2007 Fiscal Year Final Research Report Summary
AFTA, FTA and Automobile Industry in Malaysia-Liberalization of Trade and Enhancing Competitiveness
| Project/Area Number |
18402018
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| Research Category |
Grant-in-Aid for Scientific Research (B)
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| Allocation Type | Single-year Grants |
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| Section | 海外学術 |
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| Research Field |
Applied economics
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| Research Institution | Otaru University of Commerce |
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Principal Investigator |
ANAZAWA Makoto Otaru University of Commerce, Faculty of Commerce, Professor (40192984)
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| Co-Investigator(Kenkyū-buntansha) |
YOSHINO Fumio Takushoku University, Institute of World Studies, Professor (90220706)
SHIZU Kazushi Kyushu University, Graduate School of Economics, Professor (80271625)
TAMAI Kenichi Graduate School of Commerce, 商学研究科, Associate Professor (80271740)
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| Project Period (FY) |
2006 – 2007
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| Keywords | AFTA / FTA / Malaysia / Automobile / Competitiveness / Economic policy |
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| Research Abstract |
The automobile industry in Malaysia has been heavily protected since mid 1980s when the government started the national car project. Bumiputera Policy in which special rights and opportunities were given to Malay people intensified the protection for the national car producers and their local vendors. However, AFTA in ASEAN and FTA with Japan forced the automobile industry to fight in the regional and world market.
In our project, it was attempted to analyze the competitiveness of the local firms under the free trade. The main findings are as follows below.
The government began to reduce the tariff protection level of the imported cars gradually. On the other hand, the government introduced excise duties to compensate for the decreasing revenues. The National Automotive Policy announced in 2006 showed the future directions for the industry and the government decided to introduce new fiscal incentives based on the production amounts and local contents ratio.
Under the changing situation, P
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roton, the first national car producer, is trying to develop new and cheap models without concluding strategic alliances with big foreign firms. Perodua, the second national producer, found the way to survive by being the member of Toyota group.
The local parts suppliers can be divided into two categories. One is the rather big and competitive firms which succeeded to diversify their customers. Some firms have already started overseas production and some concluded technical assistance agreement with foreign firms. The other comprises small and medium scale firms which depend too much on the business with Proton and Perodua. These smaller firms will face harder competition under the free trade.
These observations show it is not an easy task to enhance the competitiveness of the import substituting manufacturing sector in developing countries. It is required for the government to provide appropriate supporting policies. Local firms should introduce the strategies to enhance their management resources for instance by concluding new alliances with foreign firms to be more competitive. Less
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