Transportation Technology – Automotive

The automotive sub-sector in Malaysia is a significant contributor to the economy, employing around 710,000 individuals and contributing nearly RM30 billion to the GDP. The country’s strategic position attracts global automotive manufacturers seeking to meet regional demand.

Despite challenges, such as the global microchip shortage, the sector remains resilient. In 2022, it produced 702,275 motor vehicles, with a surge of 45.8% compared to 2021. The breakdown includes 650,190 passenger vehicles and 52,085 commercial vehicles, and total vehicle sales reached 720,658 units, a 41.6% increase from the previous year.

The automotive Industry faced COVID-19 impacts, primarily due to the microchip shortage, essential for technologies like autonomous driving, EV, and in-car infotainment. This shortage affected vehicle production and emphasised the importance of microchips in modern vehicles, constituting a significant portion of their cost.

Amidst this challenge, MIDA encourages investments in the automotive sector, especially those linked to electronics and semiconductors, to ensure sustainable semiconductor production.

Malaysia’s commitment to sustainability aligns with the global ‘green agenda’. The 12MP underscores the automotive sub-sector’s role in driving sustainability and inclusivity. The National Automotive Policy (NAP) 2020 emphasises adopting Energy Efficient Vehicles (EEVs), including EV, with initiatives to strengthen the EEV and EV ecosystem and develop local technical expertise. As Malaysia strives for net-zero greenhouse gas emissions by 2050, the NAP sets the path for sustainable automotive growth.

Prospective investors are urged to consider entering Malaysia’s growing xEV (Energy Efficient Vehicles) ecosystem, supported by policies such as the Low Carbon Mobility Blueprint (LCMB) and the National Energy Policy (NEP). Malaysia, a Southeast Asian hub for E&E manufacturing, has the potential to lead in producing high-value E&E parts and components for EV and autonomous vehicles. The country is already involved in EV battery manufacturing and has a robust E&E ecosystem for semiconductor production.

Government policies support xEV manufacturing and adoption. Initiatives like LCMB target 15% xEV production by 2030 and up to 38% by 2040 under the NEP. The National Electric Vehicle Task Force (NEVTF), led by MITI, aims to holistically spearhead EV development, encourage Malaysia as a regional EV hub, and drive local EV adoption.

Budget 2022 introduced incentives to support EV manufacturers and ownership, including exemptions on import duties, excise duties, and sales tax for locally-assembled and imported EV. Other incentives cover road tax exemptions and income tax relief for EV charging facilities, encouraging critical EV component development.