KUCHING: The different green car policies across Asean create unique combinations of market push and pull, dramatically impacting demand patterns and opportunities for future growth, says Frost & Sullivan.
Dushyant Sinha, associate director, Automotive Practice, Asia Pacific at Frost & Sullivan said the three biggest automotive nations in Asean – Thailand, Malaysia and Indonesia – have all embarked on ‘low emission, high mileage’ vehicles.
However, he added that the policy approach and focus are significantly different. The Thai eco cars have stringent product and investment requirements, whereas Malaysian EEVs cover the widest possible range of segments and vehicles.
While Thailand provides a bouquet of incentives across income tax, excise duty and import duty, Malaysia has decided to customise its offerings based on how strategic the investment is.
He added that the different green car policies across Asean create unique combinations of market push and pull, dramatically impacting demand patterns and opportunities for future growth.
“Though there were preferential duty provisions for hybrids and EVs in the previous NAP (2009), Malaysia has only now put together a comprehensive policy document dealing with the entire value chain with a view to increasing investment, improve competitiveness and enhance productivity,” he added.
He said as far as automotive manufacturing is concerned, Malaysia has been a pioneer in the region, having embarked on its National Car programme way back in the early 1980s.
However, over the years, its domestic market has been plagued by structural weaknesses which have in a way ‘clipped its wings’, restraining growth and making it harder to compete with Thailand and Indonesia for fresh investment and develop the local industry further.
“These challenges form the backdrop of the NAP 2014 and are key to understanding Malaysian Government’s current focus on its version of Green Cars – the Energy Efficient Vehicles (EEVs),” he added.
Dushyant said that Malaysia’s efforts in the green car space have not been limited to the EEVs as outlined in NAP 2014. He added that for the past few years, there has been growth in the demand for Hybrids and EVs, supported by the 100 per cent import and excise duty exemption offered by the government on CBU vehicles.
He added that NAP 2014 now extends duty / excise free benefits only to locally assembled CKDs and no more to CBUs, which has resulted in a sudden spurt in local assembly of hybrids, with Honda taking the lead and Toyota following suit.
“Further benefits under the EEV Program should see a healthy growth in hybrid and EV sales over the next few years,” predicts Dushyant.