SERENDAH: The government is revamping the New Customised Incentive Mechanism (NCM) for the automotive industry, intending to implement it next year after completing consultations with the relevant ministries, agencies, and industry players.
Minister of Investment, Trade and Industry Datuk Seri Johari Abdul Ghani said the overhaul is being undertaken to develop a new approach and strategy better suited to current needs after the government took into account the development of Malaysia's decades-old automotive industry.
He said the government is currently engaging with relevant ministries and agencies, as well as foreign automotive companies that have invested in Malaysia for many years, to ensure that the new mechanism is easier to implement and capable of achieving its intended objectives.
"We are in the process of revamping the NCM. We need to engage with the ministries, agencies, and investors who have been in our country for the past 30 to 40 years. If possible, we are targeting implementation next year," he told reporters after launching the MCE Auto Hub here today.
Johari said the government continues to welcome investments from foreign automotive companies wishing to establish assembly plants in Malaysia. However, they are also expected to commit to developing the local automotive ecosystem by involving Malaysian vendors and suppliers.
He added that the government does not expect all vehicle components to be manufactured domestically. Instead, local content can be increased gradually in line with the capabilities of the industry.
The minister said the government's main objective is to ensure that more non-critical components are produced by local companies, thereby strengthening the domestic supply chain and creating more opportunities for local vendors.
According to Johari, the government has also taken into account weaknesses in the implementation of previous policies, in which some companies imported components from overseas, appointed local firms as distributors, assembled the imported components locally, and subsequently classified them as locally made products.
He said such practices do not meet the original objective of developing the domestic automotive industry, and therefore the incentive mechanism needs to be reviewed and refined.
Johari noted that imports of vehicles and automotive components rose to RM33.8 billion in 2025 from RM13 billion in 2020, highlighting the need to reassess the country's automotive industry development strategy.
He said the government wants to ensure that every industry is properly managed so that local small and medium-sized enterprises (SMEs) also benefit from the country's economic growth.
"We must manage every industry so that our SMEs can be protected. GDP has grown by more than 68 per cent over the past 10 years, but SMEs have grown by only two per cent. If SME growth is only two per cent over 10 years, how are SMEs supposed to survive?" he asked.
He said the government needs foreign investors, but the investments they bring must complement the existing ecosystem rather than undermine local companies.
"(We) need investors, but (we) need investors that come to complement what we have in this country; we must co-exist, not kill one another," he added.
Johari said Malaysia has an advantage as an automotive manufacturing hub for the ASEAN market of more than 700 million people. As such, global automotive companies should view the country as a regional production base rather than merely a domestic sales market.
He also described MCE as an example of a successful local company that has developed high-value automotive technology with the potential to penetrate export markets, in line with the government's aspiration to nurture more high-technology local companies. - Bernama
