Proton Urges Long-Term Automotive Policy in Budget 2027

Proton Holdings Bhd is urging the Malaysian government to introduce a long-term automotive policy in Budget 2027. The national carmaker says the policy must support the industry's transition towards electrified vehicles (xEVs) and incentivise upstream activities. Proton's Deputy Chief Executive Officer, Datuk Ir Abdul Rashid Musa, stated the goal is to bolster the vendor ecosystem and attract technologies and suppliers to Malaysia. The upcoming budget is set to be tabled on October 9.

Localisation and Upstream Development as Key Priorities

Proton emphasises the need to incentivise upstream activities and strengthen the vendor ecosystem. Government support is needed to achieve the national aspiration of increased localisation. Bringing more technologies and suppliers to Malaysia and encouraging local sourcing would lower development and parts costs. Lowering costs would help make the move towards electrification more affordable for Malaysians.

Abdul Rashid Musa said the aim is to "incentivise growth in upstream activities and strengthen the vendor ecosystem to achieve our national aspiration of increased localisation." Proton advocates stronger national programmes to help Malaysia move from assembling vehicles to designing, engineering, and developing automotive technologies. Support should be directed towards shared capabilities benefiting the entire industry. This includes automotive research, software development, artificial intelligence, battery technology, advanced electronics, testing facilities, and vehicle homologation. The collaboration aims to boost competency levels and create a ready base of skilled workers. Proton calls for closer collaboration between carmakers, local vendors, universities, and technical institutions.

Progress and Momentum from Existing Incentives

The strong uptake of existing incentives demonstrates market readiness. The RM10 million allocation for the vehicle replacement grant under Budget 2026 was used up within three months. Abdul Rashid Musa cited this overwhelming take-up of the matching grant for replacing vehicles aged 20 years and up. The incentive helped remove older vehicles from national roads.

Expanding such a vehicle renewal programme would help reduce the government's fuel subsidy bill. It would also provide safer cars with high technology and better fuel efficiency for more Malaysians. Proton wants to provide practical and affordable ways to retire unsafe, inefficient, or uneconomical vehicles. The company stresses the intention is not to force vehicle replacement or add financial burden on households. Proton hopes for a long-term national vehicle renewal and recycling framework to address ageing vehicles on Malaysian roads.

Proton's eMas Leadership and Future Ambitions

Through its eMas sub-brand, Proton has become Malaysia's leading xEV provider. The company has sold over 40,000 eMas vehicles since the sub-brand's inception in 2024. Almost 70% of those units were sold in the current year. The eMas models sold include the eMas 7, eMas 5, and eMas 7 PHEV.

Broader Impact of xEV Transition on the Sector

The shift to electrified vehicles will affect all areas of the automotive sector. Abdul Rashid Musa stated that Malaysia's transition to xEV would impact all areas in the sector. A managed approach is needed to balance industry players' needs with gradually building national readiness for xEVs. Accelerating development of local technology, talent, and suppliers is on Proton's Budget 2027 wishlist. XEVs include hybrids, plug-in hybrids (PHEV), battery-electric (EV), and fuel-cell vehicles. Proton is proposing the establishment of a comprehensive national vehicle renewal and recycling framework.