Transitory JIT at Proton Cars, Malaysia

Abstract

In September 1963 the Federal Government of Malaysia announced its intention to encourage the establishment of an automobile industry. It was felt that car manufacture would underpin the industrialisation of the country. However, it was not until 1967 that assembly of cars commenced in Malaysia, with the help of Swedish partners. Simultaneously, the government imposed high tariffs on car imports; CBUs or completely built‐up cars in the jargon. Stringent import licensing was enforced to encourage the growth of local assembly of imported packs of CKD (completely knocked down) vehicles. Since then, the Malaysian automobile industry has grown steadily, helped by strong growth of the national economy and relatively low labour costs. Despite this latter advantage, the small scale of the industry (on a global comparison) militates against achieving really competitive production costs. The government's insistence since 1979 in progressively cutting the proportion of imported components in CKD vehicles has not helped in this respect, since the Malaysian component industry is still small‐scale and therefore high cost. Indeed, the government has made clear its intention that all vehicles shall eventually be CML (completely made locally).

Citation

Simpson, M., Sykes, G. and Abdullah, A. (1997), "Transitory JIT at Proton Cars, Malaysia", Management Research News, Vol. 20 No. 2/3, pp. 46-47. https://doi.org/10.1108/eb028539