Proton urges Budget 2027 to introduce long-term automotive policies supporting xEV adoption, local sourcing, vehicle renewal and technology development
KUALA LUMPUR: Proton Holdings Bhd is calling for a long-term and technology-inclusive automotive policy in Budget 2027 to support the industry’s transition towards electrified vehicles (xEVs).
Deputy chief executive officer Datuk Ir Abdul Rashid Musa said the policy should encompass incentivising upstream activities in the auto sector, bolstering the vendor ecosystem, attracting technologies and suppliers to Malaysia, and encouraging local sourcing.
The national carmaker is also proposing the establishment of a comprehensive national vehicle renewal and recycling framework to address ageing vehicles on Malaysian roads.
Abdul Rashid said the policy should recognise that Malaysia’s transition to xEV would impact all areas in the sector, requiring a managed approach that balances the needs of industry players while gradually building national readiness for such vehicles.
He said that “government support is also needed to incentivise growth in upstream activities and strengthen the vendor ecosystem to achieve our national aspiration of increased localisation.”
“By bringing more technologies and suppliers to Malaysia as well as encouraging local sourcing, the industry would be able to lower development and parts costs, helping to make the move towards electrification more affordable for Malaysians,” he told Bernama.
Turning to vehicle renewal, Abdul Rashid said Malaysia needed a structured, long-term framework to address ageing and unsafe vehicles, citing the strong take-up of the matching grant incentive encouraging the replacement of old vehicles (aged 20 years and up) introduced under Budget 2026.
“The market is supportive of these schemes as proven by the overwhelming take-up for ‘geran padanan’ incentive announced in Budget 2026,” he said.
Abdul Rashid said the RM10 million allocation for the incentive was used up within three months, helping remove older vehicles from national roads.
“Expanding this programme will also help reduce the government’s fuel subsidy bill and provide safer cars with high technology and provide better fuel efficiency for more Malaysians,” he said.
He stressed that the intention was not to force Malaysians to replace their vehicles or place an additional financial burden on households, but to provide practical and affordable pathways for owners to retire vehicles that were no longer safe, efficient or economical to maintain.
On talent and capabilities, Abdul Rashid said Proton also hoped that Budget 2027 would accelerate the development of local technology, talent and suppliers.
According to him, Proton advocates stronger national programmes to help Malaysia move from assembling vehicles to designing, engineering and developing automotive technologies.
“Support can be directed towards shared capabilities that benefit the entire industry, including automotive research, software development, artificial intelligence, battery technology, advanced electronics, testing facilities and vehicle homologation,” he said.
He also called for closer collaboration between carmakers, local vendors, universities and technical institutions to increase competency levels and create a ready base of skilled workers.
