Today the Australia’s car industry is practically dead. The planned exit by Toyota from the country has hit the final nail in the coffin of Australia’s car industry. Prior to their demise, Ford and Holden (Australia’s car manufacturer) have also stopped from making cars. This is despite more than USD 1.2 billion financial aid from the Australia’s government.
For those who understands very well the impact of automotive industry towards country’s economy will surely know thousands of jobs would be affected. Beyond that, USD21 billion will be wiped out from the economy and most likely the country will go into recession.
Well, what happened and what can we learn?
Due to the strong Australian dollar and high costs of manufacturing, the Australian products are not competitive even in Australia. Together with Free Trade Agreement (FTA), Australia is one of the most open automotive markets in the world and this further aggravate the situation as foreign goods (cars) flood the Australian market without Australian goods penetrating foreign markets. Ultimately, this leads to outflow of funds, contributing to deficits.
Malaysia is no less different than Australia. We too have our own national car in a highly competitive automotive industry. Attempts to denigrate Malaysia’s national car, Proton reflect how shallow some Malaysians are from what the Proton represented and what was its real objective.
Firstly, it must be pointed out that Proton is our launchpad in acquiring engineering knowhow and consequently propelling nation to a developed industrialised country.
However in the name of liberalisation and the obsession of making foreign cars cheaper, we need to ask ourselves whether do we want to preserve our automotive industry that employs more than 550,000 workers and contributing nearly RM30 Billion to country’s GDP or do we want to open up our tiny market to cheaper foreign cars so that our consumer could have more choice?
Some may argue we can close down Proton and do the Thailand and Indonesia’s way. Yes, we can. But being a mere a assembler won’t make us a developed country. Just look at these countries- were they developed?
In fact, we can’t compete with them simply because our cost of labour is higher. Or are we suggesting we pay our workers a pittance? Then, we can kiss goodbye to a high income economy.
What happened in Australia is an interesting case study. When we liberalise our market too much, the shrinking market for local cars may result in the cessation of production locally. Thousands of jobs generated by the national car industry will be lost. Not only we lose much of our engineering capability, we can’t create more high income jobs as engineering-based industries cannot fund skilled workers. Then, expect more serious brain-drain problem.
Buying cheaper foreign cars must result in outflow of funds. As a trading nation, we must balance our export and import sheet. Australia is lucky to have large reserve of iron ore to export to China. But for how long Malaysia can rely on Petronas’ money to offset the deficit caused by our import? Already we have to rationalise subsidies in order to reduce our deficit.
Admittedly Malaysians pay more for their car. But the high car prices is not without justification. It may be old-fashioned to say this but that’s the price we have to pay for our country to be developed, to be well-equipped with technology, to be a trading powerhouse, to be industrialised, to produce highly skilled workers and to reduce country’s deficit.
United States of America knows this very well. That’s why they spent RM150 billion to bail out General Motors (GM). Not because they are anti free market but market is not ‘really free’ when you have your own product.
Korea and Japan take half of century or three generations to be at where they are today. Proton needs some protection but it will be removed gradually.
Hopefully we may not ended up like Australia, UK and Detroit.