Malaysia to offer incentives for energy efficient vehicles image

Potentially benefiting Honda and Nissan, who have operations there, Malaysia will issue licenses and incentives for manufacturers to make small, energy efficient cars in Southeast Asia’s former auto hub.

Malaysia was overtaken as Southeast Asia’s automotive hub in the early 2000s by Thailand, which has followed a more open policy toward foreign carmakers setting up factories and selling cars domestically. In contrast, Malaysia has focused on developing domestic carmakers Proton and Perusahaan Otomobil Kedua Sdn (Perodua).

“We hope this National Automotive Policy (NAP) 2014 can enable us to become the energy efficient vehicle hub in ASEAN in the future,” International Trade and Industry Minister Mustapa Mohamed told reporters at a news conference on Monday. “We hope to raise total production volume to 1.25 million vehicles by 2020 from some 0.57 million vehicles,” he said.

Malaysia will selectively seek foreign investments that bring advanced technology and offer customized incentives to attract companies, according to M. Madani Sahari, chief executive officer of the Malaysia Automotive Institute, a unit of the trade ministry. Under the previous policy, the licenses only allowed for the manufacture of vehicles that had engines 1.8 liters or bigger, he said.

The drive to attract global automakers also comes at a time when neighbor Thailand is mired in political protests aimed at ousting Prime Minister Yingluck Shinawatra’s government. Thailand’s unrest may hurt new investments as investors consider other countries such as Indonesia and Vietnam, Kyoichi Tanada, president of Toyota’s Thai unit, told reporters in Bangkok today.

Via Reuters, Bloomberg