The government has no plans to abolish the open approved permit (AP) system, but says the policy will be reviewed to ensure that it is not abused by parties looking to make a quick buck, according to deputy minister of international trade and industry (MITI) Ong Kian Ming.

He said this during an interview with radio station BFM 89.9 on its Breakfast Grille show yesterday, in which he also touched on the subject of the new national car project (NNCP).

Asked if the government had plans to address the AP issue, which BFM presenter Khoo Hsu Chuang said had artificially distorted the market, driven up prices and also reduced the number of choices for consumers, Ong replied that the policy would continue, but with possible changes down the road.

“I dont think that the AP issue is a big impediment to the development of the auto industry. If you think about the AP numbers, the permits themselves are between 20,000 to 40,000 a year, which is less than 10% of the total automotive market,” he said.

“There are no plans right now to abolish the AP system, I think what we are trying to do is to review the system so that you don’t have a situation where ‘Ali Babas’ are being used in the AP process, whereby people just apply for these APs, sit on it and sell it to somebody else at an inflated price,” Ong said.

He added that the government is trying to review the process “so that legit players are the ones that really contribute to the process of selling cars that cannot be assembled on a CKD basis.”

This echoes the view prime minister Tun Dr Mahathir Mohamad has about the matter. In September, he said that contracts or approved permits (APs) sold to other parties with the objective of reaping quick profits would be cancelled immediately.

Earlier this year, the Malaysian Association of Malay Vehicle Importers and Traders (PEKEMA) said the policy should remain in place. It said the system has helped to keep the automotive industry competitive, and prevents other importers from slapping on significantly higher price tags on imported vehicles.

Some parties have asked for the fee for the open AP, amounting to RM10,000 per used vehicle as imposed by the previous government, to be scrapped. Mutiara Motors executive chairman Datuk Ahmad Kemin had said back in June that the sum is a big burden to both consumers and retailers.

Ahmad Kemin added that removal of the fee would make it fair for local vehicle importers. “It’s different from franchise AP holders, where no fee is collected despite them importing large numbers. So, it’s only fair for it (open AP fee) to be abolished as we, the local importers, only bring in a small amount of vehicles,” he said.

In Malaysia, an AP is a licence required for the importation of certain products into the country, with items ranging from iron and steel to heavy machinery and motor vehicles.

For motor vehicles, there is the franchise AP, which is used by principal companies of car brands for the official import of their cars, as well as the open AP, which is responsible for most of the grey-import vehicles on our roads sourced from other right-hand-drive markets internationally. The importation of classic vehicles is also covered by the AP policy, for which new guidelines were implemented in July.

A study conducted by MITI back in 2015 had said that the open AP system for the distribution and importation of used cars contributed significantly to the automotive industry and the country’s socio-economic development.

According to the findings, the programme – under the system then – contributed about RM2 billion worth of taxes and fees per year, and also provided supporting sectors such as banking, insurance, shipping and logistics with around RM450 million of business on an annual basis.

What are your views regarding the open AP system, and how can the system be improved, seeing as there are no plans to discard it? Share your thoughts with us in the comments section, but remember to keep it civil.