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Malaysia as launch pad into Asean

Malaysia as launch pad into Asean

15 Aug 2023

Geely can leverage good relationship with govt via Proton connection, say experts

Zhejiang Geely Holding Group Co Ltd’s planned multi-billion ringgit expansion in Malaysia, at the expense of Thailand, is a precursor to the group growing its footprint in Asean, said industry specialists.

They said the Chinese carmaker’s focus on Malaysia was an apt decision, given its established ties with the government via Proton Holdings Bhd.

Prime Minister Datuk Seri Anwar Ibrahim had revealed last month that Geely would kick off investments amounting to US$10 billion to turn Tanjung Malim, Perak into the region’s largest auto city.

It was previously reported that Geely was supposed to enter the Thai electric vehicle (EV) market but a local publication, Headlight Mag, claimed Geely had since axed the plans and was shifting its focus to Malaysia.

The publication stated that Geely was previously set to invest 10 billion baht in Thailand.

Independent automotive analyst Shamsul Yunos told the New Straits Times that Proton had always planned for Malaysia to become a manufacturing hub for Geely.

“However, the regional automotive industry, although open under the Asean Free Trade Area pact, is still quite country-centric and companies tend to focus their investment according to the requirements of the country they are in.

“Geely has developed a good relationship with the Malaysian government through Proton and it makes sense that it would explore further investments in the country.”

Shamsul said EVs were expected to become a significant segment of the automotive industry from 2025.

He noted that the investment into a new engine assembly plant and body assembly line in Tanjung Malim had given Proton more capacity to assemble Geely sourced products, such as the X50, X70 and X90.

“Although there is no currentconcrete announcement about local assembly of EV models, this is widely considered to be inevitable as the government seems to have opened the EV floodgates with total import duty and excise duty exemptions on these vehicles.

“But Proton and Perodua (Perusahaan Otomobil Kedua Sdn Bhd), as the two dominant automotive brands in Malaysia, will stand to lose the most if they are unprepared when the EV market takes off. Therefore, it only makes sense that they will also invest in local EV capacity.”

Industry specialist Hezeri Samsuri said Geely’s investment in Malaysia might be due to the better incentives offered when it signed up for the Automotive High-Technology Valley programme in Tanjung Malim.

“Apart from that, by rebadging Geely’s products as Proton in Malaysia,the carmaker is assured of a big market to help sustain its Asean project,” he said.

Hezeri added that the assembly of Geely’s EVs would also depend on the market.

“If there is a market for EV, I’am sure Proton will be used to assemble them. There is no harm in rebadging Geely products because with only the domestic market to please, that is the best solution economically,” he said.

Source: NST