Standard Operating Procedure for Importing Quality

Used Automotive Parts

Prepared for
Malaysia Automotive Institute (MAI)



Prepared by
Malaysia Automotive Recyclers Association (MAARA)

Lot 1564, Batu 4, Jalan Kapar,
42100 Klang, Selangor.
Tel: +603-33455796/97
Fax: +603-32903784
Email: info@maara.com.my





Submitted on 6 Feb 2014




Table of Contents

Executive summary
1. Organization background
2. Identification of need & opportunity
i) MAI/MITI needs
ii) Additional requirement s
iii) Assumptions
iv) The opportunity
v) Project scope
3. Proposed plan
i) Objectives
ii) Strategy
(1) Deliverables
(2) Needs vs opportunities
(3) Team
4. Why choose MAARA
a. Benefits of our proposed plan
b. Competitive advantages
c. Team qualification
d. Success stories
5. Implementation plan
a. Methodology
b. Scheduling
c. Testing $ evaluation
i. Performance metrics
6. Conclusion











Executive Summary
Malaysia Automotive Recyclers Association (MAARA) is pleased to present Malaysia Automotive
Institute (MAI) with this proposal for the Proposed Standard Operating Procedure (SOP) to import
Quality Used Parts (QUP). We understand the dynamics of the recycled auto parts market that industry
faces and it is timely to further enhance the industry to be a governed industry. We believe that the QUP
market is in its maturing stage and that we are uniquely positioned to successfully transform the
industry to be a value adding industry.
Having duly examined the current situation, we are confident that our proposed plan will effectively
address MAI and the government concerns. Our goal is to regulate the imported QUP industry by
ensuring all imported QUP are in safest condition and related informations are capture by the MAARA
Recycled Parts Information System (RPIS). This is vital to restore consumers and governments
confidents in Recycled auto Parts. By availing itself of our proposed plan, the auto recycling industry will:
o To reform the current business model to a structured and organized model
o Contribute higher economic value to the national GDP
o Reposition Malaysia as QUP hub in ASIAN region
With our knowledge in auto recycling and the networking with the international auto recycling affiliates
make us an invaluable partner in the Malaysian auto recycling market. We look forward to forming a
mutually rewarding relationship with MAI.















1. Organisation Background
Founded in 2008 by Mr Gwee Bok Wee, Malaysia Automotive Recyclers Association (MAARA) is the
Independents non-government organization representing the auto recycling industry in Malaysia. Our
existence is known for promoting used engines or half cut car business. We have been quite successful
in promoting Malaysia as the recycled engines trading hub among ASEAN country serving the African
and Middle East countries.
MAARA currently serves over 200 members in Malaysia and affiliates to 7 regional auto recycling
associates listed below:
1) Automotive Recyclers Association (USA)
2) Japan Automotive Recyclers Association
3) Korea Automotive Recyclers Association
4) Automotive Recyclers of Canada
5) Auto Parts Recyclers Association of Australia
6) European Group of Automotive Recyclers Association
MAARA has built a remarkable reputation in the international auto recycling arena by actively taking
part in the international forum and conferences throughout the world.
Objective:
1) Facilitating the development of policies and standards to enhance the public perception of
auto recycling industry in Malaysia without compromising the welfare of recyclers.
2) Promoting the adoption of an automotive recycling industry code of conducts, best
management practice, accreditation and certification programme that defines the standard of
excellence and highest integrity level.
3) Encouraging and assist operators to venture into value-adding activities in relation to recycled parts
and remanufactured parts.
4) Encouraging research activities with local and international institution to increase the
automotive recycling rate to 100%.
5) Creating public awareness on the importance of auto recycling industry to the
environmental conservation and the nation economy.
6) Promoting continuous human capital development program to ensure operators are well equipped
with updated information and latest knowledge.

Office location
Lot 1564, Batu 4, Jalan Kapar 42100 Klang, Selangor Malaysia












Organisation chart



Council members

Post Name Company
President Gwee Bok Wee Sungai Sendok Holding Sdn Bhd
Deputy President Ahmad Shukri Bin Datuk Abdul Ghani PGN Link Sdn Bhd
Vice President Lau Koo San Tarching Nippon (M) Sdn Bhd
Ng Keng Heng Billion Series Sdn Bhd
Secretary Tony Chia Han Teun Sincere Shipping & Forwarding Sdn Bhd
Vice Secretary Gwee Chin Hwee China Auto Manufacturer (M) Sdn Bhd
Treasurer Gwee Bok Chuan BV Trading (M) Sdn Bhd
Vice Treasurer Fan Hon Keong Poly Mix Auto Parts Sdn Bhd
Members Khan Mohd Aga Wheel Trading
Wee Ming Han Han San Auto Parts Sdn Bhd
Tangam Letchumanan Thangam Auto Parts Sdn Bhd
Yew Tuan Chek Autozone Autoparts Trading
Abd Malek Bin Ahmat Asmaa Auto Parts Sdn Bhd
Tan Hee Kheong Seng Huat Hing Used Autoparts Sdn Bhd
Lai Liang Kiang Waja Pelangi Machinery & Equipment Sdn Bhd
Leow Eng Siong S Metal Network (M) Sdn Bhd
Choo Hock Kee YS Metal Auto Parts Sdn Bhd
Suah Jook Chien S5 Auto Parts (M) Sdn Bhd
Low Chee Wai S3 Auto Parts (M) Sdn Bhd
Woong Hee Fah S2 Autp Parts (M) Sdn Bhd




2. Identify Need and Opportunities
2.1 MAI needs
MAARA understands the needs of MAI to be such:
To enhance the auto recycling industry in providing quality recycled auto parts

General Requirement:
To ensure only quality usable parts serving the automotive aftermarket
To develop skilled workers with certification provided by the government
To restructure the business model of auto recycling industry

Technical requirement:
To develop the standard for all imported recycled parts
To uniform the testing mechanism for recycled parts
Develop a SOP

Reporting/monitoring method:
Compiling data and statistic from the info gathered via RPIS to monitor the
movement of QUP.
Certified testing centre to submit report on the test conducted monthly.

Evaluations Methods:
Quarterly review of statistic compiled to ensure demand and supply are in
manageable level.
Mandatory submission of testing report of QUP to MAARA database to evaluate
the effectiveness and reliability of the testing machine. .

Timeline Requirement:

Proposal
Submittal
Stakeholders
acknowledgement
Project Start Initial Review Project
Completion
15 March 1 May 1 Sept Monthly 1 March 2015


2.2 Additional requirement
MAARA has identified the following requirement that should be met in order to successfully
complete this project :
Support and recommendation from MAI in obtaining any legal procedure approval and
financing.
Cooperation from related associations to jointly agree that MAARA will host the SOP
Assistance and approval from government agency e.g. JPJ and custom department

2.3 The opportunity
MAI has the opportunity to further enhance the auto recycling industry. If successfully
accomplished. Our strategy can prevent illegal recycled parts from stolen car entering malasian
market






After analyzing different scenarios and taking into account the strengths and expertise of both
MAARA and MAI, we see2 additional opportunities:
1. Position Malaysian as QUP hub enhancing the automotive ecosystem
2. Encourage the development of remanufacturing industry with the availability
of core

Industry trends, notably increased ownership of vehicles, have shaped our proposed strategy as
described in section 3.2. MAARA will be instrumental in helping MAI reach a new milestone,
address its National Automotive Policy 2014 roadmap and stave off threat of unsafe imported
auto parts.

2.5 project scope
This project will involve over 4 MAARA delegates and require the coordination of Government
department particularly MAI, MITI, JPJ, Puspakom, and Customs department in Malaysia.

the proposed SOP will be implemented by stages. Engine and half cut body will be the prototype
of the SOP follow by other safety related parts.

Please view the following page for a diagram illustrating the overall workflow and scope of the
project.

























3. Proposed Plan

3.1 We have analyzed the current market situation and believe the following objective can be
achieved:
Establish a SOP where importers of QUP have to follow to ensure every single part is registered
and captured under a database managed by MAARA.
Establish a mechanism to ensure the safety and functional of the imported recycled parts meet
the defined standard.

3.2 Overview of proposed SOP process flow


There are 2 phases to control the imported QUP namely:

Phase 1
Develop a database to capture the information of imported QUP
To register all imported safety related QUP
Half cut body
Engines
Transmissions
Drive shaft
Alternator
Currently the scope only involve engine
Others QUP will implement by stages

Phase 2
Applicable to QUP for domestic consumption
Engine tester will be used to ensure the safety and functionality of the engines
Testing machine and testing engineer will be jointly certified by MAARA and MAI.
Tested QUP will be given mandatory warranty by the seller.




3.3 Strategy
Phase 1

MAARA will develop a database named as Recycled Parts Information System (RPIS) to store all
informations regarding the parts coming into Malaysia. The information shall include the
following:
Engine number
Year of make
Mileage travelled
Make and model
Year of End-of life (optional)
Nature of End-of life (optional)
Dismantlers info (optional)
Brief condition of the QUP (optional)
Chassis number (for half cut body)(optional)

The foreign exporters shall insert the info digitally into the system to be captured by MAARA
before the QUP arrives at Malaysian port.

Upon clearance of customs, the customs department shall verify the parts via RPIS, further
endorsed by MAARA.

Foreigner buyers may have to log into MAARA RPIS in order to obtain the exported QUP
informations.











Re-Export QUP to overseas market
QUP deliver to local dealer/wholesaler
Custom clearance and endorsement by MAARA
QUP ship to Malaysia port
Information log in into MAARA RPIS




Phase 2

Phase 2 is applicable when the engine is mean to be consumed locally. MAARA will establish a
technical support team to resolve any conflict arise and provide technical support on engine
diagnostics to dealers.

