More on the Trans-Pacific Partnership (TPP) agreement – specifically, the question as to whether or not the prices of vehicles on sale in Malaysia will be affected as a result. Earlier on, it was reported that Malaysia is set to lift the cap on vehicle imports from the United States (US) when said agreement swings into motion.
While that bit is clear enough, the agreement also states that onwards from January 1 2021, “Malaysia shall not provide, for motor vehicles, excise tax credits based on export performance, the use of local content or local value added.” From our understanding, this would result in diminishing incentives for manufacturers to establish CKD facilities here in Malaysia.
As it is now, both CKD and CBU vehicles are bound to the same excise duty, but locally-assembled models are then granted excise tax credits, based on the three conditions listed above. With that perk neutralised, the only difference between CKD and CBU models would be import tax.
Import duties ranges from 10% for CKD vehicles to up a maximum of 30% for CBU units, though vehicles imported from Japan, Thailand and Australia face even lower rates. Whether this difference would be significant enough for manufacturers to consider setting up CKD plants in Malaysia remains to be seen.
Plus, the loss of the excise duty credits will surely affect some brands, especially those that have made heavy investments in the country (initially with the promise of significant excise duty credits).
Also in the spotlight as a result of the TPPA is the “customised incentives” under NAP 2014’s Energy Efficient Vehicles (EEVs) policy.
The agreement states that “in the event a new excise duty structure is introduced,” Malaysia will be required to disclose the process in a manner that “will be transparent and consistent with Malaysia’s commitments under the World Trade Organization (WTO) Agreement” and the TPPA. As such, all the “customised incentives” given to various manufacturers will have to be made public.
Aside from that, the Approved Permit (AP) system will no longer be applicable to vehicles originating from the US. As mentioned, the agreement states that “Malaysia shall not apply any quantitative limit on the importation of originating new motor vehicles from the United States, including any limit applicable to vehicles that are subject an import licensing requirement.”
So, what does this all mean for the rest of us? While all the signs indicate a shift of some sort in prices for new vehicles in Malaysia, the bigger question is by how much. What are your thoughts on the TPP and the aftershocks it will present to the Malaysian automotive sector? Let us know in the comments below.
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why we need TPPA in the first place? if we do really need it then why Obama & co are ones rejoicing it?
I hope every single person in this country make decision for the sake of the country and her rakyats.
Is this Tappau thing good for us? Whose idea is it? Was there any discussion/negotiation/bargain?
I know I can compensate my loss (from various automobile taxes) by a couple of other ways that I will not teach you, and I know the end sufferer is not me, it is you all.
Am I short-sighted? Or purposefully being so?
since you are smarter than most of us to avoid loss from automobile tax, you dont need us to answer you
First say TPP replace import tax but minister NEVER mention about excise duty 75% and AP’s still remain. Car price will only increase if ministry never abolish AP system and reduce ‘crazy high’ excise duty !!! In the end 3rd world country Rakyat Malaysian will continue suffer higher taxes and cronies industry !!!
Who created the AP system??
That bastard must be condemned! but alas people only see the current and not removing the root problem.
ask tun mahathir. hes the brainchild for all the thing that happened in this country for the past 30 years
i have solid evidence that car companies in malaysia are double charging GST on cars sold to the public.
at least, one company does.
the first GST is charged in the custom documents, unknown to almost any other ordinary person.
the second GST is the 6% shown on the price list. these 2 figures are totally different numbers.
and with that, i decided not to support new car industry for a certain time.
75% excise duty (minimum) + GST 6% + GST 6%.
i wrote to national whistleblower NGO but seemed like no response.
hooray malaysia!!
Import GST is charged when the vehicle is brought into Malaysia. This is then claimed as an input credit in the importers GST return. If there is no output GST charged to the customer in that month, then the input-GST is refunded by Customs to the importer.
Output GST is charged by the importer when he sells the vehicle. That is the GST that you see in the new car price list and in the invoice issued to you. Output GST collected (and assuming there is no imports in that month) is paid by the importer to Customs
So if in that month, there is an import of a vehicle and a sale to the customer, only the difference is paid to Customs. So
(i) Import vehicle RM100 value
6% GST paid by importer to Customs = RM6
(ii) Vehicle sole to customer at RM150
6% GST paid by customer to importer = RM9
Importer remits only RM3 (i.e. 9 collected – 6 already paid on import) to Customs.
Total received by Customs = RM9 (i.e. 6+3)
Conclusion: Your boycott is wrong
Never trust these people. These are people with self and country interest. Nothing is free in this world.
Car price reduced, then banks and insurance companies increase their rates. If you cant afford an x6 today it doesn’t mean you will be able to afford one later.
