Over the last 20 years, the automotive industry in Malaysia has been heavily
protected as a result of high tariff and non tariff barriers imposed by the
government. Protectionism has enabled the development of national motor
vehicle manufacturers as well as national automotive component suppliers. The
barriers to trade effectively shielded national companies from foreign competition.
Not surprising that this has led to dominance of the automotive industry by
national companies, however without strong foreign competitors, the efficiency of
national auto manufacturers and suppliers remains low. This low efficiency and
the challenges and threats related to global competition have led the government
to maintain its protectionist regimes into the 21st century. On the other hand,
pressure from sources promoting globalization and free-trade such as AFTA and
the WTO are mounting and the government may soon be forced to make some
changes to its current regime.
This thesis is meant to provide the reader with a broad picture of the dynamic
Malaysian automotive industry’s current situation, the forces that influence it, and
especially, the future situation that should prevail and its effect on the dimensions
of the industry. We developed two models in this research in order to assist us
through our task. Those models were named the protected industry model and the
anticipating the future of an industry (AFI) model.
According to our findings, we judge that the government will timidly begin reduce
its grasp over the automotive industry by reducing the level of non-tariffs barriers
especially those related to components manufacturers. This will allow the national
car manufacturers to enjoy a high level of protection still for some years while
keeping foreign competition aside for additional years. Components
manufacturers will however have to cope with the situation and make their way
through a more challenging and competitive market. This could ultimately be
done wi...
