units from 605,156 units in the previous year. Passenger vehicles accounted for 535,112 units whereas the remaining units were commercial vehicles. After a strong start in 2011, the sales were affected due to the disruption of the supply chain from natural disasters in Japan and Thailand. In 2012 vehicle sales are expected to rise marginally to 615,000 units.20 The demand for Multi-purpose vehicles (MPV) and A-segment vehicles is estimated to fall in 2012 whereas the popularity of hybrid vehicles is expected to grow by 60% to 13,400 units.21
Year
Passenger Vehicles
Commercial Vehicles
4x4 Vehicles
Motorcycles*
Total Vehicles
2000 2005 2006 2007 2008 2009 2010 2011
282,103 416,692 366,738 442,885 497,459 486,342 543,594 535,112
33,732 9,782 90,471 44,291 50,656 50,563 61,562 64,765
27.338 37.804 33.559 – – – – –
165,013 440,000 422,550 449,820 531,690 536,905 345,611 450,244
**
343,173 552,316 490,768 487,176 548,115 536,905 605,156 599,877
Table 5 - Total Vehicles Sales Source: Malaysian Automotive Association (MAA) * Malaysian Industrial Development Authority (MIDA ** YTD Sept 2011
Distribution
The distribution market of CBUs (completely built-up units) in Malaysia is dominated by a few big local companies, namely Sime Darby, DRB-Hicom, Naza Motor Trading and Cycle & Carriage Bintang Bhd. National car manufacturers appoint one or more companies to act as a distributor for them, while foreign carmakers choose different means to distribute their automobiles.
20 21
MAA (2011) Business Times (2012)
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Import
In 2011 (Jan-Aug) Malaysia imported motor vehicles worth RM9.1159 billion (2010: RM11.2 billion, 2009: RM7.7 billion). Imports of car parts and components were RM 4.4867 billion in 2011 (JanAug) (2010: RM 5.5 billion, 2009: RM4.4 billion).
Export
Exports of motor vehicles in 2011 (Jan-Aug) amounted to RM654.2 million (2010: 938.2 million, 2009: RM741.5 million). Exports of parts and components were RM2.2 billion (Jan-Aug 2011) (2010: RM2.6 billion, 2009:RM1.99 billion). Major export destinations are ASEAN countries, such as Thailand and Indonesia, but large quantities are also transferred to China, Syria and UK.
Component industry
The launching of Proton in the early 1980‘s catalyzed the development of the ancillary and supporting industries by creating opportunities for growth in the manufacturing of component parts and accessories. Currently, there are more than 704 automotive components and parts manufacturers and 110 motorcycle components and parts manufacturers. Today there are about 45 vendors in the automotive component industry who has achieved the capabilities and competency to design and develop, source components and parts and manufacture the whole module/component both for the original equipment and replacement markets. Malaysia continues to be one of the main producers and exporters of vehicle parts, components and accessories in the region. These products have been accepted in Japan, Germany and the UK due to their quality, compliance with international standards and competitive prices. 22 Due to the dynamic development of the sector, the sales volume of components and parts could register a steady growth during the last decades. In 2010, sales reached RM6.13 billion (RM 5.77 billion in 2009). Along with this, the local content of national cars of all ranges average between 50-90 % (PROTON) and 35-80 % respectively (PERODUA) while the percentage of local content in domestically assembled foreign cars of all ranges average between 35-65%. 23
22 23
ibid MIDA
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Local component manufacturers besides having the capability to export have also undertaken cross border investment into the neighboring ASEAN countries, especially Thailand.