Besides, dealers are also encouraged to send the engine to testing centre to test the
functionality and quality of the engine before installation to be carried out by workshop.

MAARA proposed that tester engineer to undergo training and certified by MAI.

Tested QUP will be equipped with mandatory warranty given by QUP sellers in terms of time
period or mileage travelled.

This mechanism is highly recommended and will prevent product liability claim on sellers due to
wrong installation by unskilled mechanics.




3.3.1 Deliverables
In the course of this project, we will deliver the following:
Complete disclosure of QUP information to consumers.
Serve as monitoring system by JPJ or PDRM to prevent parts extracted from
stolen vehicle going into the market.
Quality assurance of the QUP



End user
Vehicle Inspection center
Installation at workshop
QUP tested by MAARA certified Testing Centre (optional)
QUP deliver to local dealer/wholesaler
Custom clearance and endorsement by MAARA
QUP ship to Malaysia port
Information log in into RPIS


3.3.1 Need vs Deliverables

The following table show how MAIs needs have been taken into consideration when
Formulating opportunities:

Needs Deliverables
To gather all information pertaining to
the QUP
Disclosure of information
To ensure the safety of the QUP Quality assurance endorsed by certified
tester
To prevent or minimize car theft for
parts extraction
Verification of imported engine can be done
via RPIS































4. Why choose MAARA

4.1 Benefits or our proposed plan
When comparing our capabilities to that of others parties, the benefits of choosing MAARA are:
improvement in business model
short time to completion
lower implementation cost
greater monitoring

4.2 Competitive advantages
The following are the competitive advantages that differentia MAARA from other providers:
MAARA recognition worldwide
Expertise & stability
Technology
History of success

4.3 Team qualification
Key team members

Prof Minoru Goko
Professor, Education department
Nihon Automobile College

Automotive Environment Analysis
Japan Automotive Recyclers Associations

Sosho Kitajima
Executive Director
Japan Automotive Recyclers Associations

Kenichi Suzuki
Sub Leader
Overseas Business Promotion section
Broadleaf Co Ltd

Ng Keng Heng
President
Persatuan Peniaga Alat-Alat Ganti Kenderaan Terpakai Negeri Johor

Tony Chia Han Teun
Vice President/ Section chief of Custom Affairs
Selangor Freight Forwarders & Logistics Association

Gwee Bok Wee
President
Malaysia Automotive Recyclers Association







5. Implementation Plan

5.1 Methodology
We have opportunity to follow the methods of work in this project. The deliverables shall be
provided according to the methodology because of the mandatory enforcement.

5.2 Scheduling
In order to initiate this plan, we first need to conduct the survey among the members. It will then
be possible to proceed with information gathering which allow us to gather info. We expect this
project in 6 months. A proposed schedule is summarized in the table below:

No Activity Dependency Duration Start date Progress
report
End date
1 Presentation and
discussion with
MAI
MAI 1 months 15 March Monthly 15 April
2 Presentation and
acknowledge with
related associations
EMTA
MUVATA
FEMPTAM
2 months 1 May Monthly 1 Jul
3 Appointment of
system developer
IT solutions
provider
6 months 1 Jun Bi weekly 1 Dec
4 Approval and
acknowledge of
government
agencies
MITI
Customs
JPJ
Puspakom
3 months 1 Jun Monthly 1 Sept
5 Awareness
program and
training nationwide
Used parts
traders
6 months 1 Sept On going 1 Mar 2015
6 Awareness
program and
training worldwide
Used parts
exporters
6 months 1 Sept On going 1 mar 2015
7 Full
implementation
All On going 1 Mar 2015 Monthly N/A
Table 2. Proposed schedule

5.3 testing & evaluation
Testing phases should debut when approval granted by MAI and should ensure the successful
implementation of the following elements:
Mutual agreement from all MAARA members
Mutual agreement from other related associations e.g. MUVATA and EMPTA
Evaluation methods will decide by the stakeholder and MAI. However it shall be focused reducing
the customs clearance time and the effectives of the testing procedure

The following metrics should also be used to measure the success and progress of this project.
Industry benchmarks or averages
Set goals and requirement
Desired improvement in quality
Behavior based
Cost based


6. Conclusion
MAARA is confident that our proposed plan will further govern and regulate the auto recycling
industry. We sincerely hope that MAI will consider MAARA as a long-term partner and allow us
to enter into mutually beneficial relationship. We are available to answer any question you may
have and look forward to discussing this opportunity further.
After reviewing this document, the following steps should be performed in order to come to
final agreement
Submission of question / suggestion from all stakeholders.
Counter proposal or approval by MAI and MITI
Negotiation of fees, terms, clause and conditions

We declare this offer to be binding and free of errors or omission. Due diligence has been
performed in order to ensure with your requirements and particular situation. We agree to hold our
proposal open for acceptance until June 2014.
Thank you for your interest.

Sincerely,




Gwee Bok Wee
President
Malaysia Automotive Recyclers Association