In­dus­try cap­tains hope for more clar­ity

The Star Malaysia - Star2 - - MOTORING -

NEARLY two years have passed since the Min­istry of In­ter­na­tional Trade and In­dus­try (MITI) first men­tioned the in­tro­duc­tion of a third Na­tional Au­to­mo­tive Pol­icy (NAP), and still we wait with bated breath.

Last April, MITI Min­is­ter Datuk Seri Mustapa Mo­hamed said: “We’ve done our con­sul­ta­tions. This time around, it was an ex­ten­sive one where it in­cluded all branches from the car com­pa­nies, to ven­dors, banks and the con­sumers. We will be pre­sent­ing the pa­pers to the Cab­i­net soon”.

At the same time, the Malaysia Au­to­mo­tive In­sti­tute (MAI) has re­peat­edly men­tioned that the third NAP will be brand- and tech­nolog­y­neu­tral, adding that there will be in­cen­tives to­wards the pro­mo­tion of en­ergy-ef­fi­cient ve­hi­cles (EEV) that meet a cer­tain level of re­quire­ment for fuel econ­omy and ex­haust emis­sion.

The in­sti­tute also adds that it recog­nises many struc­tural is­sues ham­per­ing the in­dus­try’s progress and that the up­com­ing NAP, which has been drafted by MAI, aims to ad­dress sna­fus made by the ear­lier 2006 and 2009 NAPs.

Since then, EEV has be­come an of­ten-re­peated buz­zword by gov­ern­ment of­fi­cials and me­dia alike.

Iron­i­cally, al­though bu­reau­crats from all lev­els of the ad­min­is­tra­tion like to talk about EEVs, no­body seems to have a clear grasp of what an EEV ac­tu­ally is.

Both MITI and MAI dan­gled EEV in­cen­tives to con­vince man­u­fac­tur­ers to in­vest in Malaysia’s au­to­mo­tive sec­tor, but when asked what de­fined an EEV, MITI or MAI have not man­aged to of­fer a clear an­swer.

So far, EEVs have been de­scribed in vague terms. To date, nei­ther party has been able to an­swer the very sim­ple ques­tion of what the min­i­mum stan­dard is, or how th­ese num­bers will be ver­i­fied.

Af­ter sev­eral rounds of de­lay, the lat­est date an­nounced by MITI for the rev­e­la­tion of the third NAP is Jan 15, 2014.

While we keep our fin­gers crossed that there will be no fur­ther de­lays, sev­eral car com­pa­nies have voiced what they would like on their wish list for NAP 2014.

“We are look­ing for­ward to more clar­ity on the in­cen­tives for EEV. There should be more lib­er­al­i­sa­tion in the auto in­dus­try to en­cour­age for­eign in­vest­ment in Malaysia,” says Datuk Ben Yeoh, the ex­ec­u­tive di­rec­tor of Ber­maz Mo­tor Sdn Bhd, which rep­re­sents the Mazda brand in the coun­try.

Yeoh is an in­dus­try vet­eran with more than 40 years of ex­pe­ri­ence. Start­ing out on greasy workshop floors as a tech­ni­cal ex­ec­u­tive for Cy­cle and Car­riage (MercedesBenz) in 1972, Yeoh is known for his hands-on ap­proach and deep un­der­stand­ing of the in­dus­try.

He was also cen­tral to re­viv­ing the Mazda brand and built a con­vinc­ing busi­ness case for Mazda Mo­tor Cor­po­ra­tion to make Malaysia its ex­port hub for the ASEAN re­gion.

Mazda cur­rently ex­ports the CX-5 from Malaysia to Thai­land.

De­spite equip­ping the CX-5 with a full suite of Mazda’s pro­pri­etary Sky­Ac­tiv fuel-sav­ing tech­nolo­gies, the lo­cally as­sem­bled CX-5 did not re­ceive any spe­cial in­cen­tives.

It should also be high­lighted that Mazda as­sem­bles a diesel-pow­ered CX-5 vari­ant, with a Sky­Ac­tiv-D en­gine that is even more fuel ef­fi­cient than the petrol vari­ant.

Iron­i­cally, al­though this vari­ant is ex­ported from Malaysia, it is not sold here be­cause the Malaysian diesel qual­ity is not high enough for the car to run on.

The in­tro­duc­tion of Euro 4 grade diesel, con­sid­ered to be a bare min­i­mum by global stan­dards, has been de­layed nu­mer­ous times.

The ini­tial sched­ule was 2012, but this has since been pushed to 2015.

