Malaysia and Indonesia hope to develop regional car company

World Today

Southeast Asian countries hope to collaborate on the production of a vehicle for the region and to export. Indonesian President Joko Widodo and Malaysian Prime Minister Najib Razak announced an agreement to study the concept during Widodo’s inauguration as president.

Some analysts said that such a venture would be difficult and that Malaysia’s own efforts to create an indigenous car could be a cautionary tale. CCTV America’s Rian Maelzer reported this story from Kuala Lumpur.

Thailand’s auto industry is the undisputed leader in Southeast Asia, however Indonesia has also seen significant growth.

Big foreign automakers have set up assembly plants in Southeast Asia, but only Malaysia has a homegrown automaker, Proton.

Many were surprised at the Indonesia-Malaysian announcement.

“To my mind, the global automakers who already have products in the ASEAN automative space, I find it hard to imagine that they would find some viability in order to participate in this project. And from Indonesia’s perspective, which company would represent Indonesia’s interests given that they don’t have a homegrown car maker?” said Alexander Chia, an automobile analyst at RHB Research Institute.

Malaysia’s own efforts to build a national car brand over the past 30 years haven’t been a huge success. Proton no longer dominates the local market, and its exports have been negligible.

For much of its history, Proton has also been plagued by quality and reliability issues. Due to high tariffs and taxes aimed at protecting Proton, Malaysians have also ended up paying more to drive.

But the creation of Proton and an influx of foreign auto makers into the region has seen the growth of local component manufacturers.

“We’re not talking about a domestic car here for this project to be feasible. What I’m saying is that any car manufacturer will be able to decide on making an ASEAN car where the sourcing of components comes from ASEAN so there could be economies of scale. You don’t need to have a national car project for the ASEAN car concept,” said Aishah Ahmad, president of Malaysian Automotive Association.

Malaysia and Indonesia hope to develop regional car company

Southeast Asian countries hope to collaborate on the production of a vehicle for the region and to export. Indonesian President Joko Widodo and Malaysian Prime Minister Najib Razak announced an agreement to study the concept during Widodo’s inauguration as president.