The National Automotive Policy (NAP)
Given the significant challenges facing the automotive industry, in particular globalization, economic liberalization and increasing competition, the Malaysian government felt that there is a need to review the strategic direction and policy framework for the domestic automotive sector. This change towards a less regulated policy is crucial to maintain the competitiveness of the domestic automotive sector in the country and internationally and to make it thus viable in the long term. Having this in mind, the government launched the National Automotive Policy (NAP) in March 2006, which primarily aims at progressive market liberalization. In September 2009, the NAP was revised to encourage new investments, ensure a long term sustainability of the domestic automotive industry, ensure safety and quality of products and services and protection of the environment. Some highlights on the revised NAP: 1) Manufacturing licence Local assembly of luxury passenger cars above 1,800 cc or priced above RM150,000 is fully liberalized. This means foreign firms are allowed to obtain manufacturing licence and can hold 100% equity in the companies. However, Current policy on the freeze of manufacturing licence for reconditioning and reassembling activities is maintained. 2) 3) Amendments to the AP System (Approval Permit) Incentives The issuance of APs will be stopped by end 2015. Incentives such as Pioneer Status/Investment Tax Allowance for the manufacture of critical components for cars such as brake system and transmission 4) Safety standards There would be a gradual introduction of Vehicle End of Life Policy. Vehicles above 15 years will have to undergo mandatory inspection during road tax renewal. 5) Euro 4m specification Implementing Euro 4m specification for petrol and diesel in 2011
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
6)
Tax/Duty
The Import Duty structure is maintained at 0% for CKD and 5% for CBU for AFTA. As for Excise Duty, there are no changes. 7) 8) Imports Establishment of a strategic partnership for Proton From June 2011, it would be prohibited to import used parts/components. The quest is on for Proton to have a strategic partnership with a globally established manufacturer. Key developments since the NAP announcement After signing an agreement for local vehicle assembly in December 2010, Volkswagen will be offering CKD and CBU models through its domestic partner DRB-Hicom. The production roll-out at DRB-Hicom Automotive Complex started in November 2011, cars are planned to be available in 2012.24 In collaboration with DRB-Hicom Volkswagen is aimed to a 10-fold production in its share of the Malaysian passenger car market which currently just comprises 1%. Therefore Volkswagen is constantly introducing new models to the Malaysian market.25 Peugeot has choosen Naza as its partner in spearheading its expansion in the ASEAN region; Malaysia will thus act as Peugeot‘s regional hub. In 2011, Nasim Sdn Bhd, the official distributor of Peugeot in Malaysia opened new facilities in the Malaysian peninsula as well as in East Malaysia.26 Increasing interest in Hybrids; 297 units were sold in 2009 and since the 2011 budget announcement in Oct for 100% excise and duty tax exemption on Hybrids 1,500 units reported bookings were made in a span of less than 3 months (Oct-Dec 2010). Proton announced its plans for the development of pure electric vehicles (PEV) for the global market in the first quarter of 2009. Malaysia‘s domestic carmaker hopes that the government will introduce an incentive to spur Malaysians to move to EVs. Protons electric vehicles are now in the test fleet stage, the commercialization of the cars is planned for 2013.
24 25
Volkswagen Malaysia (2011) The Edge Financial Daily (2012) 26 Peugeot Malaysia (2011)
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
ASEAN/AFTA: An economic region grows together
In 2002, the ASEAN was founded to facilitate trading relations between the Asian countries in particular, but global economy is also profiting from the commitment to encourage competitiveness. Malaysia, as a member, is subjected to the policies decided upon in this multilateral forum. Since then, it has thus gradually reduced trade barriers. Over the years the government has dismantled its protective policies. Import duties on CKD (completely knocked-down units) and CBU (completely built-up units) from ASEAN members have been reduced to 0% and 5%. Duties from non-ASEAN countries for CKD have been reduced to 0%10%, while duties on CBU have now reached a 30%. Excise duties are imposed on all vehicles, irrespective of their origin
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The intra-ASEAN trade recorded a constant increase in the last years. The removal of trade barriers within ASEAN has opened up a vast regional market for automotive companies which stand to benefit from potential economies of scale and enjoy access to cost competitive components produced in ASEAN countries.
Opportunities
1. Companies with new technology are highly sought after. Especially German companies with good technical know-how are demanded by the local industry. 2. Companies with design and testing capabilities. 3. Investment in areas of fuel-efficient engines and alternative fuel engines, conversion kits, transmission system, automotive electric components and special purpose vehicles are encouraged. 4. Collaboration with local vendors to supply the ASEAN and global markets. Platform of sourcing strategy: The multi-sourcing facility, which was introduced to enable assemblers and franchise holders to import components and parts direct from cheaper sources, has opened up means to penetrate into the regional and global market. 5. Training and skill upgrading programs that enhance productivity and product quality are sought after.
27
MACPA (The Malaysian Automotive Component Parts Manufacturers), March 2009
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Automotive and Supplier Industry Fairs in Malaysia
AUTOMECHANIKA 2013 Date: March 2013 Place: KL Convention Centre, Kuala Lumpur, Malaysia KL INTERNATIONAL MOTORSHOW 2013 Place: Putra World Trade Centre, Kuala Lumpur, Malaysia
Contact: Mr. Thomas Brandt at: [email protected] Ms. Michelle Lim at: [email protected]
We hope the market report serves you with actual information on the Malaysian market. Our core business is to establish contacts, finding distribution partners, project acquisitions, etc. our “Office-in Office” will give you a permanent address to develop the market. Please contact us for further information.
