Malaysia, Indonesia agree on joint production of new ASEAN car

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Indonesia and Malaysia have reached a deal to set up a joint venture to produce the first fully local-made vehicle for domestic use and sale in the Association of Southeast Asian Nations (ASEAN) and pledged to jointly further develop both nations’ automotive sectors.

Government representatives of the two countries signed a memorandum of understanding in Jakarta on August 10 to begin respective cooperation on what is a brainchild of Malaysia’s Prime Minister Mahathir Mohamad and has the support of Indonesia’s President Joko Widodo.

The agreement focuses on human capital development, supply chain development, identification of market opportunities, automotive industry technology, quality enhancement and research collaboration to further develop the sector in Malaysia and Indonesia, as well as to establish a new brand.

“This is a testimony where a strong bilateral economic relationship between Indonesia and Malaysia has come to reality,” Malaysian Minister of International Trade and Industry, Darrell Leiking, commented on the signing.

“This shows that Malaysia and Indonesia should not be separated and should stay together in the economic and social development of the ASEAN region,” he added.

The agreement is tasking the Malaysian Automotive Institute (MAI) and the Indonesian Automotive Institute (IOI) with running the venture. The two government-bacdked bodies have lined up their respective automotive component makers in order to establish business-to-business cooperations.

Since the initial collaboration between MAI and IOI last year, ten Malaysian automotive companies have reached business partnerships with their Indonesian counterparts. In March 2018, MAI and IOI also organised a joint business matching programme between Malaysian and Indonesian automotive vendors.

Both countries are seen to be capable of creating vehicles with 90 per cent of the components made locally, given the number of Indonesian and Malaysian automotive component makers is totaling almost 2,000 companies, with many of them falling in the small and medium enterprise category.

Plans are to create multiple types of vehicles, namely passenger cars, commercial and special-purpose vehicles under a new brand name. The two countries will also look into the possibility of manufacturing cars that run on biodiesel, considering that Indonesia and Malaysia are the world’s largest palm oil producers.

Purchasing power for the new brand should come from the more than 640-million-strong population in ASEAN which should create enough demand for a “homegrown” automobile brand, government representatives said.

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Reading Time: 2 minutes

Indonesia and Malaysia have reached a deal to set up a joint venture to produce the first fully local-made vehicle for domestic use and sale in the Association of Southeast Asian Nations (ASEAN) and pledged to jointly further develop both nations’ automotive sectors.

Reading Time: 2 minutes

Indonesia and Malaysia have reached a deal to set up a joint venture to produce the first fully local-made vehicle for domestic use and sale in the Association of Southeast Asian Nations (ASEAN) and pledged to jointly further develop both nations’ automotive sectors.

Government representatives of the two countries signed a memorandum of understanding in Jakarta on August 10 to begin respective cooperation on what is a brainchild of Malaysia’s Prime Minister Mahathir Mohamad and has the support of Indonesia’s President Joko Widodo.

The agreement focuses on human capital development, supply chain development, identification of market opportunities, automotive industry technology, quality enhancement and research collaboration to further develop the sector in Malaysia and Indonesia, as well as to establish a new brand.

“This is a testimony where a strong bilateral economic relationship between Indonesia and Malaysia has come to reality,” Malaysian Minister of International Trade and Industry, Darrell Leiking, commented on the signing.

“This shows that Malaysia and Indonesia should not be separated and should stay together in the economic and social development of the ASEAN region,” he added.

The agreement is tasking the Malaysian Automotive Institute (MAI) and the Indonesian Automotive Institute (IOI) with running the venture. The two government-bacdked bodies have lined up their respective automotive component makers in order to establish business-to-business cooperations.

Since the initial collaboration between MAI and IOI last year, ten Malaysian automotive companies have reached business partnerships with their Indonesian counterparts. In March 2018, MAI and IOI also organised a joint business matching programme between Malaysian and Indonesian automotive vendors.

Both countries are seen to be capable of creating vehicles with 90 per cent of the components made locally, given the number of Indonesian and Malaysian automotive component makers is totaling almost 2,000 companies, with many of them falling in the small and medium enterprise category.

Plans are to create multiple types of vehicles, namely passenger cars, commercial and special-purpose vehicles under a new brand name. The two countries will also look into the possibility of manufacturing cars that run on biodiesel, considering that Indonesia and Malaysia are the world’s largest palm oil producers.

Purchasing power for the new brand should come from the more than 640-million-strong population in ASEAN which should create enough demand for a “homegrown” automobile brand, government representatives said.

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