Automotive industry in Malaysia
The automotive industry in Malaysia consists of 27 vehicle producers and over 640 component manufacturers. The Malaysian automotive industry is the third largest in Southeast Asia, and the 23rd largest in the world, with an annual production output of over 500,000 vehicles. The automotive industry contributes 4% or RM 40 billion to Malaysia's GDP, and employs a workforce of over 700,000 throughout a nationwide ecosystem.
The automotive industry in Malaysia traces its origins bacbk to the British colonial era. Ford Malaya became the first automobile assembly plant in Southeast Asia upon its establishment in Singapore in 1926. The automotive industry in post-independence Malaysia was established in 1967 to spur national industrialisation. The government offered initiatives to encourage the local assembly of vehicles and manufacturing of automobile components. In 1983, the government became directly involved in the automotive industry through the establishment of national car company Proton, followed by Perodua in 1993. Since the 2000s, the government had sought to liberalise the domestic automotive industry through free-trade agreements, privatisation and harmonisation of UN regulations.
The Malaysian automotive industry is Southeast Asia's sole pioneer of indigenous car companies, namely Proton and Perodua. In 2002, Proton helped Malaysia become the 11th country in the world with the capability to fully design, engineer and manufacture cars from the ground up. The Malaysian automotive industry also hosts several domestic-foreign joint venture companies, which assemble a large variety of vehicles from imported complete knock down kits.
The automotive industry in Malaysia primarily serves domestic demand, and only several thousand complete built up vehicles are exported annually. Exports of Malaysian made parts and components have nonetheless grown significantly in the last decade, contributing over RM 11 billion to Malaysia's GDP in 2016.
History
1780s–1950s
Malaysia during the British colonial era
Malaysia had been a British colony prior to its independence in the mid-19th century. West Malaysia was originally known as Malaya, and was governed separately from the would-be East Malaysian states of North Borneo and Sarawak. British colonisation of Malaya began in the late 18th century, and would encompass all of Malaya by the early 20th century. British rule in Malaya was divided between the Straits Settlements, the Federated Malay States and the Unfederated Malay States.During the colonial era, the Malayan economy was largely dependent on natural rubber and tin commodity exports. Industrialisation in British Malaya was not emphasised due to the profitability and high demand for rubber and tin. Malaya was strategically located along major ocean trade routes originating from East Asia and the Indian Ocean. Trade and commerce made British Malaya the most prosperous of all the European colonies in Southeast Asia.
The boom of rubber and tin exports had funded the growth of the Malayan road network over the decades. In 1911, there were over 4,000 miles of road in the Straits Settlements and the Federated Malay States. By 1923, it was possible to drive from Singapore to Bangkok on the Malayan north-south highway. Car ownership in Malaya had also increased ten-fold between 1910 and 1925.
Western cars dominate
The earliest automobiles arrived in Malaya during the 1890s and 1900s. Western car companies from America, the British Empire and Continental Europe had established a strong foothold in Malaya by the 1910s. The automobile market in colonial Malaya was relatively small, and catered mainly to British expatriates and wealthy ethnic Chinese entrepreneurs in major cities such as Singapore, Penang, Kuala Lumpur and Ipoh.In the early 20th century, American car companies collectively held the largest share of the Malayan car market. The British administration made attempts to restrict the advancement of American cars in Malaya, as a means of protecting British business interests. American cars were subject to tariffs and periodical bans, while cars from Britain were allowed to be sold duty-free in Malaya. However, American cars were often cheaper despite the costly taxes, and some companies found ways to circumvent the tax restrictions altogether.
