Riding on RM3.5 trillion Asia-Pacific EV market

KUALA LUMPUR: The Automotive High Tech Valley (AHTV) in Tanjung Malim will play a major role in assisting Malaysia to plug in fully into the Asia-Pacific electric vehicle (EV) market, estimated to be worth US$778bil (RM3.5 trillion) by 2027, says Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.

Earlier in April, automotive industry corporation between DRB-Hicom Bhd and Chinese automobile manufacturer Zhejiang Geely Holding Group Co, Ltd (Geely) had inked a heads of agreement to develop the AHTV as Malaysia’s future hub for Next Generation Vehicles (NxGV).

Both companies are shareholders of national carmaker Proton Holdings Bhd.

Tengku Zafrul, who was keynote speaker at the Global Investors & Vendors Convention here yesterday, said the local automotive sector will fit into the New Industrial Master Plan (NIMP) 2030, which is set to be launched by Prime Minister Datuk Seri Anwar Ibrahim next month.

“The grand vision of the AHTV is to transform Tanjung Malim into a hub where automotive industry professionals can live and work to develop new technologies that will be used in NxGVs such as EVs and other energy-efficient vehicles (EEVs),” he said.

Additionally, he pointed out the AHTV was the only automotive cluster in Malaysia to be officially recognised as the next EV and EEV hub, with the government offering incentive packages, including tax exemptions for land development, manufacturing of parts and components, as well as for the establishment of research centres and educational institutions.

Tengku Zafrul added: “We see the AHTV as the key driver for automotive investors who are considering securing their regional or global supply chains. It will also be a major player in growing the automotive sector’s contribution to Malaysia’s gross domestic product (GDP).”

He revealed the sector had brought in RM64.5bil to the country’s GDP in 2022, and his ministry is looking to increase the industry’s GDP contribution to RM104bil by 2030.

This is coupled with the National Automotive Policy also targeting to export RM4.3bil worth of completely built-up vehicles by 2030, he mentioned, before recognising the automotive industry had also embarked on multiple initiatives to develop the country’s small-medium enterprises (SMEs) in its vendor ecosystem, besides the 700,000 jobs it currently provides to Malaysians.

The convention, which was organised by Proton, saw over 200 participants from among government agency officials and management representatives from DRB-Hicom, Geely and Proton, as well as local and international vendors, including 42 automotive suppliers from China.

In his address, Tengku Zafrul acknowledged China’s position as Malaysia’s largest trading partner for 14 consecutive years, reporting that trade between the two countries was valued at RM487.1bil last year, with the Middle Kingdom also having had RM55.4bil worth of investments approved in the same period.

With the Asia-Pacific EV market being valued at US$230bil (RM1 trillion) in 2021, and is estimated to grow at a 19% compounded annual rate to touch US$778bil (RM3.5 trillion) in 2027, Zafrul said in line with Malaysia’s environmental, social and governance (ESG) and Net Zero agenda, the country is pushing for higher EV adoption.

“We are aiming to have 15% total industry volume (TIV) contributed by electrified vehicles (EV and hybrid) by 2030, and 38% of TIV by 2040.

“One key performance indicator in this project is to have 10,000 charging stations throughout the nation by 2025, which would alleviate the range anxiety of customers, and encourage more ownership of these vehicles,” he emphasised.

Replying to a query as to what factors would make Malaysia more competitive relative to its neighbours, Zafrul said the country’s strategic location in the middle of the world’s busiest trade routes has placed its ports in fifth place globally in terms of traffic in twenty-foot equivalent units (TEU), just behind China, the US, Singapore and Singapore and South Korea.

“The abundance of English-speaking and skilled talent in Malaysia, in addition to a strong rule of law which provides regulatory and legal certainty to investors, as well as good quality digital and physical infrastructure are some factors that make our value proposition better,” he said.

In the meantime, he is hoping for more spillover effects from the development of the AHTV into SMEs in the country, adding that the government is always looking at incentivising sectors that would be able to provide high value jobs to Malaysians as the country continues its effort to become a high-income economy.

Separately, Zafrul said Malaysian companies involved in raw commodity exports stand to benefit from the inclusion of the United Kingdom into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as its 12th member, which will lead to the elimination of tariffs on Malaysia’s exports.

He also commented that at present, the government has not discussed phasing out the Approved Permit system.

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