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General information about Malaysia
Malaysia is centrally located within the Association of South-East Asian Nations (ASEAN). Consisting of two regions separated by the South China Sea — the Malaysian Peninsula and the states of Sabah and Sarawak on the island of Borneo — Malaysia is a federation of 13 states and three federal territories. The former British colony gained its independence in 1957. Since Independence, Malaysia has adopted the political system of a parliamentary democracy with a constitutional monarch whose position is rotated every five years between each of the nine hereditary state rulers. The political scene has been characterized by an extra-ordinary degree of political stability and continuity through an encompassing national coalition of political parties. Its territory comprises approx. 330,000 sq km, four fifths of which are covered by tropical rainforest. Due to its bio-diverse range of flora and fauna offering excellent beaches and brilliant scenery, the country is one of the region‘s key touristic destinations. Malaysia is a multi-ethnic, multicultural and multilingual society with 28.66 million members. Ethnic Malays make up the majority of the population at 57.1% followed by Chinese at 24.6%, Indian at 7.3% and other local ethnicities at 11%. The Malaysian constitution guarantees freedom of religion, although Islam is the largest and official religion. Approx. 61.3% of the population practice Islam, 19.8% Buddhism, 9.2% Christianity, 6.3% Hinduism, and 2.6% practice Confucianism and other traditional Chinese religions. The official language of Malaysia is Bahasa Malaysia, but English as well as Chinese are the business languages.
Economical Overview
Malaysia is a dynamic country which is constantly evolving. Being a middle-income country, Malaysia has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy spurred on by high technology, knowledge-based and capitalintensive industries. Malaysia‘s Economic Performance ranking improved to 7th place out of 59 economies this year compared with 12th position in 2007.1 It is one of the 20 largest trading nations worldwide and was headed of Taiwan, Sweden, Canada, Australia, the United Kingdom
1
“Malaysia’s economy attains 7th position”, New Straits Times, 20th May 2011.
“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
and Switzerland.2 The World Competitiveness Yearbook 2011 Report released by the Institute for Management Development (IMD) continued to rank Malaysia as among the top 5 most competitive nations in the Asia-Pacific region, taking 6th position in the 20 million population category and 2nd position after Taiwan in the GDP per capita less than US$20,000 category.3 Moreover, the country is the 21th largest exporter among all trading nations worldwide. Strategically located in the heart of South-East Asia, Malaysia offers a cost-competitive location for investors intending to set up offshore operations in order to manufacture advanced technological products for both regional and international markets. In addition, Malaysia has a market-oriented economy which is supported by pro-business government policies. Last year, the Malaysian Government launched the Economic Transformation Programme (ETP) which is managed by PEMANDU (Performance Management & Delivery Unit) under the patronage of the Prime Minister.4 The ETP identifies 12 National Key Economic Areas (NKEAs) which are drivers of economic activities that have the potential to materially contribute to the growth of Malaysia. Its objective — also known as ―Vision 2020‖ — is to transform Malaysia into a ―high income country‖ by year 2020. The programme will lift Malaysia‘s Gross National Income (GNI) to US$523 billion by 2020, and raise per capita income from US$6,700 to at least US$15,000, meeting the World Bank's threshold for high income nation.5 To achieve the targets set, Malaysia needs an annual growth of GNI of 6%. There are plans to revitalize Malaysia's private sector, to grow the service sector from 58 to 65% and to create 3.3 million new jobs.6 The Government will also introduce other transformation plans in 2012.7 In Malaysia, the 2011 GDP growth edged lower to 4.0 percent year-on-year due to a weaker domestic demand. Further implementation of ETP projects and a RM232.8 billion 2012 Budget tabled by Prime Minister Datuk Seri Najib Razak will boost domestic demand, but unlikely to offset underperformance in net exports8.
2 3
Ibid. Ibid. 4 See www.pemandu.gov.my . 5 Forbes.com, 21st September 2011. 6 Ibid. 7 “Malaysia Budget 2012 Main Highlights”, www.financesentral.com accessed on 21st November 2011. 8 Malaysian Economic outlook by Malaysian Institute of Economic Research (MIER), www.mier.org.my/outlook 21.11.”
