PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - Work between Malaysia and Indonesia to jointly produce the first Asean vehicle will only start when component vendors in both countries are strong and reliable, said the Malaysia Automotive Institute (MAI).

"For the project to take off, both countries need to strengthen their vendors," said MAI chief executive officer Datuk Madani Sahari.

"That is the fundamental part of this industry."

He said 80 per cent of the components to produce the vehicle would have to be supplied by vendors in both countries.

It was reported that Malaysia and Indonesia had signed a Memorandum of Agreement (MoA) to begin cooperation on the improvement of the automotive manufacturing workforce and supply chains with the aim of learning to fully produce components in the region and establish a new brand.

The MoA, signed in Jakarta on Friday, charges both the MAI and the Indonesian Automotive Institute with running the venture.

The signing was the result of bilateral talks between Prime Minister Tun Dr Mahathir Mohamad and Indonesian President Joko Widodo in Bogor in June where both leaders agreed for the joint venture project to be revived.

The project to manufacture cars between the two countries was first proposed in 2015.

Madani said Malaysia had 641 vendors with over 100 of them capable of producing global standard Tier 1 components.

Statistics show that Indonesia has more than 1,000 vendors, mostly in Tier 2 and 3.