Malaysia’s Automotive Industry in a Flux?

 

Malaysia’s automotive industry in now in a state of flux after it was reported the ministry of investment, trade and industry (MITI) imposed new requirements for BYD’s CKD local assembly plans, which the Chinese conglomerate did not agree to. According to The Edge, the government set a RM200,000 floor price as well as a target of 80% of its production volume to be made up of exports. 

This has caused progress on the Tanjong Malim plant, due to be operational in the second half of the year, to ground to a halt. At the centre of the dispute are, of course, Proton and Perodua, the protection of which was the reason behind these new requirements.

 

Source: https://en.wikipedia.org

MITI’s purported RM200,000 floor price for CKD EVs is poor policy at best. Every BYD model is priced below that mark; even the most expensive Sealion 7 Performance AWD slides under it with RM200 to spare. Only the company’s premium Denza marque has cars that cost more than that. 

MITI could argue that the floor price for CKD models is significantly below that of CBU EVs, which is now RM250,000. But if you’re BYD, why would you invest millions, if not billions of ringgit on an assembly plant. It only gets worse when you consider that other brands like Tesla and Chery seem to get preferential treatment. Not only has Tesla been able to continue selling cars at 2025 prices, but it has even managed to introduce a new version of the Model 3, the Standard, at under RM150,000. 

Will the RM200,000 floor price also applies to brands like Xpeng, or does this only apply to BYD? And will Zeekr which, like Proton, Geely owns a stake in – and is set to utilise Proton’s own Tanjong Malim plant – get special treatment? 

And what about companies that have already begun their CKD operations? Companies like Leapmotor and MG, the latter of which has only just opened the order books for the locally-assembled S5 SUV, complete with estimated pricing (obviously well below RM200,000). What about Wuling, which has already started deliveries of the TQ Wuling Bingo? 

We then come to the other requirement – that BYD has to export as much as 80% of its Malaysian production overseas. Last year, BYD sold 14,407 vehicles in Malaysia, and if it wants to achieve a reasonable return on its plant investment, it will no doubt want to sell more. But even with a conservative target of 15,000 annual sales, it will then have to export 60,000 units to other markets. Even Proton struggles to export a tenth of that figure, while BMW sent 11,400 vehicles from its plant in Kulim, Kedah to markets such as Thailand and the Philippines last year. 

The spectre of protectionism has loomed over the Malaysian automotive industry ever since the idea of a national carmaker was mooted in the 1980s. Still, the government has long sought to distance itself from such accusations. 

The new requirements were put in place to safeguard Proton and Perodua – claimed to include over 50% of local content in their cars – as well as the jobs of some 700,000 people within the wider local automotive ecosystem. But that argument falls on its face upon the slightest scrutiny. It may be true that most of Proton’s combustion-engined cars have over 50% local content, but the same cannot be said of its eMas EVs and plug-in hybrids. Just one model out of the three – the eMas 7 – is currently assembled in Malaysia, and even this is classified as a semi knocked down (SKD) product, not a completely knocked down (CKD) one. That means the car is simply assembled in Malaysia without much in the way in the local content, and right now, Proton’s much-vaunted EV plant does not even have a paint station. 

Proton and Geely’s advantage are compounded by the fact that their eMas EV models are all able to be sold at under RM100,000. This includes the eMas 5, which is still fully imported and benefits from a special CKD bridging programme, allowing Proton to sell thousands of CBU units at CKD-level pricing, instead of the mere hundreds that other companies are limited to.

Plus, Proton is free from any real expectations of exports. While the eMas 7 is technically exported to small markets such as Nepal and Mauritius, Proton currently exports cars that are made in China, not Malaysia (although this will soon change). Also, Proton is shut out from major markets such as Thailand and Indonesia, because Geely operates its own plants there – contrary to past promises. 

As for Perodua, it promises that its new QV-E will have 50% of local content early this year, and up to 70% a full four years from now, in 2030. That’s better than most Protons, but it’s still a long way off from the company’s usual standard of around 95%. 

Proton and Perodua do not operate in a vacuum. They are part of a massive global ecosystem currently undergoing a seismic shift, and even experienced players are finding it tough out there. Killing off their rivals at home may improve sales in the short term, but it only seeks to make them less competitive outside of Malaysia. Why do companies require 35-40 years of protection? Because they are incompetent? Because they exploit the market as a duopoly? Because they are pure capitalist? 

Those 700,000 workers that MITI wants to protect, they all benefit from a vibrant, thriving economy that feeds off of investment both local and foreign. 

Perhaps most important is the perception that Malaysia is portraying to the world with these new requirements. It shows that the government is willing to forgo foreign investment in service of its own agenda, even at a huge cost to itself. It also shows that this country may not be such a reliable partner. 

Reference:

BYD CKD EV saga – where does the auto industry stand with MITI’s RM200k floor price, export criteria? Jonathan Lee, March 30, 2026, paultan.org