NEXT YEAR, when the Association of Southeast Asian Nations embraces a free-trade area, or Afta, duties on all regionally manufactured goods will be slashed to between zero and 5%. But businessman Edward Teo, 57, is impatient--for he builds cars, duties on which, at Malaysia's request, begin sliding only in 2005-07. "Thailand has a 180% duty on car imports," beams Teo. "If that goes, I'll be able to sell them their cheapest sports car ever."
The affable, ever courteous businessman is the principal shareholder and head honcho of TD Cars, a Malaysian-Australian private company that owns the global patent rights to the TD 2000, a sleek roadster right out of The Great Gatsby. Completely hand-built at a factory in Shah Alam, west of Kuala Lumpur, the TD 2000 combines classic lines with 21st-century technology and has begun selling in Malaysia, Singapore, Taiwan and Australia and has even done what few Asian car makers can boast of--selling in Japan.
While it's a niche business, people like Teo exemplify the type of Malaysian entrepreneur Prime Minister Mahathir Mohamad dreams of--the player who does not ask for government help and who's unafraid of risk-taking and global competition. In contrast, Malaysia's own national car industry hides behind sky-high tariffs of up to 400%, which is why Afta is generally dreaded in Kuala Lumpur.
Teo positively salivates at the prospect because the way forward for TD Cars is exports. "This is a rich man's toy and because there are rich people everywhere, we have to look for new markets," he says. "But I'm optimistic. We haven't launched officially in Japan yet but we've already sold five."
That number is 3% of TD Cars' total production since it started commercial operations in April 2000 and illustrates the niche nature of Teo's business. So far, 80% of sales have been in Malaysia and progress into other countries has been slow largely because of varying design and safety standards in different countries.
Irked by the slow going, Teo shipped an entire car to Germany in mid-2002 to get European Community certification for the TD 2000. "Once we get the nod from the EU, we'll have a very good pedigree because they have the toughest standards in the world," says Roland Funk, a burly German who serves as TD Cars' technical director. "And we will get it because this is a bloody good car."
Teo's story begins in 1989 when he was a given a tour of Classic Cars, a private company in Victoria, Australia, making a modern version of the 1950s MG TD. A former senior executive with Toyota in Asia, Teo was struck by the car's beauty and never quite forgot the visit. Fast-forward to 1996 when Toe played golf with Kym Hewitt, Australia's trade commissioner in Malaysia and casually asked him about Classic Cars.
Hewitt hadn't a clue but checked anyway. Three days later, he told Teo that the company had been taken over by listed company TD 2000, operating out of Melbourne. "I went to see the company and it was a shadow of its former self," recalls Teo. "They even had problems getting engines."
The Australian company had been hard hit by the Asian financial crisis, so when Teo offered to buy them out there was little hesitation. In 1998, the company, intellectual property rights and all, was bought by Teo for over A$14 million ($7.9 million) and renamed TD Cars (Malaysia), with Teo's Australian partners taking up a 30% interest in the renamed company. "We shipped the whole factory over in 13 containers to Malaysia in 1999," he says. "And then we got to work."
Two years later, the car had been radically changed with the addition of a new Toyota engine and transmission, stop-on-a dime brake systems, air-conditioning and a left-hand-drive model. The car is now an eclectic international mix: its fibreglass body and suspension systems are from Malaysia, its tyres from Italy and its paint from Ferrari supplier Gastrulic of Germany. Thirteen million ringgit ($3.4 million) later, Teo is "ready to rock and roll."
The car retails in Malaysia for between 185,000 ringgit and 199,000 ringgit but is cheaper overseas because of Malaysia's steep duties. In Australia, for example, the car sells for $33, 786. Teo is now busy looking for overseas dealers and is excited about a pending visit from a Shanghai-based businessman who sells luxury cars in China. "I have been getting visits and enquiries from all over the world," he says and thinks that he will break even on his investment "soon."
Eric Pringle, an Australian businessman based in Malaysia, thinks he should have bought the car sooner. "You get enormous goodwill driving the car," says Pringle who bought the car in July. "People smile at you, drivers honk and wave and you can park in front of hotels. And women seem to like it."