Impact of Foreign Car in Malaysia
Amin, Nadiah, S.Presenna, Syahanim, and Sharina
Faculty of Entrepreneurship and Business,
University Malaysia Kelantan,
Malaysia is one of country that highest number of foreign cars that are being imported. Foreign cars that enter in Malaysia are some legal that are brought legally with proper documentation and some are illegal which is brought by foreigners without proper documentation into Malaysia. The entrance onto foreign cars in Malaysia has negative impact in terms of Malaysia’s economic and environment such as congestion, emission, demands toward Malaysia’s cars and policy regulation of AFTA and ASEAN. This study is about the impact on foreign car to the Malaysia.
Keywords: Foreign cars impacts in Malaysia, congestion, emission, demand of Malaysia’s car, policy regulation.
“This research investigates the impact on foreign car in Malaysia from global perspective and to the local context in example by highlighting the effect of foreign cars which is congestion and emission. This study was conducted based on previous research on the effect of transportation and tourism of Malaysia’s economy that conducted in the other nation as a baseline to study to intimidate with Malaysia. Based on findings in this research, the increasing of foreign car in Malaysia caused high of congestion, increases to emission, decreases of demand toward Malaysia’s cars, and policy regulation of AFTA and ASEAN”.
This chapter introduces the study by providing related information on the impact on foreign cars in Malaysia from global perspective and to the local context in example by highlighting the effect of foreign car which is congestion, emission, the demand for Malaysia cars, and policy regulation of AFTA and ASEAN. All of this also will be discuss for better understanding on the current issue which related to the logistic industry. Then, this chapter would present the problem statement and the research objective.
1.1 Problem Statement
The transportation sector has greatly contributed to the socio-economic development with inherent environmental impacts. According to K. Mark Hughes perspective, foreign car is referred to foreign registered vehicles for any country that may be brought into and used in the country. While, from Kelly Blue Book defined that foreign car as a car that has its part made and assembled outside the country.
Foreign car was divided into two categories which is CBU and CKD. CBU stand for the car that import with fully finished unit, can be use or drive when already arrive on Malaysia shore. While CKD stand for the car that is assemble in the Malaysia but the each part of the car is manufactured from the origin company. Besides, in this study foreign car also refer to the people that enter Malaysia with their vehicle with intention to make return trips for private use like Singapore and Thailand that enter via Johor Baharu and Kelantan (Rider Chris, 2017).
Malaysia’s Tourist Arrival was reported, in December 2017 are almost 1, 248, 917, 00 tourists that arrive from Singapore and increased from previous number for November 2017 which is 959, 897, 00 tourists. Same goes with the tourists from Indonesia which that show the increase of it from 229, 656, 00 tourists to 253, 403, 00 tourists. According to Ministry of Tourism and Culture Malaysia, ministry’s secretary general Datuk Rashidi Hasbullah, every year the number of the tourist are increase and for 2018, Malaysia is targeting 33.1 million tourist arrives.
Meanwhile, the Malaysia Automotive Association (MAA) Malaysian vehicle registration until 20 June 2017, the total of vehicle on roads reach at 28, 181, 2013 unit and almost hit 28.2 million units. And imported cars annually are somewhere between 65 0000 to 70 0000 cars. Same trend with Singapore, growth of private cars ownership is driven by accessibility and mobility afford. Not just that, activity of sharing public transport has fallen dramatically that lead to the congestion more.
Traffic volume of each mode of transportation has increased dramatically year by year, including road transportation which is rated higher than other modes, except airlines (David J.Bloomberg, 2012). The increment of traffic volumes has led to congestion, as faced by China (Speece ; Kawahara, 1995), New York (Trunick, 2004) and UK, resulting to delivery time delay, cost increment, customer satisfaction and risks of accident (McKinnon et al, 2009). Regardless the increasing number of tourists that come to Malaysia and also the increasing of demand toward import cars from other country have contributed to the growth of congestion in the city areas.
According to Population Reference Bureau (2009), the amount for Malaysia country of per capital emissions has been reached more than three times at the level recorded for the whole of Southeast Asia which is recorded at 194.48 million. Not just that, the issue that exist on the foreign cars that brought inside Malaysia is about the price of the foreign cars imported with APs is too low that make the discounts give is highest and people more prefer it and enjoy the brisk sales. The case that pop up which is 6 out of 10 cars that have on the road are of national productions, and the recent survey show only 48% cars on the road are national cars and the rating is on the verse of dropping to 44% in the coming year.
