Earlier this year, it was reported that new excise duty regulations put forth by the customs department would result in the prices of locally-assembled (CKD) cars going up by as much as 20%. However, that is no longer the case, according to Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad, when contacted by paultan.org.

UPDATE: The government has decided to extend the new vehicle sales tax exemption period to June 30, 2021, which sees a 100% sales tax exemption for new CKD cars, and 50% for CBU cars.

Before proceeding further, here’s a recap of the situation. Previously, the customs department issued the Excise (Determination of Value of Locally Manufactured Goods for the Purpose of Levying Excise Duty) Regulations 2019, which was prepared by the ministry of finance (MoF) and gazetted on December 31, 2019.

Based on the terms of the new regulations, completely-knocked-down vehicles will be liable to pay more taxes due to a change in methodology of how the open market value (OMV) of a vehicle is calculated. This takes into account not just the profit and general expenses incurred or accounted in the manufacture of a vehicle, but also of its sale. You can read more about it here.

Originally planned to come into effect this year, the move caused an uproar within the Malaysian automotive industry, resulting in the previous government to backtrack and announce a “special exemption.” This kept car prices as is until the end of 2020 and was always believed to be a temporary relief, with prices set to go up in 2021, albeit gradually.

While excise duty regulations will remain unchanged entering 2021, car prices are set to increase come the new year due to another reason: the end of the sales tax exemption (100% for CKD, 50% for CBU) under the government’s Penjana programme. As previously reported, there will be no extension of the programme, which has been in place since June 15 and will end on December 31 this year. At the very least, we won’t face a double whammy of prices going up due to the return of sales tax and new OMV duties. See, it’s not all bad news in 2020.