There is some excitement around the traps about a Malaysian recovery. During the slow down, Malaysia more than other competing economies, was able to curb inflation, and keep costs low. Yes... and that includes business costs.

Add to this the perception that Mahathir and UMNO is taking the job of ridding UMNO or corruption and sweetheart deals, plus continuing high business base costs in Singapore, the malaysian market is looking good as a good alternative manufacturing base, to China. Consumer sentiment on the way up is a bonus.

New car sales are always a fairly sound indicator of improving local sentiment, rising over 15% last month.

Informally, the traffic jams that plagued Kuala Lumpur are back.. but this time, both locals and investors are seeing it as a good thing.

Wait News reports that Malaysian Car Sales for 2001 showed good growth -

Strong sales throughout the year took final sales in Malaysia to the predicted 343,000 mark, setting a new all-time record. Sales grew in eleven of the twelve months, and in all of the final nine months, rising 15.7% to 343,234 from 296,557. The growth rate was beginning to ease towards the end of the year, but we still expect to see 2002 set another new record at around 360,000.

Malaysia is also about the indigenous duo, and they duly took full advantage of the growth potential. Proton lifted sales by 29,786 units, to 208,746 from 178,960, and Perodua Kancil gained 13,641 units at 108,234 from 94,593. Malaysia is not really a market for outsiders, with fourteen manufacturers fighting for a share of 7.7% of the market, which means less than 2,000 units each on average for twelve months of selling.

However the car manufacturing market in Malaysia is driven by protectionist import tariffs. As usual protectionist tarrifs are a double edged sword. They nurture a new developing industry that cannot compete internationally. They also reduce competition, and in almost all cases, this means sub-optimal products and services. The critical decision is what time do you release your baby to the disciplines of the free market.

Proton and Perodua have brought budget car ownership to many middle class Malaysians who could not otherwise have afforded car ownership. It has also developed a car-owning society where public transport becomes less of a priority. In neighbouring Singapore for example, where space is at an enormous premium, car ownership is the pejoritive of the rich and upper middle class only. On the other hand, a very efficient public transpotation system has developed. Though to be fair Singapore has a greater population concentration than main Malaysian cities like Kuala Lumpur and Johor Bahru.

Malaysia has courted poor PR among their neighbours by refusing to remove protectionist automobile tarrifs in the last few rounds of the ASEAN free trade talks. But being a good neighbour and resolutions of the body means that free trade between ASEAN nations is imminent. This will mean competing - specifically against the lower cost base and more competitively geared Thailand car manufacturing industry.