According to the literature of fluctuated of GDP growth and decrease the demand of Malaysia’s cars (Rabiul Islam et.al, 2016) are found having positive relationship with the foreign cars that enter into Malaysia. Imagine that when Malaysian more attract to buy more foreign cars than local cars, the money will be outflow and not circulating within Malaysia, the national balance become deficit when import exceed export.
1.2 Research Objectives
The objective of this research is to find out the impact that attributes to the Malaysia when foreign cars keep enter or come into Malaysia. In order to achieve the aims of this study, the following supporting objectives are established:
1. To examine the impact of congestion from foreign cars that come to Malaysia
2. To examine the impact of emission from the foreign cars that come to Malaysia
3. To measure the highest impact of foreign cars on the congestion, emission, decrease of demand toward Malaysia cars, and policy regulation of AFTA and ASEAN
2.0 LITERATURE REVIEW
According to Jamilah Mohamad and Amin T. KIGGUNDU, (2007), since the early 1980s, the motorization process of Kuala Lumpur has been going on nearly unconstrained. Whereas private cars and bikes have made a difference to create the portability needs of numerous Asian cities, counting Kuala Lumpur, there are substantial reasons to concern almost the rising patterns of the single inheritance vehicles. One reason is that as the number of single inheritance vehicles has risen, so has that require for plentiful and satisfactory street space particularly within the Central Trade Area of cities such as Kuala Lumpur. A vital challenge postured by the later fast motorization marvel in Kuala Lumpur is expanding traffic congestion. Traffic blockage could be a major urban issue in numerous cities both within the created and creating world (Jamilah Mohamad and Amin T. KINGGUNDU., 2007).
According to Hamzah and Azli Ayub, (2015), a few examinations have been conducted in Malaysia relating to issue from activity blockage basically related to issues that is related to the continuous issues experienced by the interstate commuters. One of the blockage theories is that commuters will incline towards private automobiles. Blockage is watched rising in various parts of the globe, from the Western-European countries to North American nations and to quick new city districts of Southeast Asia such as Thailand (Schallabock & Petersen, 2008). The transportation framework gets affected as the society, technology and economy creates. Bovy & Salomon (2008) has mentioned that congestion could be a double-faced incident. It can be seen as a characteristic of the network of illustration, by the length and number of lines that have stimulated within the arrangements or by their length. According to Lewis, Traffic congestion may direct results from increased traffic stream. The volume of activity on connect comprises of an arrangement of vehicles, the drivers of which each need to play down their possess travel time on the street. The speed and stream of the activity is totally subordinate to the behaviour of each vehicle’s driver. Each vehicle’s advance hence is essentially subordinate (but on a purge street) on how its driver adjusts his or her behavior to that of other drivers. In this way, the clog is essentially a work of individual behavior and elements. In expansion, activity clogs to assist in actuating mishaps and discuss contamination.
Congestion on streets primarily leads to misfortune of financial efficiency (man hours misplaced) and increment in natural contamination. Motorized street transport is the most mode of development in Malaysia. Rising vehicle blockage and slower travel speeds are considered the foremost self-evident affects to the fast motorization. The foremost prompt reaction to this issue is to develop more streets and transport infrastructure. Space shapes transport as much as transport shapes space, which could be a notable illustration of the correspondence with transport and its topography. All through history, transport systems have organized space at diverse scales. The fracture of generation and utilization, the locational specificities of assets, labor and markets to produce a wide cluster of streams of individuals, products and data, (J.P. Rodrigue, C. Comtois, and B. Slack., 2009).
The car industry is one of the foremost imperative businesses in Malaysia fabricating division. Car industry contributes a boosting and advancing financial and industrialization methodologies which lead Malaysia to exchange right into a progressed nation inside the predictable future mentioned by M. F. Ahmad et.al (2016). According to M. F. Ahmad et.al (2014), Malaysian car advertise turns out to be an engaging suggestion and numerous foreign vehicle creators proposed to enter into Malaysia. Moreover, after executing AFTA policy, it has affected to ASEAN exporter especially from the neighbouring countries wherein the expulsion of exchange boundaries has diminished car cost. Malaysian car producer has to be progressed their competitiveness in ASEAN countries (M. F. Ahmad et.al, 2014).
According to Ivy and Bekhet (2015), is a CO2 emission that the environment has been contaminated by seeing the impact on CO2 emissions from the environment have led to the increased use of this energy due to the per capital merger and the fuel price of fuel to transport. This can be prevented if FC and CO2 growth can be controlled by creating low carbon energy. Additionally, if economic growth increases, low carbon vehicles such as high speed rail and hybrid cars should be a priority for passengers using the vehicle. As a result of CO2 emissions, it can suggest that technological advancement was the most effective way to improve the FC efficiency. At the same time this can be seen when most people in Johor Baharu from Malaysia that have been used their car or motorcycle by entering Singapore. So automated vehicles brought in by the people of Johor as foreign car will be tax and charge entry vehicles permit in Singapore. So in order to reduce cost for people that has been worked in Singapore, by using bus services. It also can reduce CO2 emissions and reduces the amount of foreign car entering Singapore.
