Malaysia..Gbe Presentation 2
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Transcript of Malaysia..Gbe Presentation 2
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Malaysia: Protectionism of the
automobile industry
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Malaysian Industrial Development Authority
MALAYSIA IS AMONG THE:
Top 3 growth centres in emerging marketsDeutsche Bank Research 2005
Top 10 countries as a choice for business locationTNSGlobal Reputation Survey 2005
Top 3 countries for Offshore Location CentresA.T.Kearney Annual GlobalServices Location Index, 2005
Top 5 countries for energy, finance and logistics inglobal shared services and outsourcing (SSO)
Frost & Sullivan -SSOHub PotentialAnalysis 2005
23rd most competitive economy in the worldIMD World Competitiveness Yearbook, 2006
Kuala Lumpur is the cheapest city in the world to live inUBSBank ofSwitzerland, 2006
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Background
1960 - Malaysian Automotive industry begins
1984 - PROTON, national car maker is
established.
1985 - Proton SAGA is launched.
1992 - Second National car maker PERODUA is
established (Primary focus on compact cars).
Perodua
Proton saga
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Market share: The entry of proton into the local automobile market
resulted in massive structural changes in theeconomy
Sale and market share of Japanese cars which haddominated the market prior to the launch of Protonwere reduced as Malaysians bought their nationalcar.
The success stories of Proton and Perodua were
positively influenced by high tariffs imposed by thegovernment
As a consequence, national cars market shareamounted more than 60% of total sales(2009figure)
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ANALYSIS Analyzing the effects of Malaysias
protectionist policy involving the
automobile policy
AFTA (ASEAN Free Trade Area)
ASEAN leadership
WTO
Domestic consumers
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Implications :
ASEAN leadership
Malaysia as a founding nation needs to
lead via example, otherwise it will lose
credibility.
WTO membership requires all member
states to dismantle all trade barriers Domestic market
Limited choice and poor quality
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The Malaysian government has taken a number
of precautions to compete with imported cars:
National cars receive 50% reduction in
excise tax
Import duty: 140-300% on passenger cars
Import duty: 5-30% on automotive parts and
components
10% sales tax on all assessed vehicles. Import Quota on completely built up units
(CBU)
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Delay implementation of ASEAN free
trade area
Malaysia is a part of the Association of theSouth East Nations (ASEAN)
4thASEAN summit, AFTA was initiated withthe objective of creating a free trade area in
ASEAN by 2010.
Malaysia promised to remove all protection
related to the national car industry by 2003. In 2003, Malaysia asked for extension till
2005.
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The National Automotive policy
(NAP)
Given the significant challenges facing
the automotive industry, in particular
globalization, economic liberalizationand increasing competition the
Malaysian government launched the
National Automotive Policy (NAP) inMarch 2009.
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Highlights of the revised NAP
Removal of import duty on importedvehicles and components.
Reduction of excise tax on importedautomobiles.
Removal of excise tax rebates on
national automobiles. Government sell of shares in national
car producers (i.e. Proton)
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Government Influence on
Trade
Economic rationale
Fighting unemployment
Protecting the infant industry
Developing an industrial base
Economic relationships with other
countries
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Government Influence on
Trade
Non economic rationale
Maintaining essential industries
Preventing shipments to unfriendly
countries
Maintaining and extending spheres of
influence Preserving national identity
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Government Influence on
Trade Tools of Governmental intervention
Tariffs, Subsidies, Quotas
Tactics for dealing with importcompetition
Convincing decision makers
Involving the industry and stakeholders Preparing for changes in the competitive
environment
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Core Issues
Malaysian Governments policy on
protectionism
Increased international pressure on
free trade by WTO and ASEAN
The uncertain future of national cars
Malaysian consumer is disadvantaged
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Recent Developments
Review of revised NAP with effect 1,
Jan 2010
Strategic partner still in lieu for Proton
Increased consumer
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Future Recommendations and
Possible Solutions
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Conclusion