MCO 2.0: MITI allows all car factories to operate again

From yes, to no, and now yes again. The ministry of international trade and industry (MITI) has reinstated automotive manufacturing to the approved list of services in economic sectors allowed to operate during the second movement control order (MCO), which means assembly plants will be allowed to run again.

Vehicle production and component manufacturing were included in the initial directive issued on January 11, but an update to the document the following day saw them being omitted, with a specific footnote mention that automotive assembly and manufacturing activities were no longer included in the permitted list.

Now, in another u-turn, MITI has given the green light for all automotive assembly plants – covering vehicle and component manufacturing – to continue operations, with the activity restored to the essential services list as of today, January 16.

Previously, the ban on activity was applicable only to states in which the MCO is in effect, specifically Selangor, Johor, Penang, Melaka, Sabah and the federal territories of Kuala Lumpur, Putrajaya and Labuan, which meant that Proton’s Shah Alam plant and Honda’s Pegoh plant in Melaka were impacted by the move.

While assembly plants in other states – under a recovery or conditional MCO – such as the Hicom plant in Pekan, Pahang and the Inokom plant in Kulim, Kedah could remain in operation, interruptions to their operations were likely to happen at some point due to supply issues.

This is because their ability to function would be subject to them being able to secure parts, something that would be difficult if component vendors within the MCO areas were closed. Now, it’s business as usual, and the resumption of auto manufacturing will be welcome news to companies looking to clear their order backlog.

The move follows on the call made on Thursday by the Malaysia Automotive, Robotics and IoT Institute (MARii), which said it supported the move for the automotive sector in the country to resume operations quickly. According to MARii CEO Datuk Madani Sahari, this resumption was crucial given the industry’s major contribution to the national economy.

He said that the sector, which contributed RM13.1 billion through exports in 2019 and employed more than 700,000 people, had continued to perform well last year despite the Covid-19 pandemic, which had resulted in many production interruptions and a scaling back in manufacturing.

Despite all these challenges, exports of parts and components to regional markets had exceeded the RM10 billion mark by the end of October, and Madani said that it was important that the momentum continue, as any lengthy delay would have a significant negative impact on the industry.

What do you think of the move to reinstate automotive manufacturing to the list of services allowed to continue during the MCO? Share your thoughts with us in the comments section.

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