According to a report by Population Reference Bureau (2009), as for Malaysia country the amount of per capital emissions has been reached more than three times at the level recorded for the whole of Southeast Asia. Malaysia has recorded a record high of 194.48 million. This amount is the highest emissions from the Malaysian government, this should be addressed by reducing discharge emissions from the country as well as taking steps to create programs and campaigns to address climate change by addressing anthropogenic emissions from removals by sinks of all greenhouse gas (Selamat & Abidin, 2010).
In Malaysia now air pollution has occurred due to human and anthropogenic pollutants. Anthropogenic pollution is due to the activities of human activities that pollute the activity of consumption and production. The highest air pollution occurred due to the use of motorcycles. This is because hydrocarbons, oxides, lead and nitrogen that have been released into the air affect the health of humans in Malaysia. In addition, the release of CO2 emissions produced by various moving vehicles has resulted in global temperature rise. At the same time when Singapore entered their foreign car to Malaysia, it was evident that the release of CO2 emissions was very high and air pollution occurred in Malaysia. However, the amount of Malaysia CO2 emissions can still be overcome by limiting the number of motor vehicles and the distance between trips. (Ho and Fong 2007).
According to (Ibarahim, R. 2011), As developed countries have succeeded in reducing emissions from GHG emissions but Malaysia, on the contrary, Malaysia continues to increase emissions to a higher level. Consequently, Malaysia has lagged behind with some developed countries in Europe. As the result, in Malaysia being experiencing rising domestic and international pressure to decelerate greenhouse gas emissions. The Cancun Agreement has been established which contains a framework to all major developed and developing countries to formally target their 2020 greenhouse gas targets of a regular basis. Malaysia has also agreed to reduce greenhouse gas emissions by up to 40% by the year 2020.
According to (Wedel, 1999; Çaynak et al., 2009) Biodiesel is a fuel that can protect the environment and human health. Biodiesel is based on vegetable oils that do not contain any sulfur, metal or crude oil that contribute to the reduction of acid rain by not removing sulphates and sulphuric acid in our atmosphere. Biodiesel blends with a 20% percent with diesel-based diesel was created to reduce the reduction of smoke and visible odour. Biodiesel has higher oxygen content than petroleum diesel and its use for diesel engines has shown a significant reduction in CO2 emissions. So biodiesel uses is a good encouraged to overcome air pollution and human health.
According to Malaysian Automotive Association (2010) an agreement has been discussed that the local automotive industry needs to be protected and some import limits of overseas vehicles have been conducted. This is because so many foreign car demands of the other country has been brought in Malaysia. To protect the local car industry, more than half a million sales a year, Malaysia is a major market for autos in Southeast Asia. Over the long term, the Malaysian government have introduced a policy on Asian material content including high tariff disposal as well as non-tariff barriers known as “National autos” produced by Malaysian manufacturers such as Proton cars. Singaporeans who have always entered Malaysia are one of the largest foreign car buyers to use while living in Malaysia. Hence this can reduce the sale of local cars in Malaysia. So this matter has been regulated by the Malaysian government by imposing high excise duty, import duty of 30% per cent will be imposed if Malaysians people want to buy foreign cars in other countries. Furthermore, this can be overcome and reduces the demand for foreign cars in other countries.
Based on the result, it is found that networked public transport is a major factor in public transport demand in Malaysia car between foreign cars, Malaysia and Singapore have agreed to create speed trains using today’s technology systems. Public transport of passengers and highways is not suitable as a substitute for road transport due to the undeveloped speed train network. Using Irrelevant Regression Equation Model which uses monthly data onto a city served by three different modes of public transport in Malaysia. The result shows that Malaysia’s city cannot connect public transport demands of Singapore are not worth the price but it’s a bad car fuel cost.
Based on the journal that had been collected, the statistics show that the emission occurred in Malaysia caused by foreign car. Malaysia is the second largest per capita greenhouse for emitter from among the group of ASEAN countries based on by CO2 emission from transport sector in Southeast Asia. When another country successfully reduces GHG emission level, Malaysia is still continued increasing its emission level. Malaysia declared to reduce its greenhouse gas emission up to 40% in year 2020 which is comparing with year 2005 level. Slow public transportation system and high demand on having a car per person caused the rapid increase in cars of our country. Many foreign cars have been brought into this country. The times past year by year and witnessed that the car ownership in Malaysia shows to increase rapidly, according to approximately that three people had one vehicle in 1995 which reduced to 1.4 people in 2010.