TPPA = To Punish Proton Absolutely.
There’s no punishment. TPPA is not unilateral. There will also be removal of entry barriers for Malaysian products and Malaysian intellectual property into the American market. In other words, it will now be easier for Proton and Perodua to sell left-hand drive versions of their cars into the US upon the signing of the TPPA.
However, if they were to enter the US market as they are now, our local car makers might get penalized by lemon laws and class action suits. In a way, that is good, because in order for Proton and Perodua to gain access to the American market, they’ll have to buck up and deliver good products and good after-sales service. It won’t be that hard. Anyone who has driven American cars over there in the past 5 years can tell you that the interior quality of Proton and Perodua cars are already better than the crappy American domestic model cars.
at least middle income people doesn’t have to be tied with proton or perodua for the rest of their life, give them option, choice n alternative in searching an affordable with quality car, this life is too short, let them enjoy their deserved life quality
Welcome back union jack
Fortunately the British is not in the TPPA.
But they are in their own problem and even worse trade agreement in TTIP
The AP system must go otherwise the AP fees which is a whopping RM25K + RM10K can burden the new pricing structure.
How many right-hand drive vehicles have been produced by the US for right-hand drive markets?
That’s right. We can hardly name any in recent times except for the Ford Mustang. Therefore, before we get our knickers in a knot, let’s stop to think for a moment whether this will affect our auto industry in a big way since the clauses apply to vehicles imported from the United States..
If the clauses apply to the importation of vehicles from other TPPA signatories, it will have a much larger impact and result in higher capital outflow from Malaysia
Dont be so short-sighted… they might not produce significant RHD vehicle now. Look to the future a bit.. this clause will be in force possibly forever. Now.. imagine the impacts (for the future)?
Why would the current superpower of the world pushing this hard to sign any agreement with small country like us if that agreement didn’t provide and guarantee overwhelm benefits in their favor?
This is a group of people that plan, perhaps for hundred of years to come. They are not called ‘neo-con’ for nothing.
TPPA removes entry barriers for US goods to be sold in Malaysia, and at the same time it also removes entry barriers for Malaysian goods to be sold in the US. It also enforces intellectual property rights between the US and the signatories, so it’ll actually make it easier for Malaysian K-economy to develop by selling Malaysian-developed intellectual property and professional services to the US.
Is the glass half-empty or half-full? For those who have only been hopped up on Pakatan BS, the glass is permanently half-empty. TPPA is making the doors open wide both ways. Losers will feel threatened while winners will see bigger opportunities.
With the TPPA be prepared for a big increase in healthcare cost in the future once its enforced. Patents for all western medicine from the big pharmaceutical companies will be extended so generic versions cannot be sold anymore locally.
Since consumers will have no choice but to use the original medicine be prepared to pay between 2-10 times more than current generic medication. A good example will be a standard first line diabetic generic medication cost between 6-10 cents per tablet vs 40 cents for the original one.
From the healthcare point of view the TPPA agreement will have minimal benefit to patients depending on medication here in Malaysia.
The ones biggest affected will be cancer patients where a single dose can easily cost up to 10k. Some of the cancer drug patents will end by this year and many generic costing less than half the price will be out however with TPPA say goodbye to cheaper alternatives.
Is the glass half-empty or half-full? “For those who have only been hopped up on Pakatan BS, the glass is permanently half-empty.”
My opinion has no correlation with the shallow political divide being played out in the political theater. Simpan sikit your judgemental prejudice and shallow simplistic mindset.
Its universally recognised that US is the worse (as in best) schemer when its come to protecting themselves through ‘legal’ trade barriers (such as environmental laws) and other potent ‘political’ and protectionist measures. TPPA is their newest most potent tools and an advancement in this regards. An upgrade, an evolution of NAFTA.
“TPPA is making the doors open wide both ways. Losers will feel threatened while winners will see bigger opportunities.”
TPPA is designed and targeted to only benefit the ‘select’ large corporations with big capital and resources. It has only 1 winner, it’s own designer a.k.a. the big corporation.
So the benefactor from this deceitful agreement is big corp, it’s collaborator and conspirator.
Its clear who the losers going to be. It’s the national sovereignty countries itself (which is not to be confuse with the ruling government / controlling political party. Government/political party is not a country) and almost all the citizen of each TPPA countries.
Blind supporter will lose out too. Sorry.
TPPA is NOT even a trade agreement, its an enslavement/surrender agreement of all signatory countries and it’s people / rakyat to the ‘select’ big corp masking behind the US.
