Signing of Collaboration Agreement Between DRB-Hicom Berhad and Volkswagen AG
- I am delighted to be here today to witness the signing of a collaboration and license agreement between DRB-HICOM Berhad and Volkswagen AG. This represents a significant development not only for DRB-HICOM Berhad, but also for Malaysia’s automobile industry as a whole.
- By bringing together one of Europe’s best automobile manufacturer and our own home grown automotive leader, this venture has the potential to transform Malaysia into a Volkswagen manufacturing hub for the region. Three Volkswagen models – Passat, Polo and Jetta – will be assembled at DRB-HICOM’s Pekan automotive plant in accordance with Volkswagen’s strict specifications and quality requirements. Initially, these vehicles will be produced for the Malaysian market, and later for the ASEAN region, promising steady growth for Volkswagen and the region.
Ladies and Gentlemen,
- The increasing entry rate of respected multinationals into the Malaysian market reflects the growing confidence that foreign investors have in our economy and investor-friendly policies. Under the National Automotive Policy, the Government provides a range of customised incentives, including tax relief, to entice foreign auto manufacturers to move their operations to Malaysia. Our emphasis has been on attracting successful auto makers that utilise high value-added manufacturing techniques and the latest technology – companies like Volkswagen.
- It’s clear that competition fuels the innovation and creativity we need to build a high income economy. Indeed, we expect global players like Volkswagen to create a competitive fervor within the local automotive industry. This can push our capabilities to a completely new level, and help us achieve our national objective of becoming an automotive hub for the region. By opening the local automotive sector to quality foreign players, we are creating a stronger, more competitive industry within Malaysia.
- It is important to note that for such partnerships to be successful, they must be a two-way street. On the one hand, both parties stand to benefit from sharing technology and global and local best practices. For companies like Volkswagen, collaborating with DRB-HICOM also provides access to a skilled workforce, fast-growing markets in the region, and a nation with pro-business policies and programmes. In short – it provides a win-win opportunity for both companies.
Ladies and Gentlemen,
- I have been told that this collaboration represents an investment of almost RM1 billion. This 96-hectare complex is the main component within Pahang’s automotive industrial park. The park will be expanded to 400 hectares as part of the Government’s effort to expand Pekan’s automotive industry output under the East Coast Economic Region initiative. I also understand that the Pekan automotive plant has so far produced nearly half a million vehicles. These include renowned brands such as Mercedes-Benz, Isuzu, Hicom Perkasa, Suzuki, Mitsubishi, Daewoo and Ssang Yong. Pekan is well poised to be focused as a centre for the development of the automotive industry alongside those in Shah Alam, Gurun and Tanjung Malim.
- Malaysia is well-positioned to serve as a regional hub because of our strategic location and sea, road and air transportation network. Indeed, I firmly believe that this collaboration will spur Pekan’s transformation into a vibrant and self-sustaining automotive production centre for ASEAN. This in turn will promote job creation, skill development, and business opportunities for downstream industries. It will also advance our local automotive technologies and transfer technical expertise for the assembly, testing and quality assurance of CKD (Complete Knocked Down) models. This is very much in line with our national goal to become a knowledge-based, high-income nation.
- Volkswagen’s entry, with its advanced automotive technology and expertise, will help Malaysia achieve this national goal by ensuring Malaysian workers can add value along the automotive value chain. In order to stay relevant to this dynamic market, local automotive players need to regularly reinvent themselves through innovation and adoption of new technologies.
- With 30 years of automotive industry experience and a proven track record in meeting the highest global standards for quality and safety, I believe that DRB-HICOM will be an ideal partner for Volkswagen. DRB-HICOM has also shown leadership by establishing an educational institution near Pekan. The International College of Automotive, or ICAM, was established to offer automotive education and to develop a workforce that is both well-trained and well-equipped. Institutions like this are an investment for the future, helping to produce and nurture highly qualified workers for a knowledge economy.
- As we move forward, I must note that the task of developing the automotive industry is not the Government’s alone. To achieve our national vision for this industry, the private sector has an important role to play. Strategic alliances, like this one, will help advance the industry through the injection of new investments and dynamic technologies. For long-term success, partnerships and strategic alliances must be based on strong foundations of mutual respect and trust. To this end, DRB-HICOM serves as a role model for many Malaysian companies, as it has established beneficial alliances with many respected global players.
- I am happy to note that this collaboration will also support our national localisation goal. DRB-HICOM and Volkswagen plan to localise certain components and expect to achieve about 40 per cent local content. Both parties, I understand, will also be developing a vendorship programme for this purpose. This will create a pool of highly skilled local vendors and extend DRB-HICOM’s efforts to promote downstream opportunities in surrounding communities and accelerate development in Pekan.
Ladies and Gentlemen,
- I would like to conclude by congratulating DRB-HICOM and Volkswagen on this successful relationship. This collaboration will certainly pave the way to generate new energy and a sharper focus that will take this industry to greater heights. I wish both parties every success.
Wabillahitaufik Walhidayah Wassalamualaikum Warahmatullahi Wabarakatuh.