Honda Motor Co. Ltd. has established a place in Malaysia's highly protected automotive market. The Japanese automaker will take a 49 percent stake in a joint-venture company with two Malaysian automotive firms, who hold a combined 51 percent: DRB-Hicom, with 36 percent; and Oriental Holdings, with 15 percent.
Under the terms of the agreement, the three will form a new entity, DRB-Oriental-Honda, which will be incorporated next year with an authorized capital of 500 million ringgit ($130 million). The venture initially will produce up to 20,000 Hondas annually, the Malaysian news agency Bernama reported.
DRB-Hicom is selling its stake in Malaysia's leading national automaker, Proton, to state oil company Petronas. Oriental is involved with Malaysia's other car company, Perodua. The two brands control the vast majority of the local market because of tariffs that have angered Malaysia's partners in the Association of Southeast Asian Nations. The tariffs have particularly angered Thailand, which has turned itself into a manufacturing center for American, Japanese and European automakers. Malaysia has balked at lowering tariffs until 2005, although the region's trade agreement had called for an end to most tariffs by 2002.
The new joint venture would add Malaysia as a regional automaker base for Honda, which already has factories in Thailand.