“Burden or catalyst?” By Dr Fong Chan Onn

Tuesday, May 3, 2011
Ministers Car Without Airbags !
By Syed Akbar Ali

There is a well thought article by economist Tan Sri Dr Fong Chan Onn in yesterday’s Star about APs and our car industry. You can (and should) read the full article here :

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It is titled “Burden or catalyst?” By Dr Fong Chan Onn

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I have truncated the article here but it is an injustice because the piece is so full of facts. My comments follow.

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AP system a burden to Malaysians
Hinders automobile industry from ..global trends.
(AP) for imported cars at 10% of car sales, 4% for franchise holders.
In..1970s automotive industry seen as forerunner ..to industrialise.
licensing procedures, high tariffs ..enabled Saga to capture 80% of market share.
consumers penalised if they buy Non National Car models
Honda City (1500cc) at RM85,480 is 41% higher than Proton Gen2 (1600cc).
Perodua Myvi in Britain for RM36,792 - home price RM46,400.
no written policy on the AP system... hybrid or alternative-fuel cars require APs
currently 76 Open APs and 37 Franchise AP holders. ..issued 51,559 in 2004, decreasing to 27,838 in 2007. 2008 it spiked to 40,886 down to 20,000 in 2009.
.. no transparent guidelines on selection of (AP) holders
Datuk Seri Nazir Razak ..reiterated the AP system .. should be abolished immediately.
Government pledged in 2006.. to phase out AP system by Dec 31, 2010.
lobbying by AP holders .. extended deadlines to 2015 for Open APs and 2020 for franchise APs.
Under prolonged protection, car manufacturers neither incentives nor urgency to innovate ..
25 years.. Proton still manufacturing conventional cars, replication of other manufacturers'.
.. not up to world benchmarks in ..quality and safety.. Proton cars used by Cabinet Ministers not even equipped with air bags.
trend worldwide ..electric, hybrid or alternative-fuel vehicles.
Brazil leading nation flexible-fuel vehicles. US world leader in hybrid cars .. natural-gas cars, Pakistan is a world leader.. Thailand and China .. manufacturing hybrid cars.
Malaysia, totally out of sync. . hybrid cars not being assembled or manufactured locally, Malaysian consumers have to get AP first before they can buy such cars.
to support alternative-fuel cars, we need ..fuel (e.g. natural gas). For electric or hybrid cars, we need ..convenient charging of the batteries on highways
..not specified strategies to develop these supporting infrastructures.
..protective AP system is a burden to Malaysian car owners, it hinders automobile industry's connection with the global trends
the Government must take bold steps to reform the automotive industry .. same way electrical and electronics (E&E) sector has since 1970s.
..Malaysian consumers have been paying far too much to sustain the livelihood of (AP holders)
..to wait until 2015 and 2020 is a huge burden, particularly for youths with first jobs who are seeking to buy their first cars.
. global excess manufacturing capacity of 20 million units of conventional cars, we should also be less ambitious with our automotive industry.
..huge expenditure on R&D, many countries are far ahead in new automotive trends.
..we cannot afford giving our car manufacturers another 20 years protection.

Tan Sri Dr Fong Chan Onn was Prof of Applied Economics and Dean of Faculty of Economics and Administration, Universiti Malaya. He served in the Government as Deputy Minister of Education (1990-1999) and as Minister of Human Resources (1999-2008). Currently, he is the MP for Alor Gajah.

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I agree completely with Tan Sri Dr Fong Chan Onn's analysis of the car industry. We spearheaded the car industry to quick start our industrialization process. In the 80s this was a good move. But not anymore. Technology has changed.

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In the 19th century, steam engines spearheaded the rapid industrialization of Britain, including the huge steam ship building industry. Then steam gave way to the internal combustion engine. Steam ships died. Then airplanes were invented and the ship building industry died almost completely in Britain. Technology changed. Shipbuilding is no more a spearhead for industrialization in Britain.

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Shipbuilding has moved to China, Korea and other places. The same with the car industry. Building a car with an engine, four tyres and a steering wheel is now rustbucket technology.

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Here are some technologies that are not produced in a car factory : electric battery technology, fuel cell technology, hybrid technology, alternative fuels, new metal alloys, new materials, miniature electronics, on board computers, low intensity radar technology have nothing to do with a car factory. Yet these are the technologies that are already going into the manufacture of cars. The technology has changed.

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These are the technologies that are going to create jobs, going to create industrialization and wealth in the future. We do not have these technologies. We are not focused on these new technologies.

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Instead we are using up very limited resources to prolong our “black and white tv” type thinking – still producing conventional ‘museum piece’ cars with an engine, four tyres and steering wheel.The technology has changed but we are insisting on sticking our ground. This is making us poor. Kita jadi miskin dulu.

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Here is another danger : as the technology is changing rapidly, more conventional car manufacturers around the world are going to have even more unsold cars. They will suffer excess capacity. So they will be dumping their old cars and old manufacturing technologies.

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An example of an old car technology that has been recently got rid of by the Japanese is the 9THGENERATION Mitsubishi Lancer (about 10 years old in Japan). Now this 9TH GENERATION Mitsubishi Lancer has been rebadged and reborn as the Proton Inspira in Malaysia.

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Then we prolong all these barriers (APs, duties etc) to inflate the prices of higher quality and higher technology imported cars.

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We thus deprive our middle income people of better safety, better fuel consumption and better quality cars. (Forget about the poor people ok, tak payah sebut pun nasib depa. Biaq pi kat golongan berpendapatan rendah. Siapa suruh hangpa jadi miskin?)

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Then we continue to impoverish all Malaysians by insisting that Malaysians pay higher for all cars, including the local cars. And the irony is the Perodua Myvi is sold for a much cheaper price in the UK - RM9,608 less in the UK. In Malaysia RM 46,400 versus RM 36,792 in UK. Cium lagi b*ntot Mat Salleh !

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And now the APs will be extended until 2015 and 2020. Malaysians are being asked to suffer higher car prices so that the cronies who have the monopoly on the APs can continue to enjoy a fake lifestyle as millionaires and billionaires.

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What I see as more devastating is that these AP cronies (and the entire car industry) have become vegetables. Now they cannot even breathe without the crutches. Our policies have made perfectly able and capable people become vegetables. If not sooner then definitely a little after, this entire AP, duties and tariff barrier regime will collapse. The car industry will collapse too. Then what will happen to all these people?

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Bila dah tak boleh cari makan, they will revolt. All the videos of the Arab rebellion – don’t delete them yet.

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p.s. Here are some afterthoughts


1. If the Ministers' cars dont have airbags, how then do we contain their hot air?

2. If the Minister's car has a serious accident, where do we bury the survivors? At sea, with Bin Ladin?

3. If the Minister is already an old airbag, then do they still need new airbags?

4. If the Minister carries a handbag, can "she" put air in it?

5. What happens if the Ministers' air their bags? Should we cover our noses? Should TV3 be ready?

It must be the pulut and rendang this morning. I best go burn it off.
Posted by Syed Akbar Ali at 11:12:00 AM