Malaysia's Auto Policy Can Attract Major Players, Says Thai Co...

BANGKOK, Oct 26 (Bernama) -- Malaysia will be able to attract major vehicle manufacturers around the globe to set up plants in the country if it offers favourable tax incentives apart from the recently-announced National Automotive Policy (NAP), a leading Thai part manufacturer said Wednesday.

Yeap Swee Chuan, president and chief executive officer of Thailand's largest parts manufacturer, Aapico Hitech Plc said the policy was timely and it would help Malaysia's drive towards becoming a major automotive player in the region.

"But it takes time and depends on how the Malaysian Government implements it. It's possible to achieve its target but lots of hard work will be needed," the Malaysian-born businessman told Bernama here.

Yeap said although many automotive players had set up their regional plants in Thailand which was aiming to become the "Detroit of Asia", there were still other big manufacturers looking for opportunities in other regions.

Even without the NAP, manufacturers like Honda had set up its plant in Melaka three years ago and more companies are likely to come now, said Yeap, who started his venture in Thailand as a Ford distributor 20 years ago.

But the Malaysia-Thai Chamber of Commerce president said Malaysia must be willing to offer attractive tax incentives like what Thailand did to attract major players like Mitsubishi, Nissan, Honda, Audi, Toyota, Isuzu and General Motors.

"Thailand is giving tax free incentives up to eight years for certain industries. Maybe Malaysia can do better," he said.

Yeap said the potentials were there as some of the leading manufacturers had yet to set up their production plants in the region, among them Alfa Romeo, Kia, Renault, Hyundai and Peugeot.

"Some like Kia have plants owned by their car distributors, not their own. With the new policy and perhaps better incentives, the manufacturers will come," he added.

Yeap also said that although the NAP looked likely to pose challenges to Thailand which was exporting vehicles and parts to almost 130 countries, it could also benefit Thai part manufacturers.

"If there are more vehicles being manufactured in Malaysia, Thailand can expect more demand for its parts," said Yeap, whose company supplies parts to almost every vehicles produced in Thailand as well as overseas, including Malaysia.

In the first seven months of this year, Thailand's auto parts and accessories' export to Malaysia was worth US$350.46 million compared to US$360.29 million for the whole of 2004.

There are about 14 automobile assembly plants with a total production capacity of 1.2 million vehicles per year in Thailand, five motorcycle assembly plants with capacity of 2.5 million units annually and auto parts industry with 709 factories.

According to the NAP announced by the Finance Ministry last week, there are four passenger and commercial vehicle manufacturers in Malaysia, including Proton and Perodua, besides one motorcycle manufacturer, the Motosikal dan Enjin Nasional Sdn Bhd (MODENAS).

In addition, there are nine motor vehicle assemblers and nine motorcycle assemblers.

All these companies are supported by 343 motor vehicle and 100 motorcycle components and parts manufacturers.

In 2004, Malaysia was the largest producer of passenger cars in ASEAN, accounting for 24.4 percent of total ASEAN production and for commercial vehicles, it was the third largest producer in ASEAN, accounting for 11.0 percent of total ASEAN production.

Under the new structure for all passenger cars, import duties on Asean CBU vehicles will be reduced to 15 percent from 20 percent and that on non- Asean CBUs to 30 percent from 50 percent.

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