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Economical Key facts Malaysia
Currency: Exchange rates: GDP (billion RM): GDP - real growth rate: Inflation rate: Exports: Exports - commodities:
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1 Ringgit (RM) = 100 Sen 1 EURO = RM4.3; 1 US$ = RM3.2 (17.11.2011) 2009: 679.94; 2010: 765.97; 2011: 829.34 2010: 7.2%; 2011: 4.0%, 2012: 5.0% (est.)10 3.3-3.5 % (est. 2012 IMF) RM513.59 billion (Jan- Sep 2011) Electronics 34.5%; petroleum & products 9.9%; palm oil 9.3%; chemical products 6.9%; machinery 3,4%; manufactures of metal 3.0%; rubber products 2.6%
Exports – partners: Imports: Imports - commodities:
Singapore 13.3%, China 12.5%, Japan 10.5%, USA 9.5%, Thailand 5.3%, Hong Kong 5.1%, Germany: 2.7% RM424.37billion (Jan – Sep 2011) Electronics 31.2%, petroleum & products 10.1%, chemical products 9.2%, machinery 8.0%, manufactures of metal 5.9%, transport equipment 5.1%, iron & steel products 4.3%, optical & scientific equipment 3.2%, processed food 2.2%, other products 20.8%
Imports - partners: Unemployment rate: Average wage 2011:
Japan 12.6%, China 12.6%, Singapore 11.4%, USA 10.6%, Thailand 6.2%, Germany 4.0% 3.0% (2011)11 Project manager IT: RM8,415, lecturer/speaker: RM3,459, mechanical engineer: RM3,070, account executive: RM2,572, plantation worker: RM85012
Population below poverty line:
3,6%13
9
Malaysia External Trade Development Corporation (MATRADE), www.matrade.com.my . Malaysian Institute of Economic Research (MIER), www.mier.org/outlook/ accessed on18th November 2011. 11 Bank Negara Malaysia, Economic and Financial Data for Malaysia, last updated on 14th November 2011. 12 www.payscale.com/research/MY/Conutry=Malaysia/Salary accessed on 21th November 2011. 13 Index Mundi, www.indexmundi.com/g?r.aspx?v=69 accessed on 18th November 2011.
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Bilateral Trade: Malaysia & Germany
Malaysia is EU‘s second largest trading partner inside ASEAN, behind Singapore, with bilateral trade in goods reaching 31.9 billion Euros in 2010 and the EU‘s 22nd largest trading partner. Germany enjoys intensive trade relations with Malaysia and is one of the main foreign investors in Malaysia, while among members of the European Union, Germany is Malaysia‘s leading trade partner.14 Besides, Malaysia ranks 2nd as a consumer of German products among the ASEAN countries. As the automobile sector is the largest German export industry, the car and respective component exports to Malaysia account for a large part of the German commodities that are sold in Malaysia. Description Parts & Components Passenger Cars and Camping Vans Commercial Vehicles & specialized Vehicles Other vehicles Total
Table 1 - German automotive industry exports to Malaysia January to November 2011 Source: Federal Statistical Office Germany (2011)
Exports in thousand € 221,397 177,875 3765 3116 406,153
In comparison to German exports to Malaysia, the imports remain on a rather low level as the following table shows: Description Parts & Components Passenger Cars and Camping Vans Commercial Vehicles & specialized Vehicles Other vehicles Total
Table 2 - German automotive industry imports from Malaysia January to November 2011 Source: Federal Statistical Office Germany
Exports in thousand € 64,446 181 0 1,980 66,607
Several German automobile manufacturers have already engaged in the Malaysian market, but most of them operate only in the segment of luxury cars of the automotive sector. Companies such as BMW and Mercedes Benz use assembling facilities provided by their local partners. For
14
http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/malaysia/ accessed on 21st November 2011.
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
models that are not assembled locally but imported, local partners with approved permits (APs) are used. The distribution is conducted by the brand owners (for example BMW or Mercedes Benz) and sold through various dealers. Components and spare parts manufacturers can either go on joint venture like Continental Sime Tyres or set up their own manufacturing facilities like Malaysian Automotive Lighting, Robert Bosch, Schmitter Automotive, Vogel Sitze, ZF Steering excetera.