Automotive industries polemics are just sideshow / by-product. Open your eyes.
problem is malaysia dont have any product but raw material…that is the sick part of AHNO Gov running for years that productivity for the country, innovation is killed..since people with skill, knowledge wont be welcome but all relationship for $$ award for G. Close case for the next generation of whole rakyat if any realize that.
DonkeyKong is a big hypocrite and always spews righteous words and shows his shallow way of thinking. He is just a mouse pretending to be a lion behind the anonymity of the internet as in most trolls.
Just like in this case when multiple people put forth hard facts about how wrong his comments were, he shuts up and moves on to troll other post.
One of the reasons GM acquired the bankrupt Korean Daewoo brand was to have small size cars for both LHD/RHD market in Asia and Europe.
Though Chevrolet is hardly making any impact after almost 15 years (yes most of our cars are from GM Korea instead of GM America) but the presence is felt and to GM that does matter.
The same step is being taken by another american brand which is Chrysler in collaboration with Fiat. Using Lancia models as template Chrysler is using the same formula as GM.
Pelingkup negara
Proton saja lingkup.
It would also mean that japanese (Honda, Toyota) and European (bmw, vw) cars assembled in USA would be exempted from current tax, duty and ap unlike cars assembled in Japan. This will increase japanese and European investment in USA, increase production and include rhd cars to be assembled in usa and exported to tppa countries. Smart move by USA.
U.S. labour costs are too high, much higher than ours. The cost of transporting and shipping CBU cars across the Pacific would easily negate any savings on higher economies of scale. Most of their cheaper Japanese cars are only made in LHD, but some expensive ones are made in RHD and then exported back to Japan (apparently, it makes sense because of the currency rates).
However, for premium and luxury cars, yes, they will definitely save quite a bit, because our automotive industry is focused on economy and affordable cars, where the profit margins are extremely small, sometimes non-existent.
the current tax and duty already bring our car price highest in the world except Singapore.
if Acura coming then nice.
or ford mustang sell less than 200k
No APs for CBU imports from the U.S. ? That is the only good news I’m seeing.
I honestly think the TPPA will be the beginning of the end of our automotive industry. If Thailand and Indonesia join the TPPA (they have announced interest), then that’s it for our CKD industry. The whole idea of CKD is to get rid of import taxes and if feasible, maximize localisation to reduce excise taxes as much as possible. If the same conditions are set for a Malaysia-Thailand or Malaysia-Indonesia TPP agreement, then foreign investors would gradually wind down Malaysian CKD operations and just sell us CBU Thai and CBU Indonesian models. Most of our CKD plants serve domestic demand only, and thus have low economies of scale. The Thai and Indonesian plants serve global demand, and their governments have huge incentives for foreign investors. In short, Malaysia can no longer rely on CKD operations to sustain our automotive industry. Malaysia will have to rely solely on our national car companies, Proton and Perodua. It is very likely that both Proton and Perodua would be drowned out by the invasion of cheaper Thai and Indonesian made Japanese cars. This is extremely bad news for hundreds of thousands of Malaysians employed in our automotive industry and associated industries, including our very competitive electronics industry.
If you’re too lazy to read, just keep this in mind; TPPA is not your friend. It brings promises of ‘free trade’ and ‘cheaper products’, but in the long run, we Malaysians will be exploited economically by far larger and more experienced foreign companies. We will lose our bargaining powers and be forced to play a one-sided game, which we cannot win. The rich will become richer, and the poor will stay poor. The future generation of Malaysians should not pay the price for our mistakes and incompetence.
I tot everyone wanted Proton to close shop rite? Now, it’s TPPA killing our industry… Is it just because the Opposition says so or because you really appreciate the implications?
Let’s put it this way, Proton is only ailing because they need to support all the local parts manufacturers, good AND bad. The good ones like APM would continue to survive and TPPA might likely be very positive for them. The bad ones.. Well, I’d say enough is enough with sucking Proton dry. Hopefully once TPPA is in place, Proton can source parts from Detroit of the East as much as they can.
Aero, I was surprised why Malaysia signed the agreement.
nope, it will make manufactures open more plants in Malaysia since the cost is cheaper here, its a 2 way, but the company may own by USA companies and create more jobs.
Why Thai is not included since Thai is big auto-hub for Japan, USA can potential make Malaysia a USA-auto HUB to compete in this region.
The lost out are cronies.
i want to say yes, and i hope price will reduce. but deep inside, i know the chance will be very small. even if car price reduce, something else will increase, e.g. interest, tax, insurance. sigh….
No need to discuss and speculate, whats going to happen in 2021, its a long way to go. How about the closer one, AFTA, reduce car price by 30% and abolish AP? Still did not materialized, so its wasting time to discuss and speculate.
