Carmakers would have second thoughts on investing in M’sia had new excise duty regs went through – MAA

Carmakers would have second thoughts on investing in M’sia had new excise duty regs went through – MAA

It went down to the wire. If not for a last minute change of plans – told to Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad at 9am this morning by a ministry of finance (MoF) official – we could have been looking at a 4% price increase for some CKD locally assembled cars. Word is that 4% was what the parties settled on prior to the late reversal.

It would have been due to the CKD cars attracting more excise duty because of the new methodology of how the open market value (OMV) of a vehicle is calculated. OMV is the final market value of a CKD car ex-factory, before the government imposes excise duties on it, with profit margin and sales tax to top things off.

An assortment of components determine the OMV, and these include the cost of the CKD pack, cost of manufacturing and components as well as assembly and administration charges. However, the Excise (Determination of Value of Locally Manufactured Goods for the Purpose of Levying Excise Duty) Regulations 2019 – prepared by the MoF and gazetted on December 31, 2019 – sought to add new components into the OMV calculation.

Carmakers would have second thoughts on investing in M’sia had new excise duty regs went through – MAA

Under the new regulations, the computed value to determine duties will now take into account not just the profit and general expenses incurred or accounted in the manufacture of a vehicle (ex-factory), but also of its sale. The MoF says that this is in line with World Trade Organisation (WTO) standards.

According to an industry source familiar with pricing and taxation, the “and sale” clause also now applies to areas such as engineering, development work, art work, design work, plan and sketch, royalty payments and license fees (patent, trademark, copyright), raising OMV and applicable excise duty.

That has been now averted for this year, with a special exemption by the MoF essentially maintaining status quo for 2020. It remains to be seen what will happen next year, but any increase will be gradual. This is what the MAA is holding on to.

Carmakers would have second thoughts on investing in M’sia had new excise duty regs went through – MAA

“As far as we are concerned, the government has said that the increase will be gradual, so we’re hoping that they will abide by what they say. Even if there’s an increase, it will not be a hefty 20% increase, 15% increase, it’ll be gradual,” Aishah said.

Had the last minute “fingertip save by the goalkeeper” (in football parlance) not happen, it would have been bad news for the auto industry, which already faces a challenging environment. Aishah said that the association’s members, some of whom have invested heavily in assembly operations in Malaysia, would have had to rethink their plans for our market.

“Had the new OMV been implemented, a lot of investors would have second thoughts on investing in Malaysia. Even our local car companies that have been heavily investing in CKD operations would have to think again. Maybe they will decide to bring in CBU (fully imported cars) – why do you invest so much and yet it’s not competitive. That’s how I look at it,” the head of the umbrella association for carmakers in Malaysia said.

Carmakers would have second thoughts on investing in M’sia had new excise duty regs went through – MAA

Aishah and MAA council members also said later that the industry was not consulted prior to the release of the gazette, despite being in active talks with the government on other matters. This is consistent with what Perodua president and CEO Datuk Zainal Abidin Ahmad said yesterday at the market leader’s full year review event.

“We have very frequent engagements with the government, particularly on items in relation to the development of the local automotive industry. But specifically for excise duties, no, we were not consulted. That’s why we are in discussions with some of the members of MAA to try to evaluate what is the impact of this,” the P2 chief said.

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Danny Tan

Danny Tan loves driving as much as he loves a certain herbal meat soup, and sweet engine music as much as drum beats. He has been in the auto industry since 2006, previously filling the pages of two motoring magazines before joining this website. Enjoys detailing the experience more than the technical details.

 

Comments

  • Datuk on Jan 22, 2020 at 3:28 pm

    Datuk Aishah Ahmad, we support you.

    Like or Dislike: Thumb up 12 Thumb down 2
    • https://paultan.org/2018/07/18/kita-tak-perlu-lagi-projek-kereta-nasional-aishah/

      Like or Dislike: Thumb up 15 Thumb down 1
      • skodamalaysia on Jan 22, 2020 at 9:10 pm

        Better impose Carbon Tax base on carbon emissions (euro2,3,4,5,6 etc.) & subsiding ev :)

        #climate change

        Like or Dislike: Thumb up 5 Thumb down 2
  • khalid on Jan 22, 2020 at 3:32 pm

    Easy. revive GST 4%. No need other tax.

    SST tax to maker/ Factory, then seller increase price, end consumer tax. But middle men able to cheat.
    That why advance country (unlike Malaysia Baru) implement GST.

    Help the seller cheat or country: politician please don’t cheat

    Like or Dislike: Thumb up 17 Thumb down 1
    • Uturn Malaysia on Jan 22, 2020 at 6:11 pm

      If they revived GST, that is the mother of all uturns to all the uturnings they had done up til now.

      Like or Dislike: Thumb up 22 Thumb down 0
    • U-Turned Boleh Land on Jan 23, 2020 at 9:35 am

      SST came back was a BIG mistake from the first place… politician simply fooled us for their political. Now Govt insufficient funded and need to find more ways to get $$$ from the market.

