Why did the Malaysian Automobile Sector not Achieve their Described Look East Targets in 1981?
Keywords:automotive, Malaysia, industrial policy
In the past decades, there was a growing demand in commodity vehicles that has contributed to the increase in market share of the automotive sector in many countries, including Japan and Korea. However, despite a lot of countries cherishing the significant sales in the automotive sector and also, Malaysia was not able to succeed. One example is Proton, which has failed with an immense decrease in market share and sales over the last two decades. The previous research has provided a dominant explanation for this failure as the lack of economies of scale, dependence at the home marketplace, technology development, Limited R&D, testing capabilities, compliance with worldwide standards, lack of professional workers, and poor linkages. I use the data from Tai and C.Y.Ku, Malaysian Investment Development Authority, Anazawa, and Ministry of International Trade and Industry to understand the organizational structure and industry performance. Similar to the previous findings, our findings indicated that the Malaysian automotive industry suffers from a lack of dynamics between state and private enterprises, a lack of scale efficiencies, and a reliance on domestic markets. Additionally, it made clear reference to the problems raised by Chang, Andreoni, and Rodrik. In contrast to Japan, where the automotive industry made a large contribution to the Gross domestic product, Malaysia's automotive industry, which includes companies like Proton, was unable to flourish and win the national championship.
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