PETALING JAYA: BIMB Securities Research believes regardless of how the negotiations between the Investment, Trade and Industry Ministry (Miti) and Chinese automaker BYD Co Ltd play out on the latter’s proposed investment in Tanjung Malim, the broader completely knocked down (CKD) wave of investments in Malaysia is structurally intact.
The research house noted that another China-based automaker, Chery Automobile Co Ltd, is building a major new smart auto industrial park, while SAIC Motor Malaysia Sdn Bhd is already assembling CKD units for the MG brand in Melaka, and Xpeng Group has announced a formal partnership with EP Manufacturing Bhd
to launch local electric vehicle (EV) production.
“The real investment question is no longer whether Malaysia will become an EV manufacturing cluster – it almost certainly will. The key question is who benefits fastest, and who benefits most durably, as the industry reshapes around export-oriented, higher-value CKD assembly,” BIMB Research stated in a sector report.
BYD had proposed to set up a CKD facility at the KLK Tech Park in Tanjung Malim, Perak, with plans to use Malaysia not only for local sales, but as a strategic regional production and export hub for its next-generation vehicles.
BIMB Research assumed the EV giant wanted to leverage on Malaysia’s membership in the Asean Free Trade Area and 17 other free trade agreements to sell its brands with minimal or zero tariffs, after meeting sufficient local content requirements, amid rising trade and tariff barriers in markets such as Europe and North America.
Miti – under its interim manufacturing licence issued in September last year to BYD – wanted the company to adopt an export-oriented model, with a significant portion of production (up to 80%) targeted at international markets to support trade balance and deeper integration into global supply chains.
It also required BYD to ensure its cars sold in the market must carry a minimum on-the-road price of RM100,000.
The research house speculated this was done to protect the local auto sector, which employs some 700,000 people directly and indirectly and has local producers like Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Proton Holdings Bhd that control some 50% of market share.
“The 80% export mandate ensures BYD treats Malaysia as a manufacturing platform rather than a dumping ground for its cheapest models and is framed as a strategic export-promotion condition rather than a punitive measure.
“Likewise, the RM100,000 floor price prevents low-cost models such as the Dolphin Mini or Seagull from entering direct price competition with Perodua’s entire line-up.This protects the local automotive industry so that it does not lose market share, allowing established players with good-quality products to continue thriving.”
It said the BYD-Miti standoff is a live negotiation, not a concluded policy.
The BYD project in Tanjung Malim, if it materialises, would be an additional upside rather than the main driver.
The EV infrastructure players will benefit regardless of which carmaker succeeds first.
BIMB Research maintained its “neutral” stand on the automotive sector and retained a “hold” recommendation on Sime Darby Bhd with a target price (TP) of RM2.46 a share and MBM Resources Bhd with a TP of RM5.28 a share.
The research house also has a “sell” call on Bermaz Auto Bhd with a TP of 68 sen per share.
