The Politics of Industrial Policy
: The Case of Malaysia's National Automotive Policy

  • Firdausi Suffian

Student thesis: Doctoral ThesisDoctor of Philosophy (PhD)

Abstract

This thesis explores the politics of the industrial policy-making process in Malaysia, specifically in the national automotive policy (NAP). The automotive sector is one of the sectional interests under the heavy industrialisation programme introduced by the long-serving ruling coalition, the United Malay National Organisation (UMNO) led by Barisan Nasional (1963-present). Often in Malaysia’s policy-making process, the government manages the need for modernising the country through industrial development. It also responds to the domestic political economy including to political pressure, domestic enterprise interest and ethno-economic development. This highlights the need to understand the dynamics of the politics behind its policy-making process. To uncover the politics of the national automotive policy, this study seeks to explore what institutional arrangements evolve around the national automotive policy and how the state elite (politicians and bureaucrats) and ‘selected’ business groups mobilise, coordinate, and prioritise resources and economic preferences in the policy-making institutions.
This research utilises the theory of institutionalism along with a developmental state approach to develop a theoretical framework to explore and make sense of the politics in Malaysia’s policy-making process. This study employs a qualitative, interpretivist method. Primary data were collected by means of interviews with elite policy actors. Secondary data were also used as part of empirical evidence. The findings show that the political elite have a paternalistic role in policy decisions. As a consequence, the political elite can assert policy preferences along with the interest of the Bumiputra industrialist class. The empirical findings also suggest that though the formation of the NAP was part of an effort to liberalise the domestic automotive sector to create a level playing field environment, various institutional arrangements are in fact made to protect the domestic enterprises’ interests. The terms of policy have limited pro-market reforms. The reciprocal relationship between policy actors and ‘selected’ business enterprises enable them to configure and interpret policy in a way that favours their interests. Domestic automotive enterprises have benefitted from various state resources through beyond arm’s length relationships. Furthermore, the ethno-economic consideration (i.e. Bumiputra interest) is ‘packaged’ in the policy as part of protecting the domestic automotive sectors. This study shows how political influences in the automotive sector are crucial to facilitate the growth of Proton, the country’s flagship national car manufacturer, though they have a constraining effect on the direction of the national carmaker. Political consideration and ethno-nationalist interest have generally limited the growth of Proton.
Overall, this study shows that existing institutional structures influenced by historical events, political factors, power relations and norms have enabled a ‘triangular arrangement’ between state elites (politicians and bureaucrats) and ‘selected’ enterprises to formulate policy. Institutional arrangements made by these actors reveal the complex relationships and interactions among elite policy actors to influence the policy-making process. Often, political consideration precedes economic rationale. This has implications on policy-making institutions, which in turn affects their developmental strategy.
Date of Award19 Jun 2018
Original languageEnglish
Awarding Institution
  • The University of Bristol
SupervisorJeffrey Henderson (Supervisor) & Gaston E Fornes (Supervisor)

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