      Like or Dislike: Thumb up 7 Thumb down 0
  • Itu dia… Uturn sudah mula…
    Uturn… Jangan tak Uturn

    Like or Dislike: Thumb up 16 Thumb down 0
  • maslanfriendrice on Jan 22, 2020 at 3:43 pm

    Follow WTO standards my foot lah.
    If follow WTO Standards, our car price won’t cost so much in the first place lah.

    Cakap tak serupa bikin. Nobita will always be Nobita

    Well-loved. Like or Dislike: Thumb up 53 Thumb down 0
    • Honda on Jan 22, 2020 at 7:26 pm

      Spot on bro…If follow wto, no all protective taxes…btw, u can reduce tax ler…moving forward no need to subsidize petrol…

      Like or Dislike: Thumb up 9 Thumb down 0
    • Levin on Jan 23, 2020 at 11:20 am

      Exactly…. WTO has like so many rules and its like following one of it and call it “inline with WTO standards”. Biggest joke of 2020. Which WTO standard says you could impose 200% tax on vehicles?
      And what’s all this OMV nonsense? Simply creating new jargon to make people think that they’re working something great in the background? Come on, put your money where your mouth is. It’s time to take actions instead of running your mouths and realize all promises made in the manifesto during the election.

      Like or Dislike: Thumb up 5 Thumb down 0
  • Looks like next year, Honda Malaysia will be game over. These are the reasons is because most people all complaint about service and quality issues for Honda Malaysia. Secondly, CRV (but only top spec), Civic (but only top spec), HRV, BRV, City, Jazz and etc have no advanced safety features. So Honda Malaysia has no way to push up sales and no longer leader of non national cars which Proton has deserved to takeover Honda Malaysia as second place since last year.

    Like or Dislike: Thumb up 42 Thumb down 15
  • transformer on Jan 22, 2020 at 3:52 pm

    “Carmakers would have second thoughts on investing in M’sia” ??? Really?

    even without E.D hike, Tomyam Land are auto makers most preferred second is either Viet/Indon/Phillipines, just not Bolehland……

    Thanks to unfair tax barrier to protect, higher labour wages, lower populations, limited supply chain compared to Tomyam and corruptions….

    In your dream Aishah and that Madani……

    Like or Dislike: Thumb up 19 Thumb down 5
  • Mason on Jan 22, 2020 at 3:58 pm

    With this kind of uncertainty, Bermaz may think twice on investing into CKD for the recent launch CX30 even if it sell well in CBU.

    Want more taxes but will loss automotive investor to invest in Malaysia and go to thai n indo. Think twice please!!!

    Like or Dislike: Thumb up 8 Thumb down 0
    • 25or6to4 on Jan 22, 2020 at 6:24 pm

      From what I’ve been told, Bermaz wants to CKD the CX30, but Mazda Japan is the one not convinced about the ROI. And, since Thailand has been given the go ahead to assemble the CX30, it seems more unlikely that Bermaz will be able to CKD it.

      Like or Dislike: Thumb up 3 Thumb down 0
  • Zaman Khan on Jan 22, 2020 at 4:13 pm

    You cannot blame PH for this. This is because PH and BN both have the same people running the show.

    New Government means only 100 cabinet members have changed.

    The people who make policies, usually the Secretary Generals, think tanks, Pengarahs etc are ALL the same NOW and 3 years before. Only Ministers and their Deputies have changed.

    In other words, the 1.6 million Government servants plus all those serving the Ministers in the Ministries are all the SAME clowns as BN time

    So, why do you expect a good decision to come about? These people memang got no brains.

    This is why we need more Mainland people to come into Malaysia to fill up the GLCs and replace the 1.6 million Government servants.

    One good example is Proton. Look at Li Chunrong, in 6 months, he transformed Proton to profit making what our local CEOs could not do in 30 years for Proton

    Like or Dislike: Thumb up 14 Thumb down 54
    • Uturn Malaysia on Jan 22, 2020 at 6:12 pm

      Don’t blame other people for your PH Government’s incompetence and uturnings. Just step down now and hand back power to BN if you don’t know how to govern.

      Like or Dislike: Thumb up 43 Thumb down 6
    • Ask your smart Finance Minister and MITI minister why their policy is a clear cut very investors unfriendly. They need no second thought BUT just ignored Malaysia altogether.

      Like or Dislike: Thumb up 19 Thumb down 0
    • Uncle Sam on Jan 22, 2020 at 9:57 pm

      Excuse me, but didn’t the previous government (Najib’s BN) was the one that brought in Geely to fix Proton?

      Like or Dislike: Thumb up 7 Thumb down 1
    • People talk tax you talk c***
      Tak payah cerita panjang la, end of the day you can only blame yourself being the fool for not seeing what you describing today. Ask yourself why did you vote a disfunctional government operated why two separatist teams.
      Logic bro… Jangan tak logic

      Like or Dislike: Thumb up 4 Thumb down 1
    • lilytan on Jan 23, 2020 at 9:37 am

      Thats sad. U just indicated that the current cabinet members are puppets to the gov machinery. No wonder we are in such mess. Utterly incompetent puppets.