We just maintain out cars and stop buying any new cars. this is more promising and price will surely come down, when stock piling up and sales significantly reduce…
When the buying stop, the killing can too…
When we work together, we can win this…
The easiest way apa mahu susah peningkan kepala tukar the corupt stupid umno bn government to new elected pakatan rakyat for sure its a big value for us and our beloved country. Coming sooon PRU14 lets umno bn dead ever and forever you all ada berani kaa.
The stupid pakatan cannot be trusted. Even water supply and garbage collection they cannot manage.
2.6 billion and diam diam. Donation….. Dummo
For more details which imported products exempted from tariffs (or very low tariffs), MITI posts a tariff schedule in its website.
A full text of TPPA agreement can now be downloaded from MITI for the public to read.
One of the advantage is that Proton and Perodua will gain easier market access to the usa. Since USD value is very high therefore local cars should be able to export very competitively in their lowest tier auto market. It’s still gonna be tough though.
indeed..!
Dont be silly, US is smart not to impose taxes on imported cars but the emission regulations is enough to keep many cars out of its market. P1 & P2 cars have no chance to make it there..la
Dont be shallow minded lar, their silly regulations enough to bankrupt VW.
Hyundai, Kia and even Honda & Toyota almost died on the shores of the US when they first entered. Koreans had to offer 10 year warranties and still was struggling 5 years ago. Mitsubishi is now dying.
Proton can’t even conquer our local minds even though it’s the cheapest car here.
What makes you think Americans stupid enough to pay for 25-year old failing power windows even though price is cheap?
Old story, now story of Takata airbags lor
Malaysian cars will be on the very bottom of any list. Did you forget that for 1 Proton, there are 10 Chinese car makers with more budget and cheaper prices willing to battle it out in the US, once they reach another agreement? One stroke of the pen, everything tapao. Who the hell wants a failed, corrupted Proton? Not Honda, not Mitsubishi, not even corrupted VW.
Our market is dropping already… And you still want to increase it? Think twice before you make your decision yeah~
Australia already rejected the partnership, what do Malaysian gain over this that we need to consider about? a small drop in car price? or the truth that big corporation will taken over your business/health & environment in the future. https://www.getup.org.au/campaigns/tpp/tpp/the-dirtiest-deal-you-ve-never-heard-of
As Long Ass I Can Get Cheaper Car, I Dun Care What Happens To BlahLand….. BANTAH GST RAKUSS
Cheaper car? Why? Tired of riding on your motorbike? Get a better job to get a better car because we’re not getting cheaper cars anytime soon
Yeay BN already uphold their words to reduce the car price…. In return… damn…
While Mustang roaming our roads… Proton and related close shop…more and more jobless… Welcome to Boleh Land…
Competitors(US,Japan,Korean) can absorb them into their local M’sia workshop instead strolling around in P1 factory doing nothing “useful”
i think we are about to see more american cars on our land!
IMO, this sort of trade agreements only benefit the big boys – countries which are manufacturing and technology powerhouses. We are a small economy and need their markets more. What else can we export to them other than commodities, air-conditioners and rubber gloves? These products does not have high value added.
We will see more left handed cars in future. Waiting for Donald Trump to be the American President. RIP Proton and Perodua. No more Sam Lorr.
TPPA is not about reducing car prices. Far from it. Some speculation mentioned about it killing the local industry as a whole in the long run. This is not about Proton or Perodua alone. This is about the whole industry. And not just automotive industry, but the entire ecosystem.
Did the government think thoroughly on this TPPA thing? I am worried.
Playing golf together.. Nothing concrete with the whole RM2.6B. You can bet your butt US has Malaysia over the barrel.
The US’ NSA can track all phone calls & internet traffic, and they know nothing about Altantuya or Najib’s son’s and Jho Low’s activities in the US, or the other 100 scandals?
You bet they will use it as ammo to force Malaysia to sign. The US is the most powerful and devious country in the world, going against sly Russia and China and relentless Middle East. Malaysia is peanuts for them to take advantage of.
You can’t take for granted of import tax waived for certain policy. Remember excise duty? This comes in full force after bn gov promises ASEAN neighbour countries to waive import tax of member states. Gov could always shift tax from manufacturer to consumer in 1 way or another? Sounds familiar … GST?
In fact, transparency in policy is all about don’t lie blatantly to the public without proofs.
TPP was created by the americans so they can fully hijack out economy and take full control. You people should actually read about the TPP before talking about it. Car prices are the least of your concerns.
This article started with a question and ended with a question as well. Is the writer of this article dare not to put his own stand or opinion?
No. I actually would have voted for the guy if this is true. I’m on the autism spectrum. Trump would have become an asset to me.