by Shaun Tan

Thirty-two years ago, Malaysia embarked on a grand project – to produce our very own national car – Proton.

The result was spectacular as we finally saw the birth of Proton Saga, our first national car, in 1985. We were extremely proud of this achievement.

Several protectionist measures were put in place to ensure that Proton had ample room to establish a strong footing in our automotive industry.

We had high hopes that Proton would be the start of something meaningful – a new, exciting and uplifting industry that would create lots of jobs, generate exports and, above all, receive global recognition. To an extent, some of these objectives were achieved.

Malaysia was once the largest passenger car market in Southeast Asia.

Given the vast potential of our domestic market, we could have simply been the automotive hub of Asia.

However, our priority back then was the national car project; and in order for us to make it work, some forms of protection had to be introduced.

Unfortunately, as a result of our auto policy, some global manufacturers shied away from investing in Malaysia.

It should be noted that Thailand only started to develop its automotive industry 10 years after us. However, it took a completely different route.

Thailand had a liberal auto policy. It relaxed a number of regulations in its automotive sector – including removing the requirement for foreign firms to enter into joint ventures with local partners. The corporate tax rate was also significantly reduced.

The result was a total transformation of Thailand’s automotive industry – from a low-end assembler of pick-ups to the “Detroit of the East”.

In 2015, despite very low local demand, it still managed to produce 1.9 million vehicles, of which 1.2 million were exported.

Thailand is now ranked in the top 10 in world car exports – the cars produced have the highest local content compared with its Southeast Asian neighbours and its export of component parts is bigger than all other Asean countries combined.

Thailand is, therefore, not only strong in exports of CBU, but also in the manufacturing and export of car components.

The sheer size of Thailand’s automotive industry is unmatched by many. It is currently home to 18 renowned car markers.

Additionally, Thailand has over 700 Tier 1 auto-parts suppliers and around 1,700 Tier 2 and 3 suppliers.

Out of the world’s top 100 auto-parts manufacturers, almost half have plants in Thailand. The industry has created more than 1.2 million employment opportunities. Exports of CBU and auto components are one of the top three exports of Thailand.

At the same time, the rise of Indonesia’s automotive industry is also something that we need to monitor.

More and more global car manufacturers, such as Toyota and General Motors, have been investing heavily in Indonesia to take advantage of its low per capita-car ownership, cheaper labour costs as well as a rapidly expanding middle class.

In 2015, Indonesia produced 1.1 million vehicles.

Meanwhile, at home, our automotive industry has plateaued, with a total industry volume (TIV) of 680,000 last year. We have been left behind and are now playing catch-up with our neighbours.

All this while, we have been proud to be the only Southeast Asian country with its national car.

However, this national pride comes at the expense of consumers who have been paying higher prices for automobiles.

Above all, Malaysia has missed the opportunity to establish itself as the regional automotive hub. Last year, the export value of our motor vehicles only stood at RM1.3 billion.

Having said that, what’s done cannot be undone. However, there are some important lessons which can be learnt from the past.

I believe that the painful reality faced by Proton, as expressed by the Minister of International Trade and Industry (MITI) Mustapa Mohamed should be read with an open mind.

If we were to put emotion aside, we will see that instead of running down Proton, the minister was actually issuing a wake-up call to the national car maker.

His message was simple – Proton cannot continue with the “business as usual” attitude, piling up losses.

Any further assistance from the government to this national car project, especially now that it is a private entity, must be made conditional upon Proton’s commitment to implement several painful measures.

But rather than being regarded as punitive, this advice should be viewed as something good for Proton and the country.

Hopefully, by implementing these measures, Proton will have the scale and be able to compete not only in Malaysia but also abroad.

We had high expectations when the first Proton was launched in 1985, but clearly, Proton has fallen far short of these expectations.

We hope the assistance that the company is expected to receive from the government will allow Proton and its vendors to recover from the current challenging period.

As Malaysians, we naturally want Proton to gain a bigger market share, increase its exports from 1,000 units currently to 50,000 units – and help make Malaysia a regional automotive hub.

· Shaun Tan is an FMT reader.

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