Overview of the Automotive Market
Malaysia: The biggest automobile customer market in South-East Asia
The history of the Malaysian automotive industry dates back to the early 1960s, when the Malaysian government developed a policy to promote an integrated automotive industry to strengthen its industrial base and reduce its dependency on the agricultural sector. The main objective of the promotion of the automotive industry constituted the limitation of imports, the reduction of expenses in foreign exchange, the creation of employment and the development of the industrial sector. Even nowadays, the automotive industry is designated to boost the country‘s industrialization process and to enable it to reach the status of a developed nation by 2020. The Malaysian national automotive industry is not only one of the major industrial sectors, but also represents a matter of national pride. In terms of fact and figures, the sector ranks amongst the top 20 in the world and disposes of the largest passenger car market in the ASEAN region. In the 1960s and 1970s, the industry was fragmented and consisted of inefficient assembly plants. The industry‘s progress to a well-developed manufacturing sector with regards to motor vehicles as well as components can be traced back to numerous government incentives that were initiated in the mid-1980s and remain until today. As a result of this policy two national car projects – Proton, which commenced operation in 1985, and Perodua, which was founded in 1994 – dominate the automotive industry commanding 26% and 30 % respectively of the local market. In the non-national car segment, Nissan held 6.5% of the market, while Toyota held 18% and Honda 6%.15
15
The Financial Edge, Mo. 1st of Dec. 2008
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
The entry of Proton into the local automobile market resulted in massive structural changes in the industry. The industry shifted from assembly activity to manufacture of vehicles and automotive parts. The sales and the market share of Japanese cars, which had dominated the market prior to the launch of Proton, were reduced as Malaysians bought their national car. The success stories of Proton and Perodua were positively influenced by high tariffs imposed by the government. Many analysts viewed the protectionist policies implemented by the Malaysian government as the most intervening among ASEAN countries. As a consequence, national cars‘ market share amounted more than 59% of the total sales in 2009 and the market share of the two big Malaysian car manufacturers Proton and Perodua still accounted to 59% in February 2011.16 In 2006 the government introduced the National Automotive Policy (NAP) that envisions the progressive liberalization of the car market through strategic tie-ups and alliances in order to eliminate competition.17 Today, with the opening of the market due to the ASEAN Free Trade Agreement (AFTA) the national cars domestic market share has dropped to less than 60%. In ASEAN Malaysia is the third biggest car market with 3 car manufacturers, 8 car assemblers, 9 motor assemblers and more than 800 component manufacturers and employs more than 300,000 people.18 National car dominance is expected to decline further with more liberalization in the near future. In the Government‘s 2012 budget, several incentives for further development of the domestic automotive industry were announced to be continued. Following global trend of environmental friendly vehicles and fuel efficiency, 100 percent exemption for import and excise duties was proclaimed to be continued until 31 December 2013.
Car imports and protectionist policies
To protect the local automotive industry, a number of import restrictions were imposed on foreign vehicles. With more than half a million sales per year, Malaysia is the biggest market for automobiles in South-East Asia. For a long time Malaysia's government has protected its auto industry from
16 17
MIDF Equity Beat (2011): “Automotive Sector” MACPA (The Malaysian Automotive Component Parts Manufacturers), March 2009 18 MAI (2011)
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
foreign competition by introducing an Asian material content policy, which included imposing high tariffs as well as non-tariff barriers. "National autos", those manufactured by Malaysian producers such as Proton and Perodua, benefit from preferential treatment compared to "nonnational" autos. The latter category includes even those automobiles that are manufactured in Malaysia by foreign-owned companies. High excise duties, import duties of about 30%19 (nonASEAN) and so-called Approved Permits (APs) also belong to these restrictions. The Ministry of International Trade and Industry (MITI) issues the latter only to ‗qualified‘ local personnel and companies, which is the main reason for foreign companies to cooperate with local partners. However, measures have already been undertaken to reduce trade barriers, as the government is forced to abolish this policy within the near future due to its obligations in the World Trade Organization (WTO) and in the ASEAN Free Trade Agreement (AFTA). So far duties are defined separately for Motor Cars, Four Wheel Drive Vehicles, others (like MPVs and Vans and Commercial Vehicles) and whether the cars are from ASEAN or non-ASEAN countries. The duties can vary and depend on the engine capacity as well as if the car was imported in CBU (Completely Built Up), CKD (Completely Knocked Down) or MSP (Multi-Sourcing Parts) form. Irrespective of the form of import, local taxes (Excise Duties and Sales Taxes) are imposed even on cars from ASEAN countries.