From the journal “Investigating Factors Affecting CO2 Emissions in Malaysian Road”, In Malaysia, the analysis shows that the petrol vehicles were dominated on the road transport and made the greatest percentage 93%, while diesel vehicles 6% which is dominated by taxi and bus. On the same hand, the share of natural gas vehicles that was used by taxi and bus was at about 1% only. Natural gas vehicle was only a small share of total vehicles, so it was not included in the analysis. In addition, the data sets were divided into two which is data sets for petrol vehicle technology and diesel vehicle technology, respectively. The annual fuel consumption, fuel price and CO2 emissions were collected mainly from conceptual model of CO2 emission reduction model which is consists of fuel consumption, fuel efficiency, fuel price, and distance travel.
The consumption of petrol and diesel has been growing rapidly with the increasing of dependence on private modes such as car and so on. Currently, the analysis shows that the transportation sector has consumed about 36% of the national energy. Consequently, it has appeared as a major emitter of CO2. It is also responsible for other gases causing air pollution. Transport sector of Malaysia also has produced 42.43 million metric tons CO2 which is the shares 22.9% of total CO2 emission of Malaysia. Increased number of registered foreign car is expected in years to come which will certainly increase the emission. Growth of CO2 emission from transport sector of Malaysia it can be concluded that CO2 emission has increased from 15 million metric tons in early nineties to 42.43 million metric tons in 2012. As the conclusion, the transport sector must to reduce CO2 emission by 9.17 million metric tons in the process to reduce 40% of it by the year 2020.
Now, recently developed extensive, formally organized public transport networks, however, many residents were still preferred to use their own transport. Otherwise, as the study has been stated that about 83% of respondents in Kuala Lumpur expressed a wish to own a car on the next five years, which is will only make the current congestion that we face daily increasing year by year. However, there is also another option, such as ride sharing which is convenient and timely. Based from the article in 20 December 2017, we found an analysis from Kuala Lumpur, Malaysia which is show that percentage of respondent who plan to buy a car within the next five years. There are 83% from them who plan to buy a car, while only 17% that did not plan to buy a car.
From another journal, the analysis has been seen that the traffic congestion is the big issue that cannot be denied. This is because due to the poor planning, lack of bus and residents prefer to use their own transport. As an example, traffic congestion always happens to Klang Valley which is making the driving time exhaustingly and taking long hours. The traffic congestion in Klang Valley was already reaching a very serious level in entire area which is cause by many factor, one of big factor is private modes. The foreign car was making the congestion becomes worse.
The analysis shows the data onto this study were collected by 350 more respondents of highway in Klang Valley in survey between on January to March 2014 in order to help in reducing the transport externalities. The distribution of the respondents was following to gender shows that the most of the respondents (55.2%) was females. According to marital status, more than half of the respondents (44.3%) are formally married. When refer to the education level, most of them have high education level. There are, almost 52.7% of the respondents have a degree, while 44.2% have diploma and 1.9% have Master or PHD. To capture the effect of willingness to pay to reduce traffic congestion, the highest percentage (53.6%) of respondents was from Shah Alam followed by Bangi and Putrajaya (26.2% and 20.2%) respectively. Furthermore, the largest proportion is in the 21-30 years age group (62.8%) of the respondent.
Towards the analysis that has been done according to demand on national car, shows that, the aim at this research is because the sales of national car are lower than the imported car in the same price range. The demand for national cars was showing the declining trend compared to previous years. Tan and Govindan, 2014, told that consumers were preferred to buy a foreign car that is quite expensive than national car, rather than buying a national car.
From the data onto this study, the number of car sales in Malaysia had been showed from year 1994 to 2014. In Malaysia, to ensure the imported car was priced significantly expensive than the local car manufacturer like Perodua and Proton, approved permits were introduced for more than 20 years ago and make sure the competitive advantage to local car manufacturer. According to this matter, it has makes manufacturers of foreign car, disappointed. However, government claimed that they have the right to impose the policy in order to protect the local car manufacturer. Under this policy, to import a car, people needed approved permits. However, the approved permits applied for the imported foreign cars were too low and gives the opportunity for the car dealer and be able to provide high discounts on the car and enjoy good sales for the imported cars.
Next, the Gross Domestic Product (GDP) has been found that fluctuated according to manufacturing. The economic downturn was being stated that happen in United States, Japan, Singapore and also Malaysia. The economy downturn in Malaysia around 1.7 per cents because due to significant manufacturing factor involving the cars. When the manufacturing of national car is decreasing, the demand for foreign car will increase.
