Auto part makers to benefit from TPPA

CYBERJAYA: The Malaysia Automotive Institute (MAI) foresees tremendous opportunities for part and component manufacturers with the implementation of the Trans-Pacific Partnership Agreement (TPPA).
Speaking to reporters after a talk on the impact of TPPA on the automotive industry here yesterday, MAI CEO Datuk Madani Sahari said Malaysia exports RM10 billion worth of parts and components annually and could perform better after the TPPA implementation.
“It has been an increasing trend as it only used to be RM5 billion before. We just have to do more and believe in ourselves...Why can’t we double that export value in five years,” he added.
Madani highlighted that Malaysia automotive players could tap into other TPPA countries under the rule of origin provisions.
“For vehicles that exported within TPPA countries, they must meet the rules of origin of 55%, meaning the parts and components must be coming from TPPA countries.
“Malaysian suppliers not only have the opportunities to supply to OEMs (original equipment manufacturers) within the country, but also to TPPA countries, especially the top four countries that produce cars, namely the US, Japan, Canada and Mexico,” he said.
Given the preferential tariff rates, Madani believes Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) will also benefit from market access under TPPA.
“But provided they must be competitive in terms of their base cost, that’s why the strategic direction of NAP (National Automotive Policy) is about enhancing competition,” he said.
While Thailand has been the automotive hub for the Asean region for some time, Madani is of the view that it’s not too late for Malaysia to establish its footprint in the automotive industry through the energy efficient vehicle (EEV) segment.
He explained that there are still many OEMs that haven’t expanded into the Asean market, whose models are more towards fuel efficiency and lower carbon emission.
With the liberalisation of the automotive industry through NAP, Madani said future car prices will be largely driven by market forces.
According to him, average car prices for 400 variants have dropped by 12.7% from 2013 till the first quarter of 2016.
Meanwhile, Ministry of lnternational Trade and Industry (Miti) deputy secretary-general of strategy and monitoring Datuk J. Jayasiri said he couldn’t assure that car prices will come down post-TPPA implementation.
“By right, if no changes in excise tax and when import duty comes down, you should see a 30% drop in car prices provided there is no exchange rate fluctuation,” he noted.