The National Automotive Policy 2020 (NAP 2020) was officially launched last Friday by prime minister Tun Dr Mahathir Mohamad. It aims to push the country towards becoming a regional leader in automotive manufacturing, engineering and technology, and is very much an enhancement of NAP 2014, expanding on the outlines seen previously.

In a nutshell, NAP 2020 consists of three directional thrusts and three strategies as well as seven roadmaps/blueprints to be implemented to the year 2030. The directions include a focus on Next Generation Vehicles (NxGVs), Mobility as a Service (MaaS) and Industry 4.0, and the plan will incorporate the development of Automated, Autonomous, Connected Vehicles (AACV), light weight material tech as well as hybrid, electric and fuel cell vehicles.

What do the car companies think of it? We’ve heard from a couple of individual carmakers, but here’s what the Malaysian Automotive Association (MAA), the umbrella body for all car companies in Malaysia, has to say. Asked by The Star, MAA president Datuk Aishah Ahmad agrees on the direction NAP 2020 is pointing to, but urges the government to not just look into the future, but look at present issues as well.

“Overall, I think the NAP 2020 is the future and is in line with the global trends. ASEAN countries are also focusing on the future trends. They’re looking at the next generation of vehicles,” she said.

“Where I’m pleased is the fact that the ministry will be taking a step-by-step approach as they start introducing next generation vehicles and new technology. Because if we’re not ready, implementing anything too soon will not be good for the industry,” Aishah added.

However, the MAA head also urged the government to focus on current issues faced by the automotive industry. And there’s no bigger issue than the uncertainty brought about by the recently introduced 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.

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 “and sale” clause also now applies to areas such as advertising and marketing, warranty and trade royalty, plus wages and commission. Also included are general and administrative expenses such as rental, utilities and office supplies, among other costs. Naturally, this raises the OMV and applicable excise duty.

On January 22, the finance ministry gave a special exemption that essentially maintains the car price status quo for 2020. It remains to be seen what will happen next year, but the government says that any increase will be gradual.

“The present concerns that we have are the policies to excise duty hikes. It’s been held back for this year but what about beyond that? That creates uncertainty for the industry,” Aishah stressed, adding that the new tax structure would have hiked up CKD car prices by up to RM33,000. “What we’d like to reiterate to the government is to not ignore the present situation,” she urged.

On the day that Aishah announced the MoF’s exemption for this year, she said that had the reprieve not happened, 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,” she said then.

Aishah and MAA council members also said that the industry was not consulted prior to the release of the new OMV gazette, despite being in active talks with the government on other matters. Datuk Zainal Abidin Ahmad, president and CEO of Perodua, had also said that the Malaysian market leader was not consulted on the matter.

At the launch of NAP 2020, minister of international trade and industry Darell Leiking urged naysayers to “work together” with the government for the betterment of the industry, which contributes 4% to the country’s gross domestic product (GDP). Perhaps more engagement between the auto industry, MITI and crucially, the finance ministry, would be good for all. More on the NAP 2020 here.

Tags: