It’s now 55 years since the first new vehicle assembly plant began operations in Malaysia. Volvo, together with its local partner, Federal Auto, were the first to introduce a locally-assembled model in 1967 after the government had announced what could be considered as the first national automotive policy in the mid-1960s.
The policy was intended to attract foreign carmakers to assemble some of their models locally and if they did so, they would be given incentives in the form of lower tax rates. This would enable them to sell at lower, more attractive prices compared to the models that were imported in completely built-up (CBU) form.
Swedish Motor Assemblies in Shah Alam, Selangor, was the first assembly plant to start operations, rolling out the Volvo 144 in 1967 as the first locally-assembled model. The plant is still in operation today assembling the latest Volvo modelsfor the region.
The locally-assembled vehicles were assembled from CKD (completely knocked-down) packs of parts sent from bigger factories in Europe, Japan and North America. To help develop a local automotive industry – an important catalyst for industrialization – the government also listed certain parts for mandatory deletion. Assemblers had to obtain them from local companies, many of which had also been set up in tandem with the new assembly plants.
The parts were items like windscreen glass, paint, tyres, wire harnesses, etc and if the assembler chose to still import them, then there would be a penalty for doing so. Over time, revisions in policies saw an emphasis on getting assemblers to source more parts locally and targets were set for local content.
From manual welding of parts by human workers in earlier years (above), many of the plants today have automated welding processes done by robots. Shown below is the X70 body welding line at the Proton factory in Tg. Malim.
The first batch of assembly plants were opened in two areas – Tampoi in Johor and Shah Alam in Selangor. By the 1980s, other locations were also chosen in Sarawak, Sabah and Pahang. Selangor saw the most activity in the early years and the Klang Valley remains a major automotive hub today. In the 1990s, new plants were opened in Kedah and Proton and Perodua also built plants outside the Klang Valley. Honda and Hino chose sites in Melaka and Negeri Sembilan, respectively.
Source: Malaysian Automotive AssociationPorsche Cayenne assembly at Inokom in Kulim, Kedah.Proton factory in Tg Malim, Perak
From tomorrow, Monday August 16, 2021, a greater degree of normalcy returns to Malaysia as the government will allow a number of activities to resume. Announcing this long-awaited development, the Prime Minister said that the vaccination programme has covered a significant portion of the population already and there was also a decline evident in the number of serious cases of COVID-19 infection, hence the removal of restrictions which have been in place since the beginning of June 2021.
Of interest to the auto industry which has been facing growing challenges as it could not carry out normal business is permission to operate showrooms and distribution centres again. Additionally, manufacturing activities are also allowed to resume, subject to certain conditions. This means that, for the auto industry, things can return to normal but with observance of the Standard Operating Procedures (SOPs) that we should all be familiar with by now.
Orders waiting to be fulfilled
While service centres have been allowed to operate so as to provide essential services to motorists, the closure of showrooms has prevented visits by customers who may be shopping for a new car, as well as deliveries of new vehicles. However, while the showrooms have been closed, many companies have been able to get bookings via their virtual showrooms online during the past two months. Now they will be rushing to complete those orders and deliver the new vehicles to customers.
However, stocks may not be readily available as the suspension of assembly operations for two months has meant that there have been no new vehicles coming from the plants. The government is allowing plants to resume their operations with workforce levels dependent on the percentage of workers already vaccinated. Those which have had more than 80% of their workers vaccinated are allowed to operate at full capacity, again with adherence to SOPs.
Assembly of vehicles will be allowed to resume and many companies will be rushing to meet the backlog of orders which has built up over the past two months.
Employees at Perodua awaiting their turn for vaccination at the carmaker’s headquarters complex.
MITI has helped to organize the vaccination programme for workers in the manufacturing sector with PIKAS (Program Imunisasi Industri COVID-19 Kerjasama Awam-Swasta), the public-private sector partnership immunisation program. This has been important, particularly in the Klang Valley where many of the country’s economic and industrial facilities are located.
Accessory shops, carwash centres reopen
For those who require accessories, such stores can now open for business while carwash centres are also allowed to operate again. And if your hair has gotten rather long, the good news is that barbers (as well as hairdressers and beauty palours) can also resume their business. Also include in the list are shops which sell electrical items, household items, jewelry furniture, sportswear and fashion and accessory centres.
MITI has also made it a condition that employees who work in their offices must take biweekly RTK antigen tests approved by the Health Ministry. While many companies will continue with the work-from-home routine to avoid the additional costs of such frequent testing, those in the manufacturing sector won’t be able to avoid the expenditure which can be quite substantial.
Only for those fully vaccinated
An important condition is that those who visit all these places must be already fully vaccinated. Full vaccination means 2 doses of Pfizer, AstraZeneca or Sinovac vaccines, with the second dose received no less than 14 days ago. For those who the Johnson & Johnson or CanSino vaccines, a single dose is considered enough but must have been received not less than 28 days ago. If you have not been vaccinated or do not meet these conditions, or you have symptoms of COVID-19 infection, DO NOT go to any public places and remain at home. If your symptoms are serious, seek medical help immediately.
Visitors to showrooms, service centres and all public places must still observe SOPs.
The number of new cases daily has been over 20,000 since August 11 but hopefully, as vaccination of a larger proportion of the population is completed, spread of infections can be reduced. According to a report, there are signs that the most serious cases are getting a bit less now although hospitals are still overloaded. Precautions are still necessary (don’t think vaccination makes you immune to the coronavirus) and facemasks should be used in public places with social distancing observed. If everyone can do their part and protect themselves and each other, perhaps we can return to the sort of life we have before 2020.
Local assembly of vehicles has been going on since the mid-1960s when the government offered incentives to carmakers to build factories and assemble their vehicles in Malaysia, or have the vehicles assembled under contract by other parties. The move was to put Malaysia on the path towards industrialisation and the auto industry was to serve as a catalyst, as it had in countries like Japan and Germany.
From a handful of factories in the late 1960s, mainly in Selangor and Johor, the network of assembly plants spread across the country to states like Pahang and Perak, and even East Malaysia. The number of factories has risen and fallen as market conditions have changed over the past 50 years, and there are 22 active plants today which collectively produced 380,940 units of passenger and commercial vehicles during the first 8 months of this year.
From the start, the government encouraged the sourcing of parts locally as well to develop the auto industry in a comprehensive way. Incentives were also given for using more local parts as well as for investments made to grow local assembly. However, where exports are concerned, Malaysia has not been as strong as Thailand and Indonesia and it is only in the past decade that a few carmakers have started to use Malaysian plants as regional production hubs for some models.
Aerial view of HICOM Automotive Manufacturers (Malaysia) in Pekan, Pahang. Brands such as Isuzu, Volkswagen, Mercedes-Benz, Mitsubishi FUSO and DEFTECH assemble their products at the complex.
