Mahathir's new car brand to be Asean effort to weather trade war

Kuala Lumpur

MALAYSIA'S third push to build a national car brand may see it sourcing parts from South-east Asian neighbours, as the region forges stronger ties to weather out the United States-China trade tensions.

Prime Minister Mahathir Mohamad's dream of developing a homegrown automotive brand has courted interest from neighbouring countries, Minister of International Trade and Industry Darell Leiking said in an interview with Bloomberg in Kuala Lumpur.

"What Mahathir meant was that he needed something where Malaysians can get together, Asean can get together, to supply components of this vehicle and make it into a national car in Asean, not only in Malaysia," said Mr Leiking. "It's ambitious but I think that it's necessary now, more so when you want to create an economic bloc like Asean." As a trade war between the US and China deepens, the 10-country Association of Southeast Asian Nations, or Asean, has benefited from its fallout as companies shift orders and move production bases to the region. It was the top destination among the one-third of more than 430 American companies in China that considered moving operations elsewhere, according to a survey by AmCham China and AmCham Shanghai.

Toyota Motor Corp, Tata Motors Ltd and Ford Motor Co already operate assembly plants in Thailand, the biggest car manufacturer in South-east Asia. The country seeks to ramp up production to 3.5 million units in 2020, an 80 per cent increase from 2016, and exports the vehicles to Australia, Japan, as well as Malaysia and Indonesia. Malaysia stands to gain as a trans-shipment point, capitalising on its location by the Straits of Malacca.

Finance Minister Lim Guan Eng said the trade war will be positive for the country over the next year or so, especially in electronics and steel as the world's two biggest economies seek alternatives for supplies.

The government is gathering views from the industry on developing the new car brand, and will let the project be driven and funded by the private sector, Mr Leiking said. The government will assist in licensing and facilitation, he added.

Dr Mahathir revived his vision of a homegrown car brand just a month into his premiership. He started automaker Proton Holdings Bhd in the 1980s during his previous tenure, but the brand was later privatised and almost half the stake sold to China's Zhejiang Geely Holding Group Co. A second effort was made in the 1990s with Perusahaan Otomobil Kedua Sendirian Bhd, also known as Perodua.

This time, however, the new car will compete in a market beyond Malaysia, Mr Leiking said. "Proton has already achieved what they've wanted and they're there," he noted. "So this is not competing with Proton, this is not competing even with Perodua, this is not competing with anyone. This is a separate thing altogether."

A successful carmaker could help boost the nation's exports, which relies on commodities such as crude and palm oil, as well as electronics.

Shipments declined 0.3 per cent in August from a year ago, falling far short of economist estimates for an 8 per cent increase. That narrowed the trade surplus to RM1.6 billion (S$532 million), from RM8.3 billion in July. BLOOMBERG