Mayban Securities Research predicts incentives given by the government to increase competitiveness of the local automotive industry would amount to RM27.5 billion over a 5 year period, which is about RM5.5 billion a year. The government would actually be spending more per year on the automotive industry with this plan, as 5.5 billion expenditure is more than the revenue foregone from excise duty rebates given to national carmakers
Assistance would likely be given to all eligible players, whether local companies, or auto part manufacturers and even non-national assemblers who qualify, although the assistance would likely be less than compared to national carmakers.
Mayban also predicts the form of disbursement or you could say, subsidy, would be according to the amount spent, as well as the area of expenditure. For example, every dollar spent on R&D activities would qualify for a 50 cent grant. Main beneficiaries for this would still be Proton and Perodua.
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So…Is this INCENTIVES or SUBSIDY? Which is which? If this is INCENTIVE, then why we can't get lower price petrol or lower priced car?
If this is SUBSIDY, then the GOVERNEMNT should abolished it…PROTON, PERODUA and the rest must "UBAH CARA HIDUP"..
Pentan Sakua said,
March 21, 2006 @ 8:51 pm
So…Is this INCENTIVES or SUBSIDY? Which is which? If this is INCENTIVE, then why we can’t get lower price petrol or lower priced car?
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bcoz those money are not meant for rakyat like you and me but some cronies' pockets. period.
Paul,
You got the timeline WRONG…
The incentives of RM27.5 billion is for a period of 5 years (2006-2010) and not 10 years…
Hehehe… to tired eh?
yeah, type wrongly. bleagghgh this is all tiesto's fault.
ok, can book honda civic now, price wont drop.
National Automotive Preview: What a "farce" by Mayban Research! This article raise more questions than answer. When talk about government expenditure, it is always included in yearly budget to be table in parliament by Finance Minister around Sept/Oct each year. Do this figure included! Where is the money come from! Tax contribution by Proton?
RM 27.5 Billion over five year period! Remember, if compare current tax-phobia structure and say in the US open market, the government unnecessary tax (up to 300% – up to 5% say for AFTA), the car buyers have to pay extra and unnecessary tax in access of more than approx. RM 8 Billions (vehicle sales approx. more than 400K units) for year 2004 alone! So for 5 years, on average it will be more than RM 40 Billions, then how to claim it is government incentives?
The fact is it is consumers' SUBSIDY. In 2004, Proton profit is RM 510 millions, but consumer subsidy is more than RM 8 Billions. Then consumer have to fork out RM 8 Billions in order to enable Proton survive and make RM 510 Millions? Totally ridiculous,……..
"Incentive or Subsidy"? This is a good question raised by Pentan Sakua. I am in the opinion it is "subsidy" as above calculation shown. Government so call "incentive" may included but not limited to in the form of bail out (as the MAS case maybe) or take over the company liability after losing money (in this case Proton already GLC). "Incentive" normally in the form of tax break (under normal % of tax) or other support design to stimulate certain industry. However, at least every car buyers know very well the automotive tax-phobia structure is up to in aggregate of 300%. It is a scenario of NOT government INCENTIVE, but it IS car buyers have to pay high or higher "SUBSIDY" in the form of high tax. Government never take out money, but just collect lower revenue (lower percentage of tax), but claim it as "incentive", WTF! Very farce, ………… NAP is farce, this is not government incentive but the sad truth is to comply with FTA like AFTA.
BTW, this NAP "incentive" will not stimulate long term automotive growth as far as the government do not remove the "main menu" from policy equation of Proton “great romantic demeanor†with crass automotive policy and tax-phobia structure, which become its “money-making business†tool, expected government to act as “sugar daddy†by maintaining it. As a result, car buyers are “force†to act like “sugar mummy†to buy it “over price†but inferior products to sustain its hullabaloo existence.
Consumers still have to suffer in the form of high prices for car! When petrol increase 30 sen per litre recently, government warn biz people not to raise price indiscriminately! Enforcement from Domestic Trade and Consumer Affair Ministry will carry out PR exercise by raiding and fine small trader!
This is not only double standard, it is encompass injustice and selective enforcement! If it is fair and apply to everybody, then the enforcement have to raid MITI and fine them as they make enormous "MOUNTAIN PROFITS" from consumers in the form of automotive tax-phobia structure and issuance of AP. What is this? Is Rakyat is blind!
it is an incentive,.. it means that national manufacturers will be encourage to do their r&d.. subsidy is more of the g giving direct money to these companies. good move..
Full AFTA implementation is getting closer.. by then it will be free trade, and the g needs to give iniciatives to these national manufactures early.. kudos
talk so much on NAP details……..but WHEN is it going to come out?????????
no need to speculate or preview…..all rubbish………just tell me the date when the NAP will be announced.
after so many round of NAP announced throughout the year, i feel that NAP is nothing but benefiting the AP holders only…..all car prices will increase except proton…so…AP holders can encourage people to buy now rather than wait for another round of price increse…..sad…
this is a very simplified calculation/ball park numbers. in 2005, the govt got around rm8b from excise duties. no breakdown from govt is revealed, but let's say 75% is from motor vehicles (quite reasonable actually. excise from cigarette sales about RM1.5b++ in 2005). that's about rm6b. for simplicity, assume that the source of the excise from vehicles closely follow the market segments. in 2005, national cars (proton+perodua+naza+inokom+malaysia truck and bus) make about 65% of sales. so that's rm3.9b in excise duty is from national car sales. now, these national carmakers get 50%-70% in discount on excise duty. for simplicity, we take the figure of 50% (that's what proton & perodua get laa btw). therefore, RM3.9b is equivalent to 50% of total excise duty that SHOULD have been collected from the national carmakers. so the other 50% must also be rm3.9b laa. rm3.9b is the sum of excise from motor vehicles foregone from giving national carmakers the rebate on excise duty. assuming the govt wants to contiune protecting national carmakers, at least rm3.9b p.a. in subsidies/incentives must be given to them to cover for the rebates, which ended in oct 05. but this is only for national carmakers. under the nap the govt is supposed to improve the whole sector, i.e. part makers as well laa. thus, the govt can be expected to spend more. rm5.5b (37.5% more) seems quite reasonable to cover the costs of improving part makers and maybe other auto assemblers as well.
of course this projection is not exact. the govt doesn't release numbers down to the last details, thus reasonable assumptions must be made. this projection ignores many other variables, especially political ones and is done via a reverse calculation from the available figures of revenue from excise duty. but it is a good first step to see the costs of sustaining a national auto industry.
whether we should have an auto industry or not is a different matter all together. the auto industry was one of the spearheads to push m'sia towards developed nation status under the industrial master plant (imp). of course, along the way some aspects of the implementation was screwed up. u must study how the japs and koreans used the auto industry to industrialise their economies. in japan and korea, their markets are heavily protected. tariffs are really high, even today, resulting in the market share heavily skewed to the nationals at 80-90%. and just like m'sia, their govts put the industry high in priority. but this comes with the stick that the carmakers must built cars of world-class quality in order to pull their economies at the forefront in r&d and high technology. this is what the m'sian govt forgot to stipulate when proton was set up. add to the vested interests which resulted in several more carmakers springing up.
nap out today at 5 pm. salient details to follow