All carmakers must have local content, CBU rise puts Malaysian supplier ecosystem at risk – MITI’s Johari

Malaysian investment, trade and industry (MITI) minister Datuk Seri Johari Abdul Ghani today said in a speech at the launch of the MCE Auto Hub in Serendah that the government wants carmakers in Malaysia – not just Proton and Perodua – to have local content in their vehicles, and that the rise of fully-imported (CBU) vehicles puts Malaysia’s supplier ecosystem at risk.

“(Proton and Perodua) collectively contribute approximately more than RM15 billion in local purchase value. For many locally-assembled vehicles today, the government wants them to incorporate substantial Malaysian-made content, supported by an increasingly sophisticated supplier base.

“We want every assembly plant coming into this country – not only local car manufacturers – to put a real effort to make sure that there is involvement of local content in every aspect in Malaysia,” he said, adding that the local content must include value creation and not merely be imported parts disguised as localisation.

The MITI minister also said that Malaysia currently has approximately 730 specialised automotive vendors that support an ecosystem which employs over 700,000 people and which contributed RM84 billion to the nation’s gross domestic product (GDP) last year.

Referring to the Chinese wave (especially EVs) in recent years, he said: “During this period, Malaysia’s trade deficit in motor vehicles as well as parts and components has widened significantly, from RM13 billion in 2020 to RM33.8 billion in 2025.”

“Without a strategic and forward-looking response, there is a real risk that imports could further dominate the market and mount increasing pressure on our domestic supplier ecosystem. We must safeguard the over 700,000 jobs that support this ecosystem,” he added.

The integration of local vendors into carmakers’ supply chains would enable Malaysia to progressively move up the value chain beyond simply assembling imported kits to higher-value activities like engineering, systems integration and component development, Johari said.

“In a broader regional context, Malaysia should not seek to compete on volume alone. Our ambition is to become the ASEAN hub for automotive intelligence, which includes finding our niche in automotive electronics, semiconductor integration and complex mechatronics. Those are the industries that generate higher wages, deeper technological capability and long-term economic resilience,” he added.

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