Hurdles to third national car
THE government has just approved nearly RM20mil for the third national car prototype, according to reports. This is contrary to numerous earlier statements from a host of ministers that this project will not involve government funding.
Although said to be from existing grants, it is still taking away from funds which could be used for urgent projects like schools, hospitals and utilities for remote areas.
A neighbouring country was reported to have provided extendable five-year tax breaks and generous grants to cover the costs of the project in enticing a renowned company to set up its electric car plant. Our government has now taken a similar approach to attract car manufacturers. Such indirect funding is from government coffers and not from any other private investment.
Investors may even demand more with our eagerness for this third national car and lack of success with the other national cars. State governments may try to outdo each other to provide even more tax breaks and grants to have the plant sited in their state. Again, a drain of funds which could be used for more practical local development.
Infrastructure and utilities for the plant site will have to be built by state or government funds. It will be unusual for any car manufacturer to pay for these essential components to any industry.
As we will be new to this indus- try with few supporting industries, much of the factory machinery and car components could initially be brought in from abroad, resulting in an expensive car. We will merely be a car assembler for a while until we develop adequate local support industries to make manufacturing competitive. Protectionism could again be a byword for its survival in the early years.
Being a private investment, it will have to survive on its own even in tough times. It is, however, hard to imagine an incumbent government letting the plant close down with loss of thousands of jobs together with closure of supporting industries. It will be a very unpopular closure and much pressure and anger will be vented upon them.
Malaysians have been continuously suffering from painful lessons from our current car industry which still relies heavily on protectionism besides frequent taxpayers’ funding just to survive.
Government funding for this third national car has now been approved despite initial reassurance that there won’t be any and this sets up distrust and apprehension of the government.
There is much dissenting voice from the people to this third car. The government must take heed of the voice of the people and not repeat the past expensive follies of national cars.