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The Future of Asia 2018

Malaysia weighs new national carmaker with global reach

Mahathir also says reopening North Korean embassy is a possibility

Prime Minister Mahathir Mohamad speaks about his vision for Malaysia's auto industry to the Nikkei Asian Review in Tokyo on June 11. (Photo by Keiichiro Sato)

TOKYO -- Prime Minister Mahathir Mohamad proposed on Monday establishing a new national car company to raise the level of Malaysian-made autos and export them to international markets.

The Malaysian leader also said the world should welcome North Korea's newfound openness to dialogue, and he said his government would consider reopening its embassy in Pyongyang.

In an interview with the Nikkei Asian Review on the sidelines of the Future of Asia 2018 conference, Mahathir said Malaysia's current carmaker Proton Holdings, which is 49.9% owned by China's Zhejiang Geely Holding Group, has limited access to the global market.

Mahathir said Geely has confined Proton to producing right-hand drive vehicles, limiting the company's access to the world's biggest automotive market in China.  

"We are looking at a different company and we are also looking to Japan for some cooperation at the initial stage, like [with Malaysia's] first national car," said Mahathir.

Proton, the brainchild of Mahathir, was established in 1983 and rolled out its first model two years later with  technological assistance from Mitsubishi Motors. The carmaker underwent several ownership changes until conglomerate DRB-Hicom took control from state fund Khazanah Nasional in 2012.

In a state-directed restructuring under ex-Prime Minister Najib Razak, DRB-Hicom later sold a stake in Proton to Geely after sales continued to slump despite government support. Drawing on Chinese technology, Geely said it wanted to use Proton as a platform to penetrate a Southeast Asian market now dominated by Japanese brands.

"Proton is no longer a national car," said Mahathir, referring the loss of state control. 

With the new car company that he now envisions, Mahathir said Malaysia would seek to produce vehicles that use advanced technologies in order to capture a piece of the global market.

"We hope of course we would be able to produce a new car in compliance with the Euro-5 or Euro-6 emission standards so that we can have access to the world market even if we cannot penetrate China," said Mahathir. 

The premier believes that advanced manufacturing methods and digital technologies like those developed in Silicon Valley, such as sensors that enable autonomous driving, could be the next engine of Malaysia's economy. 

The Najib government had identified e-commerce as a new driver, working with China's Alibaba Group Holding to develop what was known as the Digital Free Trade Zone. The ongoing project, which involves a logistics center at Kuala Lumpur International Airport, promotes cross-border e-commerce, targeting business-to-business transactions involving small and midsize enterprises.

Mahathir said working with Alibaba was a "good idea" and the collaboration would continue. 

Turning his attention to Tuesday's U.S.-North Korea summit in Singapore, Mahathir said the international community should accept Pyongyang's intention to talk without suspicions about its motives.

"We should take North Korea at face value and get it to participate in international negotiations to moderate the rigid attitude it had before," said Mahathir, adding that Malaysia would consider reopening its embassy in Pyongyang.

Kuala Lumpur shut the embassy following the murder of the North Korean leader's estranged half-brother Kim Jong Nam in 2017 in  Kuala Lumpur Airport, which sparked a diplomatic row. 

On a planned high-speed rail link connecting Kuala Lumpur and Singapore, Mahathir said the proposed project is now on hold because of the high cost. Both countries should also "rethink the need for high speed" as the 350km distance is not very long, said Mahathir. His government will consider high-speed rail projects within Malaysia, however.

Mahathir also reiterated that a transfer of power will take place after his government restores the country's democracy and fiscal health. 

"If the people want me to serve longer, I will serve, but as I have promised, I will step down after two years or so and Anwar Ibrahim will take over," said Mahathir. 

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