Kuala Lumpur: There is a huge potential for local auto parts firms to export to Japan as Japanese auto firms facing rising costs are increasingly outsourcing their requirements to keep costs down and maintain their competitiveness.
In sounding out the potential, Tsuneo Tanaka, the managing director of the Japan External Trade Organisation (Jetro), said that local parts makers however, have to upgrade quality and improve delivery.
He said a team of Japanese experts, who visited Malaysia recently to evaluate auto parts makers, find local firms still have quite a distance to go to effectively compete in the international market.
But the good news was that several parts makers have what it takes to penetrate global markets, with at least two now in "serious discussions" to supply parts to Japanese firms following matchmaking sessions, he said.
"Some Malaysian companies were requested to submit quotations, some even have settled prices but negotiations have not been finalised," he told Bernama here Friday.
The companies were mainly involved in manufacturing auto accessories and components.
"If they build on current capacities, then there is a good chance for them to compete internationally," Tanaka said.
With Japan's technical assistance, Japanese car firms operating in Malaysia could also source better quality parts locally instead of importing them from other countries or Japan.
He said local firms should also endeavour to penetrate the single market under the Asean Free Trade Area where they could also supply to Japanese firms operating elsewhere in Southeast Asia, such as Thailand.
All this has been made possible with the signing of the wide-ranging Economic Partnership Agreement (EPA) between Malaysia and Japan.
The Free Trade Agreement between Malaysia and Japan is part of the EPA.
Under the aegis of the EPA, auto specialists were despatched to Malaysia while Malaysian parts makers took part in expos in Tokyo and held business matchmaking sessions with Japanese auto firms in Tokyo and Osaka.
Hoping to get auto parts distributors to supply to Japan, he said more local firms should participate at the next Tokyo International Auto Aftermarket Expo (IAAE) in 2008.
Their participation was part of the Malaysia-Japan Automotive Industry Cooperation or MAJAICO project under EPA.
Tanaka said EPA also culminated in Japan helping to set up an auto skills centre at the Advanced Training Centre (Adtec) in Shah Alam, aimed at fostering world class technologists.
It also offers training courses to raise the competency of auto industry workers from the novice to top-class levels, as it was found that the existing system for the auto industry in Malaysia was inadequate.
Tanaka also said the Japanese experts found that only 10 percent of the estimated 300 parts makers are internationally viable.
The rest were not so competitive in terms of pricing and quality, which means they have to upgrade as well as improve quality and delivery in order to survive in the international market, he said. - Bernama