Malaysia and Indonesia sign joint venture agreement to produce ASEAN car

Malaysia and Indonesia have signed an agreement to form a joint venture to produce the first fully local-made ASEAN (Association of Southeast Asian Nations) vehicle.

The memorandum of understanding (MOU), which was signed in Jakarta, Indonesia, last Friday, marks the start of cooperation between the two countries to improve their automotive manufacturing workforce and supply chains to produce vehicle components and establish an ASEAN brand.

Malaysian Minister of International Trade and Industry Darrell Leiking said the agreement followed Malaysian Prime Minister Mahathir Mohamad’s meeting with Indonesian President Joko Widodo in June.

“This shows that Malaysia and Indonesia… should stay together in the economic and social development of the ASEAN region,” Leiking said.

Under the MOU, the joint venture will be run by the Malaysian Automotive Institute (MAI) and the Indonesian Automotive Institute (IOI), both government bodies.

MAI Chief Executive Mohamad Madani Sahari said that both Indonesia and Malaysia are already capable of manufacturing vehicles, with 90% of their vehicle components being manufactured locally.

The two countries – the world’s largest palm oil producers – had also looked into the possibility of manufacturing cars that can operate on higher blends of palm oil biodiesel.

“We will have more cooperation on research to advance our (capabilities) in creating electric, hybrid vehicles,” Sahari said.