Our Malaysian government has announced some of the details on the new National Automotive Policy today. Let’s have a look at what changes have been implemented, effective this Thursday (20/10/2005).

The new policy sees the abolishment of excise duty rebates for Proton and other national car manufacturers. We also see the reduction of import duties for Southeast Asian passenger cars from 20 percent to 15 percent. Vehicles from other regions will have their import duties cut from 50 percent to 30 percent.

Excise duty for Completely Knocked Down (CKD) and Completely Built Up (CBU) foreign cars have also been reduced to 80-200%. Before this, it was 90-250%. Excise duty for imported MPVs have been changed from 40-170% to 55-160%. A decrease for the high-end MPVs but an increase for the low-end MPVs.

The way excise duty is calculated has also been revamped. Before this, excise duty is calculated on cost, insurance and freight of the vehicle. Now it adds the value of the vehicle and import duty to the equation.

Before you guys scream in fear that Proton and other car manufacturers vehicle prices are going to go up because of the lack of excise duty rebate, note that the government is giving other incentives to national automobile manufactuers such as interest-free loans. The government says the prices should balance out in the end.

A new fund called the Industrial Adjustment Fund has been setup for this purpose. Other incentives to help out the local manufacturers are such as special auto production industrial zones designated in states like Gurun, Bertam, Tanjung Malim and Pekan.

As for imported cars, the government has calculated that imported passenger cars will enjoy an overall reduction in duties, but MPVs and four-wheel drive vehicles will see an overall increase in duties.

As for the controversial Approved Permit car import licences issue, the government has said it will phase out APs slowly stage by stage in the long term.

The first phase of the AP abolishment is allowing DRB-Hicom Bhd and Sime Darby Bhd to import vehicles directly instead of going through companies with AP franchises for the respective marques. Any other Bumiputra companies which imports cars can also apply for APs directly now, instead of going through these AP kings which secure APs for certain marques.

In a nutshell, this also means Bumi-controlled public listed companies can now apply for their APs. Before this, you had to have 70% Bumi shareholding before your company qualifies for an AP. In a public listed company, that’s hard to achieve unless only Bumis can buy your shares.

This means AP Kings Haniff and Syed Azman will lose their income from importing Chevrolet (DRB-Hicom), Suzuki (DRB-Hicom) and Honda (36% owned by DRB-Hicom) marques. Suprise, suprise. The AP kings are not AP kings anymore. This should bump up the rakyat’s respect for Pak Lah a few notches.

As for tune-up AP importers like Wald, Kleemann and Impul, APs will no longer be awarded from January 1 2006 onwards. They can still continue importing their cars using their allocation of Open APs, or if none – buy from other people who have the Open APs.

Rules for Open APs have changed a bit. Reconditioned vehicles not older than 1 year cannot be imported via Open APs anymore as this has been abused in the past. People have been importing new vehicles declared as a used vehicle and have been underdeclaring the prices.

Proton shares slipped 1.7% to RM8.50 as the stock market closed yesterday. We’ll see if the shares go down tomorrow after investors hear of the new National Auomotive Policy.

Some statistics on the Malaysian automotive industry as provided by Bernama:

  • Four national passenger and commercial vehicle manufacturers, including Proton and Perodua
  • One national motorcycle manufacturer, Modenas.
  • Nine motor vehicle assemblers
  • Nine motorcycle assemblers
  • 343 motor vehicle component manufacturers
  • 100 motorcycle component manufacturers
  • 76 open AP holders, 37 franchise AP holders
  • 1978 motor vehicle dealers
  • 158 motorcycle dealers
  • Investment to date for vehicle manufacturers and assemblers is RM11.2 billion
  • Investment to date for component manufacturers is RM8.2 billion

Source: Business Week, Dow Jones Newswire, Bernama

Updates on the National Automotive Policy

Full text of the National Automotive Policy
Thoughts on the National Automotive Policy