Economist: Tough EV Rules Risk Driving Investors Away From Malaysia

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Economist Prof Dr Barjoyai Bardai has cautioned that Malaysia risks losing out on long-term economic and technological benefits if conditions imposed on foreign electric vehicle (EV) manufacturers discourage them from establishing deeper roots in the country.

Barjoyai also argued that continued protectionist policies for national carmakers are no longer rational, especially since Proton, Malaysia’s first national car manufacturer, is no longer fully owned by the government.

“We should allow imported EVs to be sold at normal market prices.

“Let them compete with Proton, especially since Proton is also producing EVs, and at prices that are actually much lower than imported EV models.

“So this suggests that we may not be looking at the issue from a long-term perspective or through the lens of sustainable economic planning when we continue imposing tariffs on imported vehicles,” he said when contacted by TRP.

Barjoyai was commenting on the government’s latest move through the Ministry of Investment, Trade and Industry (Miti) to tighten regulations on fully imported electric vehicles after the expiry of special exemptions previously granted to the sector.

Miti announced that beginning July 1, imported fully built-up (CBU) electric vehicles entering the Malaysian market will be subject to stricter requirements, including a minimum import value threshold of RM200,000 as well as a minimum power output of 180kW, equivalent to about 241 horsepower.

Strict regulations are harming the country’s automotive industry

According to Barjoyai, measures such as these are among the reasons major EV companies remain reluctant to establish manufacturing plants in Malaysia.

“BYD has already shown interest in opening a factory in Malaysia. But if the government imposes conditions requiring most of the vehicles produced here to be exported, it may no longer be attractive for them to proceed with the plan,” he said.

According to Barjoyai, Malaysia should instead encourage foreign EV players to integrate with the local automotive ecosystem, including collaborating with national carmakers such as Proton and Perodua.

He said such partnerships could help ensure that Malaysians benefit directly from the establishment of EV manufacturing plants in the country, rather than merely serving as an export base for multinational companies.

“BYD should ideally work together with local companies like Perodua or Proton to produce vehicles not only for export markets, but also for the Malaysian market itself.”

“If not, the rakyat may not gain much direct benefit from the existence of these EV factories.”

Barjoyai also warned that overly restrictive conditions could ultimately hurt Malaysia’s automotive industry by limiting opportunities for technology transfer and industrial development.

“With these kinds of requirements placed on EV manufacturers, the country could lose out because there may be no meaningful transfer of technology taking place.”

The economist also raised concerns over Malaysia’s apparent failure to fully capitalise on earlier investments in battery technology research, particularly initiatives undertaken through Malaysian Industry-Government Group for High Technology (Might) decades ago.

He pointed out that battery technology remains one of the most critical cost components in EV manufacturing and questioned why Malaysia has not leveraged its earlier research capabilities more aggressively.

“We need to ask what happened to that industry because in EV manufacturing, battery cost determines a large portion of total production cost.”

Barjoyai argued that if Malaysia already possesses advanced battery research capabilities, the country should explore integrating that expertise into collaborations with global EV players such as BYD.

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