KUALA LUMPUR (Aug 13): Malaysia's push for electric vehicles (EVs) is seen as a way to achieve the country’s environmental goals and boost the country's manufacturing sectors through spillovers to other sectors. But the country’s journey towards adopting EVs is rife with challenges such as limited resources and a lack of advanced technology.

While Malaysia has outlined its ambitions through the National Automotive Policy 2020 and the New Industrial Master Plan 2030, the actual execution remains a challenge, said Tham Siew Yean, emeritus professor at Universiti Kebangsaan Malaysia and visiting senior fellow at ISEAS-Yusof Ishak Institute.

For example, although the government has set a target of 10,000 charging stations by 2025, progress has been slow with the private sector expected to take on a more active role. As of April 2024, there have been 2,288 charging points.

Tham said this during the sectoral studies session titled “Electrifying the future: The electric vehicles industry in Malaysia” during the first national consultation meeting on green industrialisation organised by UN Trade and Development and Khazanah Research Institute.

As the charging station infrastructure is in its nascent stages, government agencies are still ironing out the procedures, which inadvertently affects the time taken to secure necessary approvals for charging station operators, said Wan Ahmad Zam Zam, president of Malaysia Zero Emission Vehicle Association.

“We need to identify [the country’s] niche in the EV supply chain for a more targeted approach. In the NIMP, the whole value chain is there. But other countries are doing the same thing to attack the whole value chain. If we have a more focused approach, we can develop certain niches in which we can specialise,” observed Tham.

Investing in the development of local talent and targeting incentives towards early developers to stimulate demand are some of the ways to accelerate EV adoption, noted Wan Ahmad.

“We should focus on the niche areas. Focus on an area we are good at. Maybe in terms of software [and cybersecurity] … perhaps that is an area that the government can encourage investment and talent development in,” he added.

The country should also be wary of overreliance on foreign direct investment and technology transfer that could hinder the growth of domestic firms, said Tham. Instead, Malaysia should prioritise the development of local innovation and entrepreneurship.

To do this, absorbing foreign technology while fostering domestic technology development is necessary to reinvigorate the manufacturing sector via EV development.

“We need to give more incentives for domestic innovation. We need to look at the grants that we are giving out. We have given out many but if they are scattered then it doesn’t help. [We have] to align the grants with what we are developing in the EV sector,” she said.

Improving data collection and analysis is also essential to growing the EV ecosystem and making data-driven decisions on policies, said Tham. This is because the lack of firm-level comprehensive data is a significant obstacle to effective policymaking for EVs.

The government has implemented several initiatives to attract investment and enhance the competitiveness of EVs, said Fazal Mohd Yusof, senior director of the industry development division at the Ministry of Investment, Trade and Industry. For instance, the government has introduced tax exemptions and import duty reductions to encourage EV consumption among consumers.

Moreover, the introduction of EV models by national car brands is hoped to drive mass adoption, with the government aiming to install 10,000 charging bays by 2025 to meet these market demands.

A government structure that includes a steering committee, task force and technical committee has been established to oversee EV development, said Faizal.

“Apart from providing infrastructure for EVs in Malaysia, we will also focus on standard development to ensure that EVs produced in Malaysia conform to national industry standards. Standard development is also important to attract foreign investors,” added Faizal.