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Automobile part makers to benefit from TPPA CYBERJAYA: The Malaysia Automotive Institute (MAI) predicts remarkable chances for part and component producers with the application of the Trans-Pacific Collaboration Contract (TPPA). Speaking to press reporters after a talk on the effect of TPPA on the automotive industry here yesterday, MAI CEO Datuk Madani Sahari stated Malaysia exports RM10 billion worth of parts and components annually and might perform better after the TPPA execution. “It has been an increasing pattern as it just utilized to be RM5 billion before. We just need to do more and believe in ourselves … Why cannot we double that export value in five years,” he included. Madani highlighted that Malaysia automobile gamers could tap into other TPPA countries under the rule of origin provisions. “For automobiles that exported within TPPA countries, they should fulfill the rules of origin of 55%, meaning the parts and parts should be coming from TPPA nations. “Malaysian providers not just have the opportunities to provide to OEMs (initial devices manufacturers) within the nation, but likewise to TPPA countries, specifically the top 4 countries that produce automobiles, particularly the US, Japan, Canada and Mexico,” he said. Provided the preferential tariff rates, Madani thinks Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) will also take advantage of market access under TPPA. “However supplied they need to be competitive in terms of their base cost, that’s why the tactical direction of NAP (National Automotive Policy) has to do with boosting competition,” he said. While Thailand has been the automotive hub for the Asean region for some time, Madani is of the view that it’s not too late for Malaysia to develop its footprint in the automotive industry through the energy efficient vehicle (EEV) segment. He explained that there are still many OEMs that haven’t broadened into the Asean market, whose models are more towards fuel efficiency and lower carbon emission. With the liberalisation of the automotive market through NAP, Madani stated future automobile prices will be mainly driven by market forces. According to him, average vehicle costs for 400 variants have actually stopped by 12.7% from 2013 till the very first quarter of 2016. On the other hand, Ministry of lnternational Trade and Market (Miti) deputy secretary-general of method and monitoring Datuk J. Jayasiri said he could not assure that vehicle rates will come down post-TPPA application. “By right, if no changes in excise tax when import task boils down, you should see a 30% drop in automobile prices provided there is no exchange rate fluctuation,” he kept in mind.
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