afternoon highlight (21/06/12/110/584) All eyes on NAP

All eyes on NAP

PETALING JAYA: Indications are that some aspects of the revised National Automotive Policy (NAP) will soon make its appearance, ending the long wait for liberalisation of the sector.
One government source said phases of the NAP were expected to be announced soon and would include a liberalisation of the segment below 1,800cc, making it more attractive for new players to enter the marketplace.
“Something will be announced soon. It's logical that for Malaysia to be a liberalised market, we need to open it up. That will create competition for parameters to move forward,” the source said.
The source added that the announcement would touch on matters that the Government wanted to implement “as soon as possible”.

When asked to comment on this, Minister of International Trade and Industry (Miti) Datuk Seri Mustapa Mohamed said his ministry, which is reviewing the NAP, was in the final stages of streamlining the incentives for energy-efficient vehicles (EEVs).
“We are almost finalising the incentive regime for EEVs. We are going to encourage the development and production of (EEVs) in Malaysia,” Mustapa said after the launch of Miti Report 2011 yesterday.
He added that the Government was talking to “a few Japanese automakers” to manufacture EEVs locally. According to reports, the Government has put in place strategies under the upcoming revised NAP to turn Malaysia into a regional hub for EEVs.
Mustapa also said that the Government was in the final stage of setting up the Malaysian Automotive Council, which would oversee the overall implementation of NAP.
“The council will oversee the auto industry, taking into account regional and global developments. It will play a strategic role in charting the future of the industry,” he said.
Previous news reports have quoted Mustapa as saying that one of the key areas being looked into by the Government is the opening up of the 1,800cc segment.
On this, Mustapa said: “We are looking into it (liberalising the segment) but there is nothing definite yet.”
The changes brought about by the revised NAP in 2009 was set out to liberalise the local automotive industry but since then, many industry observers felt that the policies have not created “sufficient pull” for foreign players.
One example is the policy where foreign firms can apply for manufacturing licenses to hold 100% shares in firms to produce vehicles with engine capacity of larger than 1,800cc and costing more than RM150,000.
Many feel that this is more of an impediment as foreign firms are practically barred from competing within the category of vehicles below 1,800cc a segment dominated by national car companies Proton and Perodua.
The segment below 1,800cc is also the largest sub-segment in Malaysia. This sub-segment constitutes about 90% of the total passenger vehicles market. Both the national and non-national players as well as markets in other Asean countries have been focusing on this segment (1800cc and below).
“The revised NAP should be clear, unlike the current one which is entirely grey. Foreign investors are confused,” said one industry observer, adding that foreign players looking to come into Malaysia might see this as a deterrent and head elsewhere places that offer better incentives.
An analyst pointed out that a liberalisation of the segment below 1,800cc meant increased competition and the introduction of new technologies as well as technical expertise to the domestic industry.
“New players coming in means added competition and more (product) choices at competitive prices, which means existing players (within the segment below 1,800cc) would need to stay on their toes and remain competitive,” she said.
She also said the introduction of new players into the market would be a boost to the local total industry volume (TIV). According to the Malaysian Automotive Association (MAA), total vehicle sales in May rose 26% to 58,229 units from 46,045 a year earlier, due to the introduction of new models and the normalisation of the vehicle supply chain of local car companies. Year-to-date May, vehicle sales was however lower at 244,620 units from 255,413 a year earlier.
On the outlook for June, MAA said vehicle sales was expected to be maintained at May level.
AmResearch, in its report yesterday, pointed out that May TIV marked the strongest growth seen so far this year both on year-on-year and month-on-month basis. “More importantly, May numbers also marked the first significant year-on-year rebound following five months of contraction since December 2011,” it said, adding that it was raising its TIV projection this year to 607,625 units (from 605,981 previously).
“We see room for further upgrades, depending on the strength of response to upcoming new model launches.” OSK Research, meanwhile, said while year-to-date TIV fell short of its 1.1% growth forecast, the research house still sees encouraging volume for the ensuing months driven by new vehicle launches.
“Not just from the top five but also other marques, in addition to the boost to volume in the entry-level segment, which we expect to pick up pace ahead of the upcoming festive season in the third quarter.
“All in all, the growth numbers will perk up due to the low base effect caused by last year's earthquake in Japan and the devastating floods in Thailand

Source: The Star
 Date: 21 June 2012
afternoon highlight (21/06/12/110/584)