      Like or Dislike: Thumb up 4 Thumb down 0
    • Bapa Tun on Jan 23, 2020 at 9:52 pm

      Ya talking about Proton it was your good friend Najib that made the right decision to sell Proton to Geely. If PH and Tun was ruling – this wouldn’t have happened.

      Like or Dislike: Thumb up 2 Thumb down 0
  • vivizurianti on Jan 22, 2020 at 4:15 pm

    The problem of Malaysia automotive scene is that there are too many organization/association/experts/groups, etc. that only good at talking, talk-big, syoik-sendiri, egoistic, bodoh-sombong, etc

    However nobody wants, or knows how to do the REAL JOB.

    Hence, ALL TALK, NO ACTION as usual.

    Like or Dislike: Thumb up 16 Thumb down 0
  • johnnas on Jan 22, 2020 at 4:36 pm

    again with the duty taxes…my goodness. when will these people ever learn????
    gila kah??? this is robbery sudah! what a joke man!

    Like or Dislike: Thumb up 13 Thumb down 1
    • U-turner on Jan 23, 2020 at 9:41 am

      Not gila lah… just to clear the pathway for 3rd national car… TM new baby is coming it cannot get directly feed with Govt fund thus it will need a safety zone. :P

      Like or Dislike: Thumb up 1 Thumb down 0
  • Ghani on Jan 22, 2020 at 4:48 pm

    Rakyat save Billions cutting this irrelevant geng,

    Malaysian Automotive Association (MAA)
    Automobile Association of Malaysia ( AAM)
    Malaysia Automotive Institute (MAI)

    Like or Dislike: Thumb up 15 Thumb down 1
  • AutoFrenz (the original) on Jan 22, 2020 at 4:58 pm

    Why is pakatan making life difficult for us…people voted for u to get a better life with low cost living in mind…this is no what we want…whats wrong with this new government…why are you torturing us…have some mercy for us please…

    Like or Dislike: Thumb up 39 Thumb down 2
  • C.P. MOHAN on Jan 22, 2020 at 6:22 pm

    Agree with higher prices because than the focus should move to public transport and the environment. Many countries are moving towards cleaner energy. As I see it, the higher taxes is to deter investments in old technology, but an incentive to invest in newer technology e.g EV and also to prevent “dumping” of old technology.

    Like or Dislike: Thumb up 2 Thumb down 15
  • Without petrol/fuel subsidy, why the heck u want to tax the cars…less tax income is off set with the zero subsidy!! Bodohla ni PH one term govt…go fly kites ler!!

    Like or Dislike: Thumb up 14 Thumb down 0
  • vivizurianti on Jan 22, 2020 at 7:31 pm

    “Too many cooks, spoil the broth”

    Malaysian Automotive Association (MAA)
    Automobile Association of Malaysia ( AAM)
    Malaysia Automotive Institute (MAI)

    Seems like the above “cooks” ain’t doing much, except eat-salary-blindly all these while.

    Like or Dislike: Thumb up 9 Thumb down 0
  • tan32 on Jan 22, 2020 at 7:45 pm

    Car is the highest taxes item in MY, ideal would be maxs at 15% SST for both CBU and CKD.

    Like or Dislike: Thumb up 0 Thumb down 0
  • Jimkana on Jan 22, 2020 at 7:50 pm

    Beli recond je la. Sure recond laku habis.

    Like or Dislike: Thumb up 0 Thumb down 0
    • U-turned Boleh Land on Jan 23, 2020 at 9:43 am

      https://paultan.org/2020/01/22/imported-cbu-car-prices-to-go-up-from-june-1-2020/

      Like or Dislike: Thumb up 1 Thumb down 0
  • Nobita Fail on Jan 22, 2020 at 8:15 pm

    Stupid Guan Eng and Nobita. We have a lot of government officer, association and stakeholders that you can talk to. Tapi bajet pandai. Nasib baik last minit tahu.

    Like or Dislike: Thumb up 7 Thumb down 0
    • Hafiz Hisham on Jan 22, 2020 at 10:11 pm

      Nobita baru teringat. Kalau plan dia dilaksanakan, harga kereta2 Toyota Velfire dan Honda Accord untuk dia dan para2 mentri konco dia akan melambung naik cekik darah. Tu sebab dia tentukan harga kenaikan lepas 1 Jun. Tau-taulah agak bila kereta2 Velfire dan Accord akan dibeli pakai duit kita.

      Like or Dislike: Thumb up 7 Thumb down 1
    • Alex88999 on Jan 23, 2020 at 12:17 am

      Who is Nobita?

      Like or Dislike: Thumb up 0 Thumb down 0
  • Choco on Jan 23, 2020 at 7:57 am

    Car price hike! Haiz, before election claimed memang akan turun HARGA kereta, ini nak rakyat beli perodua je, dan org Kaya kaya naik Mercedes. Memang ketara lagi jurang bagi yg Kaya dan miskin.

    Like or Dislike: Thumb up 2 Thumb down 0
 

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