Tuesday, June 16, 2009

Malaysia's Problems IV: Transport

By insisting that we should have our own motor car manufacturer, Malaysia has put itself in a situation whereby we must put x number of cars on the road a year or else the local car manufacturer will go bust.

I have a sinister feeling that this could be somebody's disingenous scheme to ensure that there are sufficient numbers of cars to go on the then to-be-build North-South Expressway and ensure its viability.

This may be well and good.

But here are the costs.

1. Traffic Jams in Major Towns and Cities

What a nuisance - the constant need to search for parking and the cat-and-mouse with parking lot attendants.

2. Higher Price of Cars

Thanks to the high excise duties, the price of cars in Malaysia can be nearly double that in advanced countries like the US or the UK.

This is a strain on the purchasing power of the average consumer and, especially in times like this, one would wish that the government is wise enough to reduce cost inefficiencies by reducing completely the excise duties on cars.

If car prices could be reduced by half, this will put more cash into the pockets of new car buyers to buy other needed stuff.

With a local motor car manufacturer to worry about, policy has an added degree of freedom in demand management. When the economy becomes too heated up, the terms for car financing can be tightened without having to fear political repercussions from local car dealers. Afterall, the car importers can worry about those things, not policy makers.

3. Poor Public Transport

With the need to constantly push to put cars on the road, the incentive schemes for car purchasers have been ridiculously simple.

One could literally walk into a car showroom and drive off a car without having to put any money down.

As many people now has a car and many families have several cars each, housing developers could simply build their projects anywhere and even in the middle of a jungle and find buyers.

There is no need for housing developers or town planners to think or worry about the public transport system. The car will take care of their locational problems.

Under present circumstances, the attempt to introduce an efficient public transport system is crowded with problems. The traffic congestion caused by motor cars gives no leeway for buses. In ensure room for buses to move, motor lanes are reserved for buses at the expense of lanes for other vehicles which worsen the traffic congestion. Our transport system is caught in a Catch-22 situation.

4. Economic Relative Inefficiency

Having to support a local car manufacturer costs the nation its efficiency in resource allocation. So much resources are focused on an area of economic activity where Malaysia does not stand a chance to compete effectively in the world market.

By not being at the forefront of R&D, we get stuck for more than 20 years with the same old engine with insubstantial modification to the form. This is the recipe for commercial disaster.

If in the current crisis, even veteran car manufacturers of international repute can go bust, what should a little local car manufacturer at home try to be. I certainly hope it does not become a small timer terrorising the local population.


We should remove all the artificial support system for the transport sector and try to reconstruct the whole system based on proper cost consideration - as incentives for the real private sector to get involved in the economy.

1 comment:

de minimis said...

This is a clear analysis that the fellas working on the National Automative Policy and the Public Transportation Plan should take on board, if you'll pardon the intended pun.