In Europe, man­u­fac­tur­ers are get­ting ready for Euro 6, which will be en­forced in Septem­ber next year. In the com­ing years, avail­abil­ity of en­gines that are com­pat­i­ble with Malaysia’s ex­ist­ing Euro-2M stan­dard is go­ing to be an is­sue.

Also, more and more new mod­els will be launched with so­phis­ti­cated en­gines that re­quire a higher grade of fuel to op­er­ate on.

Other car mak­ers are forced to put their in­vest­ment plans on hold sim­ply be­cause many of their planned mod­els can­not be in­tro­duced in Malaysia un­til a higher qual­ity of diesel is in­tro­duced.

Keith Schafer, man­ag­ing di­rec­tor of Volvo Car Malaysia says the com­pany has plans to in­tro­duce more diesel-pow­ered mod­els, but this is de­pen­dent on the in­tro­duc­tion of Euro 4 diesel, which the com­pany is ea­gerly await­ing.

“Once a bet­ter qual­ity fuel is launched, we will be able to ex­pand our en­gine range con­sid­er­ably,” he says.

Schafer’s hopes are shared by his coun­ter­part at BMW Group Malaysia.

“We hope that Malaysia will adopt the in­ter­na­tion­ally recog­nised fuel at the Euro 4 stan­dard, which is a cost-ef­fec­tive fuel al­ter­na­tive that also re­duces harm­ful gas emis­sions to the en­vi­ron­ment,” says com­pany pres­i­dent Dr Ger­hard Pils.

He adds that Malaysia has a po­ten­tial to be­come a re­gional hub for elec­tric ve­hi­cle (EV) pro­duc­tion, but per­sis­tent mea­sures must be im­ple­mented to adopt the lat­est in­no­va­tions in green tech­nol­ogy.

Th­ese are mea­sures such as ex­tend­ing in­cen­tives for fully im­ported hy­brid ve­hi­cles, not lim­it­ing the in­cen­tives to cer­tain en­gine sizes and also in­cen­tives for clean diesels and elec­tric ve­hi­cles.

“Tax breaks should be cre­ated based on emis­sions and ef­fi­ciency, and not solely on en­gine size,” he says.

Pils’ com­ments on sup­port for EVs are echoed by Hof­fen Teh, vi­cepres­i­dent of Mit­subishi Mo­tors Malaysia.

“EVs still present many chal­lenges, es­pe­cially on the chang­ing in­fra­struc­ture de­vel­op­ment front. To fur­ther fa­cil­i­tate the pop­u­lar­i­sa­tion of EVs in Malaysia, we hope that full-duty ex­emp­tion will con­tinue for all ful­limported EVs, for the next five years per­haps.”

As for the afore­men­tioned EEVs, Teh echoes Yeoh’s sen­ti­ments.

“Mit­subishi Mo­tors Malaysia supports the idea of EEV en­cour­age­ment, but EEV poli­cies need to be more con­crete,” he says.

He adds that EEV cri­te­ria should be bet­ter de­fined.

For ex­am­ple, af­ford­able A- and B-seg­ment mod­els with a fuel econ­omy of at least 20km per litre should en­ti­tled to re­duc­tion of ex­cise du­ties.

Teh ex­plains that the gov­ern­ment can con­sider a grad­ual re­duc­tion of ex­cise du­ties for mod­els that meet such cri­te­ria, say from the cur­rent 75%, to 70% next year and 65% in 2015.

“This will fur­ther en­cour­age price com­pet­i­tive­ness for EEVs in the next few years within the au­to­mo­tive in­dus­try of Malaysia,” he says.

It should be high­lighted that it was Mit­subishi Mo­tors Malaysia (MMM) who made it pos­si­ble for all car com­pa­nies to in­tro­duce EVs in Malaysia.

In the past, def­i­ni­tions used in the Malaysia Road Trans­port Act did not re­flect the Road Trans­port Depart­ment’s ve­hi­cle-type ap­proval process (a com­pul­sory process for all newly in­tro­duced mod­els to go through) to reg­is­ter an EV model, as EVs do not have an en­gine num­ber.

There were also other com­pli­ca­tions with re­gards to the Cus­toms clear­ance pro­cesses.

Work­ing closely with sev­eral gov­ern­ment agen­cies, MMM paved the way for EVs, in­clud­ing those made by com­pa­nies such as Nis­san or BMW.

Volvo Car has big plans for Malaysia, but is held back by the lack of suit­able grade fuel.

Ex­cise du­ties for af­ford­able fuel-ef­fi­cient cars that go 20km per litre or more should be re­duced in phases.

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