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Malaysia Automotive Industry Overview 2015 Page 1 of 5

MALAYSIA AUTOMOTIVE INDUSTRY OVERVIEW 2015

Prepared for: -deleted-

Prepared by: ronshah (www.fiverr.com/ronshah) Email: -deleted- Date: 6 April 2015

Version: 1.1 Snapshot of Automotive Industry in Malaysia. Malaysias Automotive Industry rank third in ASEAN behind Indonesia and Thailand with a Total Industry Volume (TIV) of around 666,000 units for 2014. The TIV has grown steadily from 2011 onwards at a rate of 4% per annum. However, 2014 growth has been slow (at 1.6%) due to a slump in the economy and consumer spending. The Total Production Volume in Malaysia for 2014 is around 596,000. A drop of 0.8% from 2013. Automotive Manufacturing Plants Malaysia has a number of Automotive Manufacturers of local and foreign brands as well as manufacturing suppliers and spare parts eco-system that serve the local as well as the regional market. The main Automotive Manufacturing Plants in Malaysia are:

Proton: Plants in Tanjung Malim and Shah Alam in Selangor Production of all Proton Models Persona, Preve, Inspria, Exora, Saga, Satria Neo etc. Perodua: Plant in Rawang, Selangor Production of all its models: Myvi and Alza. Set for expansion. Also makes the Toyota Avanza.

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DRB Hicom Plant in Pekan, Pahang. Initially started as JV with Proton to manufacture some of Protons models. Now is used to assemble the brands under its umbrella, namely Mercedes-Benz, Volkswagen and Suzuki. Honda Plant in Alor Gajah, Melaka. This is the plant which rolls out the local favourite Honda City and Honda Civic while the CR-V SUV model is assembled there as well. It is one of the major assembly plants for Honda which will be involved in the manufacturing of the rebadged Honda Accord to replace the current fleet of Proton Perdanas for the government officials. It seems that Honda is planning to add the hybrid models from this plant as well. Tan Chong Motors (Nissan) Plants in Serendah and Segambut in Selangor The Serendah Plant assembles the current Nissan models like the Grand Livinas, Almera, Sylphy, Teana and others. The larger vehicles like the SUVs and the Serena are rolled out from the Plant in Segambut as well as the Subaru XV. Toyota Plant in Shah Alam, Selangor Toyotas assembling plant is in Shah Alam which is responsible for its range of Vios, Camry, Innova. Volvo Plant in Shah Alam, Selangor Volvos plant builds the S, V and XC models which are catered for the Thailand market as well. Naza Plant in Gurun, Kedah Naza group operates it plants in Gurun where it is in charge of rolling out the Kia and Peugeot badges. Inokom Plant in Kulim, Kedah Local automotive assembler Inokom rolls out the Hyundais, the Land Rovers, Mazdas and the BMWs through its Kulim plant. Other Brand are also rolling out/assembling their models in Malaysia such as Chevrolet, Ford, Mitsubishi and Audi.

Automotive Industry Eco-system.

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Malaysias Automotive Industry is matured and has good support and participation from the Government and Private Companies. Government Agencies like MITI - Ministry of International Trade and Industry (http://www.miti.gov.my) and MIDA - Malaysia Investment Development Authority (http://www.mida.gov.my) have spearhead and introduced several policies and incentives to to industry. The latest being the National Automotive Policy 2014. The Government has also setup agencies specifically for the Automotive Industry namely the MAI - Malaysia Automotive Institute (http://mai.org.my/v3/) which also involves participation from the private sectors. There are alos NGOs and trade bodies for the industry namely the MAA - Malaysia Automotive Association (http://www.maa.org.my) as well as the FMM - Federation of Malaysian Manufacturers (http://www.fmm.org.my). Under the FMM there is also The Malaysian Automotive Component Parts Manufacturers (MACPMA) who is the national association of manufacturers engaged in the production of automotive parts. The National Automotive Policy 2014 Malaysia has launched a new National Automotive Policy in 2014 (NAP 2104). The full transcript are with the attached documents. The NAP 2014 consists of 3 main directions and strategies. The 3 main directions are Investment, Technology and Engineering and Market Expansion while the 3 main strategies are Human Capital Development, Supply Chain Development and Safety, Security and Environment. Key snapshot of the information and policies are:

INVESTMENT: The Government targets for Malaysia to become the regional hub for Energy Efficient Vehicles (EEV) through strategic investments and adaptation of high technology for domestic market and to penetrate regional and global markets by 2020

TECHNOLOGY AND ENGINEERING: The thrust emphasizes the development of technology and engineering in key strategic sectors including: (i) Power train, transmission and related control systems; (ii) Dies set and Mould base; (iii) Aluminum and Other Non Ferrous Casting; (iv) Designengineeringandprototyping; (v) Vehicle, sub-system and component testing. (vi) Automotivegradesteel. (vii) Engineering Plastics

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Part of the policy and strategy is the provision of soft loans amounting to RM575 million for the period of 2014 till 2020 for pre-commercialization activities by domestic vendors that adopt and adapt to new technologies.

MARKET EXPANSION: organizing the Automotive Parts & Components International Market Expansion programme (APCIMEX)

SUPPLY CHAIN DEVELOPMENT: provision of Soft Loans amounting to RM756 million for the period of 2014 till 2020 for Tool, Dies and Mould manufacturers to develop new tooling.

Provision of Soft Loans amounting to RM295 million for the period of 2014 till 2020 for components and spares parts manufacturers to enhance their competitiveness through process improvement under activities such as automation, consolidation, joint venture, technical cooperation and others.

Amongst the financial assistance provided by the Government are the

Automotive Development Fund, Soft Loans for Automation and Modernisation, Industry Linkages Programme and Tool, Die and Mould (TDM) programme. Non-financial support includes various capacity building programmes such as MAJAICO (in full), Apprentice, Automotive Industrial Certification Engineering and Lean Production System.

Key Targets of NAP 2014

o Total Production Volume (TPV) of 1.35 million units of motor vehicles annually (2013 Forecast: 580,000 units) where 1.15 million units are EEV

o Total Industry Volume (TIV) of 1 million units for passenger vehicles annually (2013 Forecast: 652,210 units) and 100,000 units for commercial vehicles

o Motorcycles: Total Production Volume of 800,000 units of motorcycle annually (2013 Forecast: 430,000 units) where 650,000 units are EEV

o Automotive Components: Export value of more than RM10 Billion per year

o Development of Global Standard Vendors: (i) To upgrade 180 vendors to achieve level five vendor capability according to global definition; (ii) To upgrade 150 vendors to achieve level four vendor capability according to global definition; (iii) To upgrade 100 vendors to achieve level three vendor capability according to global definition

o Development of new industries for automotive and non- automotive supply chain as follows

(i) High precision and engineering industries; (ii) Design engineering and prototyping industries; (iii) Foundry and casting industries; (iv) Aluminum and Non Ferrous Casting industries;

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Malaysia Automotive Industry Overview 2015 Page 5 of 5

(v) Vehicle sub-system and component testing industries; (vi) Automotive grade steel industry; and (vii) Engineering Plastic industry

Automotive Manufacturing Suppliers The industry has a number of manufacturing suppliers that provides parts and services to local as well as regional manufacturers. A snapshot of the database from various sources is in the attached spreadsheet (Malaysia Automotive Industries Database.xlsx). I would also suggest to purchase the FMM Malaysian Industries Directory which provides a very comprehensive list of database for Malaysia Companies in the Manufactring Sector across all industries. You can view the softcopy here: http://goo.gl/6TlGpq It can be purchased online from http://www.fmm.org.my. Attached Information and Further Background Readings:

1) NATIONAL AUTOMOTIVE POLICY (NAP) 2014 (NAP_2014_policy.pdf) 2) Malaysia Automotive Industries Database.xlsx 3) MALAYSIA AUTOMOTIVE ASSOSCIATION MARKET REVIEW 2014

(Market_Review_2014.pdf) 4) MAA Newsletter February 2015 (Berita-MAA-Feb-2015.pdf)