2006 Total Trade Import Export
Source: MIDA
2007 RM5,945.00 RM4,005.00 RM1,940.00
2008 RM6,689.30 RM4,625.10 RM2,064.20
2009 RM6,408.20 RM4,423.90 RM1,984.30
2010 RM4,947.20 RM5,498.40 RM2,573.20
2011 (Jan-Aug) RM6,666.10 RM4,487.70 RM2,179.40
RM5,460.00 RM3,860.00 RM1,600.00
Table 3 - Auto Parts and Components Industry in Malaysia (in RM mil)
Production
Malaysia has now become one of the region‘s largest auto markets with vibrant production activities. Currently, there are four National Automotive Projects in Malaysia: Perusahaan Otomobil Nasional Bhd (Proton) Perusahaan Otomobil Kedua Nasional (Perodua)
19
MAA (20.12.2010)
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Industri Otomotif Komersial (Inokom) Malaysian Truck and Bus (MTB)
Furthermore nine assemblers settled down in Malaysia, among them the Naza Automotive Manufacturing Sdn. Bhd (NAZA) and Hinda Sdn. Bhd. Renowned international brands, such as BMW, Landrover, Mercedes Benz, Peugeot, Renault, Scania from Europe and Nissan, Toyota, Mitsubishi and Mazda from Japan are contracting and operating through the local Manufacturing and Assembly Plants in Malaysia in order to fulfill the local content requirements. For more specific cars, Bufori Motor Car Co. Sdn. Bhd. (www.bufori.com), TVR Sports Sdn. Bhd. And TD Cars Sdn. Bhd. are manufacturing handmade sports cars. As the volume is less than 400 units per year the company is not regarded as commercial producer. An overview about the development of the volume of vehicles produced and assembled is given in the following table.
Year Passenger Vehicles Units % Change Commercial Vehicles Units % Change 4x4 Vehicles Units % Change Total Vehicles Units % Change
2000 2005 2006 2007 2008 2009 2010 2011
295,318 422,225 377,952 403,245 484,512 447,002 522,568 488,261
– 43.0% -10.5% 6.7% 20.2% -7.7% 16.9% -6.6%
36,642 95,662 96,545 38,433 46,298 42,267 45,147 45,254
– 27,235 161.1% 45,623 0.9% 28,551 -60.2% – 20.5% – -8.7% – 6.8% – 2.4% –
– 67.5% -37.4% – – – – –
359,195 56,351 503,048 441,678 53,081 489,269 567,715 533,515
– 56.9% -10.7% -12.2% 20.2% -7.8% 16.0% -6.0%
Table 4 - Motor Vehicle Production Source: Malaysian Automotive Association
In 2011 the total production of motor vehicles amounted to 533,515 units, comprising 488,261 units of passenger vehicles and 45,254 of commercial vehicles. At present the automotive industry employs 47,574 workers, with 25,111 workers employed in the motor vehicle assembly industry and 22,463 workers employed in the motor vehicles parts and accessories industry.
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Market shares
Considering the market shares in February 2011 both national carmakers continued to dominate the market with a total share of 59%. Foreign company Toyota was outperforming against its two other major non-national peers (Nissan, Honda) with 5600 units sold despite a decrease of its sales volume. Meanwhile Honda increased its sales volume to 2254 units while Nissan‘s market share maintained at 6% with a smaller increase rate of the sales volume. All companies are using a significant proportion of components in their local assemblies from other ASEAN countries, such as Thailand and Indonesia.
YTD 2011 Market Share (March 2011)
16% 29% 6% 7% 13% 29% Perodua Proton Toyota Honda Nissan Others
Source:MIDF EQUITY BEAT
Investments
Investments from Jan-Aug 2011 in the automotive sector amounted RM1,929 million with a total of 61 projects approved compared to 62 projects approved investments of RM1,914.6 million in 2010. Domestic investments amounted to RM1,350.4 million which contributed 70% share of the total investment and increased during the last year (share of 79% in 2010) while foreign investments totaled RM578.6 million (30% share of total investment).
