Pakatan Harapan (PH) has released its Buku Harapan election manifesto for the upcoming 14th General Election (GE14), and though there was no mention of lower car prices if it came into power, as was the case in its GE13 manifesto, there were still some items in the general mention that were related to the automotive scene, or would have an impact on it.

UPDATE 1: The story has been revised with GST-related info.

UPDATE 2: Pakatan Harapan has since won the 14th general elections; however, this article was written before the elections, hence the mentions of the coalition as the opposition in this article.

The first, one of 10 specific pledges that PH aims to fulfil within the first 100 days of taking office, concerns the introduction of targeted fuel subsidies to stabilise petrol prices. Currently, fuel prices are set via a managed float system and adjusted on a weekly basis, and so fluctuation is common.

The opposition says that it will provide oil subsidies at a rate seen fit every month to eligible groups (those using 125 cc motorcycle and cars of 1.3 litre capacity and below). It said an appropriate quota will be set, with the subsidisation mechanism tied in to an individual’s identification card, presumably to prevent abuse. In this manner, subsidies will be targeted only at those who need such subsidy assistance.

The second is also one of the 10 salient points listed in the manifesto, and is a promise to abolish the goods and services tax (GST) and take steps to reduce the cost of living. Doing the former without changing anything else upstream will have an effect on car prices, but this won’t be the case – the removal of the 6% GST (currently applied on top of a vehicle’s retail price without insurance) will see the reintroduction of the sales and services tax (SST) in its place.

For cars, this will entail sales tax, previously imposed before GST came into play. This was applied on a car’s government approved selling price, essentially, the car’s open market value (if CKD) or cost, insurance and freight (if CBU) price, along with associated import and excise duties. Pricing changes will occur, but as a result of the different mechanism of calculation.

As for car insurance, which is also subjected to the 6% value-added tax, the final rate of an insurance cover for a vehicle will be lower as a result of the tax omission, if nothing is added on to it. Prior to GST, only stamp duty was applied to the figure.

Elsewhere, the removal of GST will not have any implications on servicing, maintenance and repairs or the pricing of accessories and spare parts, given that SST – which was previously also set at 6% – will go back in place of it.

There is also mention of a gradual abolishment of tolls in the manifesto, though this is part of the larger canvas and is to be accomplished within five years. The opposition also said it will reduce excise duties on imported cars with an engine displacement below 1600 cc to enable a first car purchase to be made at lower prices. To avoid abuse, only one car will be alloted in this manner per household earning below RM8,000 a month.

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