Conditions restricting foreign car imports will ‘create unlevel playing field’
KUCHING: With the new government looking into the possibility of certain conditions that will restrict the import of foreign cars, analysts project that such a move will “create unlevel playing field and stunt foreign investment growth” into auto sector.
According to Bernama, in replying to a supplementary question, from Fong Kui Lun (Pakatan Harapan-Bukit Bintang) in the Dewan Rakyat, on whether the government proposed to impose conditions for the import of cars, Prime Minister Tun Dr Mahathir Mohamad had said the government was aware of free trade practices that did not restrict the entry of goods by way of high taxation.
“That’s why we have to look at the possibility of certain conditions. Foreign cars cannot be allowed to enter the country easily and dominate the local market. We are looking into this,” he said.
As per Bernama’s article, Dr Mahathir had also said the national automotive industry, particularly involving Proton, suffered a decline in the past 10 years due to the National Automotive Policy (NAP) of allowing cars from all countries into the Malaysian market and tight conditions imposed by several countries on locally-produced cars destined for overseas markets, such as compliance with Euro 5 carbon dioxide emissions.
“Dr Mahathir said he was convinced Proton would be able to achieve the success of the past if it was assisted by the government. In this regard, he said, the Pakatan Harapan government would reform the national automotive industry so that the sector and sub-sectors continued to grow and create high capability in engineering among the people,” the article further read.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), if the move involves outright restriction even on well localised completely knocked down (CKD) models, “this will definitely have an impact on the industry, create an unlevel playing field and stunt foreign investment growth into the sector.”
“Such a move is akin to allowing national cars to solely drive sector growth in the future, which requires a much larger market than just domestic for volume competitiveness,” the research arm opined.
While MIDF Research admitted that it is not in the position to determine which is right or wrong as this would very much depend on the actual plans which is still very vague at this juncture, the research arm pointed out that the latter looks to suggests a major overhaul of the current auto sector policy which is driven by the introduction of the Energy Efficient Vehicle Program (EEV) program in 2014.
“This is just our brief take pending actual details to be ironed out on the future direction of the industry which includes a detailed plan for an Asean car or a third national car.
“At this point, details are simply too scarce to make a conclusive call.”