The reign of Ford Malaya
The automobile industry in British Malaya was pioneered by the Ford Motor Company. Ford sought to capitalise on existing Anglo-American ties to expand globally, and Malaya was recognised for its strategic potential as a regional export base. Ford's entry into Malaya was spearheaded by Ford Canada, an affiliate of Ford USA. Ford Canada was set up in 1904 to capitalise on its British colony status, which allowed it to export automobiles duty-free to the various Empire colonies. Ford Canada appointed Dodge & Seymour to handle sales in Asia, and the first Ford models were shipped into Malaya in 1909. Malayan Ford sales grew in the following years, and Ford Canada decided to take direct control of its Malayan operations in 1926.In November 1926, the Ford Motor Company of Malaya Ltd. was incorporated in Singapore, and the company set up a small garage in a two-storey shop house on Anson Road. The garage carried out wheel-fitting and touching up for Model T units between 1926 and 1929. In January 1930, Ford Malaya moved operations to a warehouse in Prince Edward Road, where they carried out more sophisticated semi-knock down assembly. The new plant assembled SKD kits which were imported from Ford Canada and Ford England. Ford's market share in British Malaya peaked at 80% in 1939.
In April 1941, Ford Malaya moved operations to their all-new assembly plant in Bukit Timah, Singapore. The 1941 Ford Malaya factory became the first fully-fledged automobile assembly plant in Southeast Asia. Complete-knock down body assembly commenced in October 1941. However, World War II broke out in Malaya just two months later, and Singapore fell to the invading Japanese Army in February 1942. The Ford Malaya plant became the venue where British General Percival formally surrendered to General Yamashita of Japan. During the occupation of Singapore, the Japanese used the Ford plant to assemble Nissan and Toyota trucks for the military. Following Japan's surrender in 1945, the British army reacquired the plant and returned it to Ford Malaya in 1946, and production recommenced in April 1947.
Between 1926 and 1965, Ford Malaya stood as the sole automobile assembler in Singapore. Throughout its history, Ford Malaya would export its produce to British Malaya, British Borneo, Siam, the Dutch East Indies, Burma, India and Pakistan. Ford Malaya had imported SKD and CKD kits from the United States, Canada, Britain, Germany and Australia respectively. Ford Malaya produced over 150,000 automobiles over the decades, and finally closed down in 1980. The government of Singapore would later gazette the old Ford factory as a national monument in February 2006.
Attempts by General Motors
In the mid-1920s, General Motors of America had also expressed intentions to establish a regional hub in British Malaya. In mid-1926, GM approached the British administration in Singapore and requested permission to build an assembly plant in the affluent Tanjong Katong area. However, the local British authorities denied GM's application on grounds that it would 'spoil the amenities of the Katong residential area'. In light of the situation, GM decided to set up their regional assembly plant in the Dutch East Indies instead.Java 01/1927 eresources.nlb.gov.sg">In late 1926, a General Motors delegation approached the Dutch administration in Java. GM was granted permission to set up an assembly plant near Batavia, and in February 1927, N.V. General Motors Java Handel Maatschappij was established. The all-new GM Java plant, the colony's first automobile assembly plant, commenced production in May 1927. GM Java exported its produce throughout the Dutch East Indies, British Malaya, French Indochina and Siam.
On the onset of World War II, the Dutch East Indies fell to the invading Japanese Army in March 1942. The GM Java plant was taken over by Toyota, and was used to assemble trucks for the military. After the Japanese surrender in 1945, the Dutch failed to regain control of their colony, and the Indonesian War of Independence broke out and dragged on for a further four years.
In July 1947, General Motors revived plans for an assembly plant in Singapore. The new plant would assemble cars and trucks from components imported from GM's subsidiaries in Canada and Britain. Operations would begin in early 1948, and the plant would serve all of GM Java's former export markets, in addition to parts of southern China. However, in June 1948, the local British administration banned imports of American cars into Malaya and Singapore, and GM was once again forced out of Singapore. Following the 1950 Indonesian independence, GM's plant in Java was restructured, and became the Djakarta Branch of the GM Overseas Corporation. However, in April 1956, GM's shareholders liquidated the Djakarta Branch, and General Motors sold their Indonesian plant to P.N. Gaja Motors.