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Everyone has an opinion on Malaysia’s Approved Permit (AP) system, but here’s one that carries some weight. It’s from the “father” of the controversial system himself, Tun Dr Mahathir Mohamad. The ex-PM has finally conceded that the AP system introduced to help Malays rise in business has backfired, with some trading in the licences for a quick profit instead.

Dr M told Malay weekly Mingguan Malaysia in an interview that he stopped giving APs to those who did not use them to set up car dealerships after some Malays merely sold the APs off. The permits, which allow holders to import cars, fetch profits of up to RM8,000 per car.

“We want to help the Malays, but they don’t want to help themselves. We must review how far we can give these APs. It’s fine if people actually get into business. Like Naza, they succeeded. They’re big now because they got APs. If Malays really made full use of this opportunity, they’d be like Naza,” Dr Mahathir said in the interview published yesterday.

naza showroom

Naza was founded by the late Tan Sri SM Nasimuddin SM Amin in 1975. Then 21, he started importing used Japanese cars. Today, Naza is one of the biggest grey import dealers in the country, but the group has also expanded to be the official distributor of Peugeot, Kia, Citroen, Chevrolet, Ferrari, Maserati and Koenigsegg, along with a clutch of high-end motorcycle brands that include Ducati and Harley-Davidson. It also has a plant in Gurun, Kedah.

“Yes, we started in 1975 trading in imported cars. At the time, the AP system was needed to protect the cars from simply being dumped in the market. However, since then, we have brought in franchises, nurtured and grown them. Having an AP doesn’t mean you automatically make money. You have to grow the brand, create the platform, market it and value-add it,” Naza’s joint-group executive chairman Datuk Wira SM Faisal SM Nasimuddin had said in March. He had added then that the group is ready for a market without APs.

The conglomerate (Naza is also involved in property development and F&B) is a shining example of the kind of business the system sought to create, but there’s only one Naza. “The problem is, there are some Malays who just want to sell the APs to other people and get lots of money. They get it for free and they can sell it for RM8,000,” Tun added.

imports

The Malay Mail Online, which reproduced excerpts from the interview, described the AP system as an extension of the New Economic Policy (NEP), an affirmative action policy that was implemented in 1970 to deal with the income disparity between the Malays and the Chinese.

Approved Permits exist for many things, but for cars, two kinds of APs are in place – open APs for the import of used cars (can be of any marque, used by grey importers) and franchise APs, used by official importers (eg. Nasim for Peugeot, Tan Chong for Nissan) to bring in new CBU cars.

The 2009 NAP policy specified that open APs would be terminated by Dec 31, 2015, and franchised APs by Dec 31, 2020 – at the announcement of NAP 2014 in January, it was stated that the government would be appointing a company to do an in-depth study on the impact of the termination of Open APs on Bumiputera participation in the automotive industry.

Has the AP system met its objectives? Do you agree with Tun’s views?