As an example, the statistics analysis that has been collected from Department of Statistic Malaysia shows that manufacturing sector in Malaysia that decreasing, among of the country that facing the problem is, in Perlis (0.2%), Kelantan (0.3%), Wilayah Persekutuan Labuan (0.3%) and Sabah (1.8%). The sub sectors that contribute manufacturing sector declining are motor vehicles and transport equipment, food processing, basic metal and so on. It is showing that the GDP economy in Malaysia has fluctuated according to manufacturing, and among of it also, causing by importing the foreign cars from abroad.
Congestion is one of the independent variable that happen caused by the foreign car that enter in Malaysia which is the dependent variable is impact of the foreign car toward Malaysia. One of the reasons is that the ownership of the car from other country such as Singapore has risen and comes to Malaysia by their own vehicle also one of the factor that impact towards Malaysia. Since, Singapore is a small island city state that located at tip of the Malaysia Peninsular, then the congestion happen due to the trip in and out by the foreign car. According to The Rakyat Post, congestion effect on the other vehicle that wants to trip from Malaysia to Singapore at the Lebuhraya Penyuaraian Timur (EDL). The most problem that happen from congestion is the number of vehicle ownership from foreign country that affects the Malaysia’s road traffic congestion. Other than that, issues that are related are encountered by the highway commuters.
The congestion that happen between Malaysia and Singapore are happening at the peak hour which is at the morning and also evening after work. According to Sock-Yong Phang and Rex S. Toh (1997), traffic congestion arises because the marginal user of road takes into account only his or her private cost and ignores the fact that his or her vehicles slows down and inconveniences other. Moreover, traffic congestion is an increasing number of traffic flows.
Malaysia located in the centre of peninsular, it contribute to the country development in aspect of transportation and industrial hub and this created jobs and also attract migrants from other state and foreign countries such as Thailand, Singapore, Indonesia and others. Impact from foreign car which is from neighbouring country like Thailand and Singapore that comes from their country into Malaysia contributed to increased pollution in the emission. Also, as the transport congestion keeps on increasing, and then there is more air pollutants are emitted such as gaseous emission from vehicles. From the journals, mostly emission are comes from road transportation.
According to foreign car between demand of Malaysia car can be seen when Singapore entering Malaysia by doing the Uber service from Singapore to Malaysia. In this issue, it create problem for congestion and also increase the emission of air pollutant. It is also increase the demand towards transportation in Malaysia which is the demand toward car in Malaysia.
In terms of the fluctuated of GDP growth is because of the demand of the foreign car. In the analysis shows that the sale of international car are higher than the national car. The problem rise from the foreign car is the demand of the car as the transportation in Malaysia. According to Tan and Govindan, 2014, state that consumers was prefer to buy a foreign car that are quite expensive than national car rather than buying a national car.
This research can be considered as exploratory study. The research team concluded that those objectives set in the research as achievable. As conclusion, the research team found that that the increase in the number of cars on the road would inevitably cause an increase in air pollution and traffic. This increase has contributed to the increasing air pollution problem in Malaysia. The problem of air pollution need to be taken seriously as this can have a bad effect on the health and wellness of the people in Malaysia. Second is in term of congestion. In term of congestion the increasing of foreign car in Malaysia will also causing congestion in our country. This is because roads in Malaysia are not enough to accommodate their own Malaysian vehicles although to accommodate vehicles from outside the country. In addition, the increasing of foreign car also can impact to our Gross Domestic Product (GDP). This is because when cars from another country increase in our country, local car demand will decrease. This case will decrease the Gross Domestic Product of our country.
First and foremost we would like to express our thousands of thank to Allah SWT in helping us along the way in life. And appreciation to Faculty Entrepreneurship and Business (FEB) that have provided us these opportunities to learn this subject which is Logistic Entrepreneurship Seminar that would apply in the logistic field soon and the biggest one is to become someone in the real working life in future.
Next, thousands of thanks to Dr. Razman Hafifi Bin Redzuan, lecturer that teach us a lots of thing. Not just in syllabus of learning only but on how to work smartly in the future. We really appreciated his effort on how to make we understand on the things that he try to deliver to us. Seriously, he really superb and always want to help student.
Not to be forgotten my dearest classmate L1, that have been positively support our group effort in completing this project and entire our education period. May god bless all of you always? Last but not least, to our group members, those who have been really helpful and able to spend the time to make the discussion along the way in finishing the project until successful. Thank you to all of you that involve in completing this assignment