Economies Of Scale If Global Car Makers Set Up In Malaysia

October 29, 2009 15:15 PM

Economies Of Scale If Global Car Makers Set Up In Malaysia

By: Ramjit

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By Arul Rajoo

BANGKOK, Oct 29 (Bernama) -- Car manufacturers in Malaysia, including Proton, can reap the economy of scale in terms of autoparts made there if global car makers set up their plants in the country, a leading autoparts maker in Thailand said Thursday.

Yeap Swee Chuan, President and Chief Executive Officer of the Malaysian-owned Aapico Hitech PCL, said the cost of producing various parts like fuel tanks, brake lines and jigs could be reduced with more demand.

"Proton will definitely benefit from more manufacturers setting up their plants in Malaysia.

"For instance, with one equipment, we need to produce at least 250,000 units of one part, or the machine is not viable," he said.

Yeap, who spoke to Bernama here today, said with more contracts in hand, original equipment manufacturers (OEM) can produce more parts, citing Thailand, considered as the "Detroit of the East" and the world's 14th largest auto manufacturer with 1.4 million vehicles produced in 2008.

"Even if one big manufacturer enters Malaysia, it will bring enormous benefit and open up the industry. If they can produce 100,000 cars, there will be T2 (Tier2) to supply autoparts to this assembly plant," he said.

There are about 400,000 workers in the automotive sector in Thailand.

Commenting on the reviewed National Automotive Policy (NAP) announced by Minister of International Trade and Industry Datuk Mustapa Mohamed Wednesday, Yeap said it was a brilliant move and even praised the minister for admitting that Thai auto industry had surpassed Malaysia.

"It's a good and sincere move to compare with the neighbour...if not we can't progress any where. Once we know where we are, we can can move to where we want," he said.

Yeap, whose company is one of the top OEM in Thailand with clients like Nissan, Honda, Toyota and Isuzu, said despite the fact that almost all the major global car makers having established their presence here, Malaysia can still lure some of the global players.

"Global companies always move around and they will look at what governments around the world are offering. Some companies had closed operations in New Zealand, Australia, the Philippines and Malaysia to move to China because of cheap labour," he said.

He said Malaysia's move to allow foreign manufacturers to hold 100 percent equity in firms which produce luxury vehicles with an engine capacity of more than 1,800 cc, was timely and would help Malaysia to attract the big players.

These companies, he said, emphasized more on the return of their investment, apart from considering the political stability of the country concerned.

Yeap, however, said what was more important now was for the Malaysian government to follow through the NAP with effective mechanism.

Mustapa had announced 18 new policies and measures covering licensing, duties, incentives, technology and environment, safety and standards and APs introduced under the NAP review.

-- BERNAMA

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