by Rajpal Abeynayake
Why are Perodua and Proton the preferred cars in Malaysia? It is a rich country and here are the comparisons. Malaysia’s GDP per capita is US $ 12,000 in contrast to ours which stands at US $ 4,500. But yet, 60 percent of cars used in that country are made locally.
In a rich country, why don’t people prefer imported cars? Costs, and protectionism are two of the key factors, and that’s for starters. Consumers have to pay far less for a car made in Malaysia, sometimes less than half of what they pay for imported Japanese or Chinese vehicles.
Sri Lanka has domestically manufactured cars, but their production has almost petered out to nothing. The Malaysian economy on the other hand, is growing and progressing at a phenomenal rate, and Malaysians prefer domestically manufactured automobiles.
The manufacturers partner with the Chinese and the Japanese. Our manufacturers did that too, but it was not anything akin to Proton collaborating with Geely, and Perodua collaborating with Daihatsu.
The fact is that the Malaysians had a national policy, that encouraged locally produced cars. It has been a long-standing policy plank of Malaysian Governments going back to the days of Prime Minister Mahathir Mohamad.
Sri Lanka’s locally produced cars never benefitted from State-aided protectionism and other policies. But the Malaysian psyche also plays a part here. The average Malaysian householder apparently considers the Perodua and Proton brands, younger brothers.
There is national pride reposed in the success of the Malaysian car industry. When Proton, a few years ago, began collaboration with Chinese manufacturer Geely, there was a national outcry because people felt the Malaysian car industry, which was a source of immense pride for the nation, had been sold out to foreign interests.
But when the Geely collaboration became a massive success, Malaysians did a major pivot, and said that the nation must use “big-tech” contributions from abroad to enhance the quality domestic car production.
AFFORDABLE
Driving Malaysia’s nationally produced cars denotes “you are one of us” in Malaysia, where this sense of national identity and pride is taken seriously. Social media in the country is full of memes about how the Mivy Perodua can do things that the sophisticated Hondas and Toyotas cannot do such as cross roads in raging floodwaters.
“Malaysia’s Own National Car” was a State driven enterprise and concept, and it was the result of Mahathir Mohamad and his vision to manufacture a domestically produced car that could compete with the Toyotas, Hondas, Mazdas or Suzukis. This is in contrast to the Sri Lankan car industry that had to weather the competition on its own, and negotiate the high-taxes that they were levied at every phase of the manufacturing process.
In Sri Lanka, with the Japanese car becoming the ultimate signifier of social status, the car industry never took off. In Malaysia, the Government made sure that every top Government official drove a Malaysian manufactured Perodua or a Proton.
Driving-local was made a patriotic duty in Malaysia. In Sri Lanka, this may have been difficult even if we tried, because the open economy beginning in 1977 was not tempered with any protectionism such as under Malaysian policy, which made certain that in Malaysia, if you wanted an affordable entry-level car, it had to be Malaysian.
Of course, other factors helped. Malaysia, thanks to oil-money and other ancillary factors, has a sophisticated national transportation system replete with subway and sky-train services. As a result, the roads are not under threat of being gridlocked if there were cheap cars made available for those who wanted entry-level vehicles, and could not afford having to spend an arm and a leg in pursuit of a dream imported vehicle.
But if Malaysians revel in national pride, did this sense of identity come because of the economic miracle, or did the economic miracle arrive due to national pride? Did the chicken come before the egg or vice versa?
The Malaysians undertook mega projects such as the Petronas Twin Towers and the Sepang F1 Circuit to validate national pride. However, Mahathir Mohamad and the national leadership was careful not to put the cart before the horse.
The landmark buildings and projects came after the domestic car industry was consolidated, and not the other way around. In Sri Lanka, the validation of economic progress was made a priority before the actual hard work of growth and consolidation took place. Previous Governments wanted to host Commonwealth Games for national pride without lifting a finger to boost local business or galvanise local production as they had done in Malaysia.
protectionism
It was a case of faux national pride, and heads overflowing with hubris. Why weren’t previous Governments unwilling to put in the hard yards for tangible growth? They were not willing to challenge the system sufficiently. It is true as stated earlier in this article, that we are not Malaysia — because we liberalised the economy early — without concomitant protectionism and related matters that were the key factors that fuelled the success of the automobile industry in Malaysia, for instance.
Therefore, we needed to start from a different place. We needed to rebuild the national psyche, and grant the necessary tax-incentives and other concessions for local production. Before we got to any of that, there was a war, and there was corruption and rampant economic-mismanagement.
This means now we need to rebuild the basics before we start on any project that is similar to Malaysia’s Proton and Perodua production initiatives.
Not that there was no corruption in Malaysia. But Malaysian corruption was tied to creating assets; while there were crony capitalism scandals that abounded, the local car manufacturing factories hummed nevertheless. In this country, the corrupt classes found that they could make more money out of importation than from manufacturing. They were the ultimate rent-seeking grifters.
Back in the day, there was the Upali Fiat. This was a car manufactured by the dashing, daring entrepreneur Upali Wijewardene, in collaboration with Fiat.
AMBITIOUS
Though the car was popular, again, there was no Mahatir style State push towards popularising the product, or offering incentives.
On the contrary, after the economy was liberalised, the Upali Fiat was swamped by the competition. It is a pity that no Sri Lankan leader thought of local production as a national imperative. The locals were supposed to compete with the Japanese on equal terms, and this was ludicrous.
Sri Lankan restaurateurs now have franchises abroad, to take Harpo’s pizza or the Ministry or Crab as examples. But big-ticket items such as cars needed State level push to succeed as in Malaysia, and it never came.
It may be too late now to do things the way Mahathir Mohamad did for Perodua and Proton. The economy needs to be aligned in a certain way for a project of this nature to be carried off. It is moot if an economy in recovery-mode could be as ambitious as to kick off a successful local car project, but maybe the experts can take an informed call on that.
It’s not so much the success of the Proton or Perodua that counted in Malaysia. It’s the ingenuity and the never-say-die attitude of the Malaysians and the Malaysian leadership.
We need to take a bow also to the much admired trait, Malaysian civic sense. Take a walk in Kuala Lumpur and you’d see that there are no foreign SUVs flitting past you.
There are hardly any SUVs on those streets, and this is remarkable for a country that is many times richer than Sri Lanka on any metric.
Perhaps our social structures don’t favour a class of entrepreneurs being encouraged and given tax-incentives by the State. That may be seen as corruption as well.
It wasn’t seen in those terms in Malaysia. If it was crony capitalism, it was crony capitalism to a positive end. If that was the yardstick, the Chaebols in South Korea could be called crony capitalist entities too.
Any community should be able to distinguish between cronyism and State-aided moves to incentivise. The Malaysians and Koreans were past masters at it. National pride required that there was an entrepreneur class, and a class that was able to engineer change, as opposed to class of businessmen who lorded it milling rice, gadding about conspicuously, and being middlemen in general.