KUALA LUMPUR (Reuters) - Malaysia may consider restrictions on foreign car imports to protect the country’s “infant industry”, Prime Minister Mahathir Mohamad said on Monday.
Southeast Asia’s third-largest economy had liberalized its automotive industry over the past decade, allowing for cheaper imports but at the expense of local automaker Proton which struggled to stay afloat as it faced increased competition.
“All the countries which produce motor vehicles have got restrictions, either on standards or because of taxes... so we need to protect our infant industry,” Mahathir said at a press conference at the parliament lobby.
“We may think about the standards (to impose). We also may have to consider certain weaknesses that we have, which should be protected,” the 93-year-old prime minister said, without elaborating.
Besides Proton, the other Malaysian automakers are Perodua and Naza. Honda Motor Co (7267.T), Toyota (7203.T) and Nissan (7201.T) sell both imported and locally assembled units in the Southeast Asian country.
Perodua is the domestic market leader, with about 40 percent share in 2017, according to data from the Malaysian Automotive Association. Japan’s Honda is the top-selling foreign brand in Malaysia, with about 21 percent market share last year, the data shows.
Proton was founded in 1983 in an industrialization push during Mahathir’s previous tenure as prime minister. Its domestic market share peaked at 74 percent a decade later as drivers took advantage of cheap loans as the government encouraged Malaysians to buy home-grown products.
But lower-standard cars, limited after-sales service and competition from foreign automakers saw its domestic market share drop, to around 14 percent in 2017, according to data from the automotive association.
Proton received a boost last year, when Chinese automaker Zhejiang Geely Holding Group Co Ltd [GEELY.UL] bought a 49.9 percent stake in the Malaysian car company. The deal marked Geely’s first push into Southeast Asia.
Earlier, during question time, Mahathir said developed countries have used conditions such as Euro 5 emission standards and certain tax structures to work around free trade arrangements and block Malaysian car exports.
“But we are very open. Every car that is produced, even if it is made using Milo tins, can enter Malaysia,” Mahathir said, referring to a beverage popular in the country.
“That is why we need to study the possibility of certain conditions, so that foreign cars cannot enter so easily into our country and also give Proton and local cars the chance to dominate the local market.”
Reporting by Joseph Sipalan; Editing by Muralikumar Anantharaman