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Sales
The Malaysian Automotive Association (MAA) registered from a marginal decrease of 7.5% in sales of vehicles in 2011 to 599,887 units from 605,156 units in the previous year. Passenger vehicles accounted for 535,112 units whereas the remaining units were commercial vehicles. After a strong start in 2011, the sales were affected due to the disruption of the supply chain from natural disasters in Japan and Thailand. In 2012 vehicle sales are expected to rise marginally to 615,000 units.20 The demand for Multi-purpose vehicles (MPV) and A-segment vehicles is estimated to fall in 2012 whereas the popularity of hybrid vehicles is expected to grow by 60% to 13,400 units.21
Year
Passenger Vehicles
Commercial Vehicles
4x4 Vehicles
Motorcycles*
Total Vehicles
2000 2005 2006 2007 2008 2009 2010 2011
282,103 416,692 366,738 442,885 497,459 486,342 543,594 535,112
33,732 9,782 90,471 44,291 50,656 50,563 61,562 64,765
27.338 37.804 33.559 – – – – –
165,013 440,000 422,550 449,820 531,690 536,905 345,611 450,244
**
343,173 552,316 490,768 487,176 548,115 536,905 605,156 599,877
Table 5 - Total Vehicles Sales Source: Malaysian Automotive Association (MAA) * Malaysian Industrial Development Authority (MIDA ** YTD Sept 2011
Distribution
The distribution market of CBUs (completely built-up units) in Malaysia is dominated by a few big local companies, namely Sime Darby, DRB-Hicom, Naza Motor Trading and Cycle & Carriage Bintang Bhd. National car manufacturers appoint one or more companies to act as a distributor for them, while foreign carmakers choose different means to distribute their automobiles.
20 21
MAA (2011) Business Times (2012)
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Import
In 2011 (Jan-Aug) Malaysia imported motor vehicles worth RM9.1159 billion (2010: RM11.2 billion, 2009: RM7.7 billion). Imports of car parts and components were RM 4.4867 billion in 2011 (JanAug) (2010: RM 5.5 billion, 2009: RM4.4 billion).
Export
Exports of motor vehicles in 2011 (Jan-Aug) amounted to RM654.2 million (2010: 938.2 million, 2009: RM741.5 million). Exports of parts and components were RM2.2 billion (Jan-Aug 2011) (2010: RM2.6 billion, 2009:RM1.99 billion). Major export destinations are ASEAN countries, such as Thailand and Indonesia, but large quantities are also transferred to China, Syria and UK.
Component industry
The launching of Proton in the early 1980‘s catalyzed the development of the ancillary and supporting industries by creating opportunities for growth in the manufacturing of component parts and accessories. Currently, there are more than 704 automotive components and parts manufacturers and 110 motorcycle components and parts manufacturers. Today there are about 45 vendors in the automotive component industry who has achieved the capabilities and competency to design and develop, source components and parts and manufacture the whole module/component both for the original equipment and replacement markets. Malaysia continues to be one of the main producers and exporters of vehicle parts, components and accessories in the region. These products have been accepted in Japan, Germany and the UK due to their quality, compliance with international standards and competitive prices. 22 Due to the dynamic development of the sector, the sales volume of components and parts could register a steady growth during the last decades. In 2010, sales reached RM6.13 billion (RM 5.77 billion in 2009). Along with this, the local content of national cars of all ranges average between 50-90 % (PROTON) and 35-80 % respectively (PERODUA) while the percentage of local content in domestically assembled foreign cars of all ranges average between 35-65%. 23
22 23
ibid MIDA
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
Local component manufacturers besides having the capability to export have also undertaken cross border investment into the neighboring ASEAN countries, especially Thailand.
