KUALA LUMPUR (THE STAR/ASIA NEWS NETWORK, REUTERS) - The Malaysian government is reviewing the national automotive policy, which may include imposing conditions on the import of foreign vehicles.
Prime Minister Mahathir Mohamad said in Parliament on Monday (July 30) that while the government agrees with the practice of free trade, other countries worldwide impose conditions for their own markets.
He cited the example of European emission standards, which define acceptable limits for exhaust emissions of new vehicles.
He said: "But here, any cars produced, even those made out of Milo tins can enter the Malaysian market, so it is very open.
"Any car producer can enter our markets - that is the problem we are facing.
"As such we are looking into imposing certain conditions to disallow cars from (arbitrarily) entering local markets."
This will allow brands like Proton to capture the local market, said Dr Mahathir, answering a question from Datuk Seri Dr Wee Ka Siong, who asked for elaboration on the government's plan on a third national car project.
“All the countries which produce motor vehicles have got restrictions, either on standards or because of taxes... so we need to protect our infant industry,” Dr Mahathir added at a press conference at the Parliament lobby.
“We may think about the standards (to impose). We also may have to consider certain weaknesses that we have, which should be protected,” the Prime Minister said, without elaborating.
Dr Mahathir said the national automotive policy would also be reviewed to ensure that local national car manufacturers like Proton and Perodua remain competitive.
He also said that the auto industry is vital for a country's growth and that a new national car project would help boost Malaysia's engineering capabilities.
In June, Dr Mahathir said Malaysia should have a third national car, a suggestion which was met with some criticism from both politicians and the people.
Besides Proton, the other Malaysian automakers are Perodua and Naza. Honda Motor Co, Toyota and Nissan sell both imported and locally assembled units in Malaysia.
Perodua is the domestic market leader, with about 40 per cent share in 2017, according to data from the Malaysian Automotive Association.
Japan’s Honda is the top-selling foreign brand in Malaysia, with about 21 per cent market share last year, the data shows.
Proton was founded in 1983 in an industrialisation push during Dr Mahathir’s previous tenure as prime minister. Its domestic market share peaked at 74 per cent a decade later as drivers took advantage of cheap loans as the government encouraged Malaysians to buy home-grown products. But lower-standard cars, limited after-sales service and competition from foreign automakers saw its domestic market share drop, to around 14 per cent in 2017, according to data from the automotive association.
Proton received a boost last year, when Chinese automaker Zhejiang Geely Holding Group Co Ltd bought a 49.9 per cent stake in the Malaysian car company. The deal marked Geely’s first push into South-east Asia.