The National Automotive Policy (NAP)
Given the significant challenges facing the automotive industry, in particular globalization, economic liberalization and increasing competition, the Malaysian government felt that there is a need to review the strategic direction and policy framework for the domestic automotive sector. This change towards a less regulated policy is crucial to maintain the competitiveness of the domestic automotive sector in the country and internationally and to make it thus viable in the long term. Having this in mind, the government launched the National Automotive Policy (NAP) in March 2006, which primarily aims at progressive market liberalization. In September 2009, the NAP was revised to encourage new investments, ensure a long term sustainability of the domestic automotive industry, ensure safety and quality of products and services and protection of the environment. Some highlights on the revised NAP: 1) Manufacturing licence Local assembly of luxury passenger cars above 1,800 cc or priced above RM150,000 is fully liberalized. This means foreign firms are allowed to obtain manufacturing licence and can hold 100% equity in the companies. However, Current policy on the freeze of manufacturing licence for reconditioning and reassembling activities is maintained. 2) 3) Amendments to the AP System (Approval Permit) Incentives The issuance of APs will be stopped by end 2015. Incentives such as Pioneer Status/Investment Tax Allowance for the manufacture of critical components for cars such as brake system and transmission 4) Safety standards There would be a gradual introduction of Vehicle End of Life Policy. Vehicles above 15 years will have to undergo mandatory inspection during road tax renewal. 5) Euro 4m specification Implementing Euro 4m specification for petrol and diesel in 2011
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6)
Tax/Duty
The Import Duty structure is maintained at 0% for CKD and 5% for CBU for AFTA. As for Excise Duty, there are no changes. 7) 8) Imports Establishment of a strategic partnership for Proton From June 2011, it would be prohibited to import used parts/components. The quest is on for Proton to have a strategic partnership with a globally established manufacturer. Key developments since the NAP announcement After signing an agreement for local vehicle assembly in December 2010, Volkswagen will be offering CKD and CBU models through its domestic partner DRB-Hicom. The production roll-out at DRB-Hicom Automotive Complex started in November 2011, cars are planned to be available in 2012.24 In collaboration with DRB-Hicom Volkswagen is aimed to a 10-fold production in its share of the Malaysian passenger car market which currently just comprises 1%. Therefore Volkswagen is constantly introducing new models to the Malaysian market.25 Peugeot has choosen Naza as its partner in spearheading its expansion in the ASEAN region; Malaysia will thus act as Peugeot‘s regional hub. In 2011, Nasim Sdn Bhd, the official distributor of Peugeot in Malaysia opened new facilities in the Malaysian peninsula as well as in East Malaysia.26 Increasing interest in Hybrids; 297 units were sold in 2009 and since the 2011 budget announcement in Oct for 100% excise and duty tax exemption on Hybrids 1,500 units reported bookings were made in a span of less than 3 months (Oct-Dec 2010). Proton announced its plans for the development of pure electric vehicles (PEV) for the global market in the first quarter of 2009. Malaysia‘s domestic carmaker hopes that the government will introduce an incentive to spur Malaysians to move to EVs. Protons electric vehicles are now in the test fleet stage, the commercialization of the cars is planned for 2013.
24 25
Volkswagen Malaysia (2011) The Edge Financial Daily (2012) 26 Peugeot Malaysia (2011)
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“Market Watch 2012”, The Malaysian Automotive and Supplier Industry
ASEAN/AFTA: An economic region grows together
In 2002, the ASEAN was founded to facilitate trading relations between the Asian countries in particular, but global economy is also profiting from the commitment to encourage competitiveness. Malaysia, as a member, is subjected to the policies decided upon in this multilateral forum. Since then, it has thus gradually reduced trade barriers. Over the years the government has dismantled its protective policies. Import duties on CKD (completely knocked-down units) and CBU (completely built-up units) from ASEAN members have been reduced to 0% and 5%. Duties from non-ASEAN countries for CKD have been reduced to 0%10%, while duties on CBU have now reached a 30%. Excise duties are imposed on all vehicles, irrespective of their origin
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The intra-ASEAN trade recorded a constant increase in the last years. The removal of trade barriers within ASEAN has opened up a vast regional market for automotive companies which stand to benefit from potential economies of scale and enjoy access to cost competitive components produced in ASEAN countries.
Opportunities
1. Companies with new technology are highly sought after. Especially German companies with good technical know-how are demanded by the local industry. 2. Companies with design and testing capabilities. 3. Investment in areas of fuel-efficient engines and alternative fuel engines, conversion kits, transmission system, automotive electric components and special purpose vehicles are encouraged. 4. Collaboration with local vendors to supply the ASEAN and global markets. Platform of sourcing strategy: The multi-sourcing facility, which was introduced to enable assemblers and franchise holders to import components and parts direct from cheaper sources, has opened up means to penetrate into the regional and global market. 5. Training and skill upgrading programs that enhance productivity and product quality are sought after.
27
MACPA (The Malaysian Automotive Component Parts Manufacturers), March 2009
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Automotive and Supplier Industry Fairs in Malaysia
AUTOMECHANIKA 2013 Date: March 2013 Place: KL Convention Centre, Kuala Lumpur, Malaysia KL INTERNATIONAL MOTORSHOW 2013 Place: Putra World Trade Centre, Kuala Lumpur, Malaysia
Contact: Mr. Thomas Brandt at: [email protected] Ms. Michelle Lim at: [email protected]
We hope the market report serves you with actual information on the Malaysian market. Our core business is to establish contacts, finding distribution partners, project acquisitions, etc. our “Office-in Office” will give you a permanent address to develop the market. Please contact us for further information.
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