The Malaysian government is expected to once again extend the sales tax exemption through next year in the upcoming Budget 2022 announcement, reports Berita Harian.

Budget 2022 is expected to further extend the sales tax exemption for vehicles in light of disappointing sales this year, even if it has already been in place following the movement control order that resulted in the closure of showrooms as well as production plants, group chief economist Sailesh K. Jha of RHB Group was reported as saying.

The sales tax exemption currently in place for Malaysian consumers was first announced in June 2020, which came as part of the Penjana stimulus package to mitigate the effects of the first movement control order which took place from March last year.

Car showrooms reopened to fully vaccinated individuals from August 16, which the Malaysian Automotive Association (MAA) saw as a much-welcomed decision by the government as the local automotive industry has suffered huge losses since the full movement control order (FMCO) was implemented from June 1.

Data from MAA saw a 153% increase to 44,275 units in new vehicle sales for the month of September 2021, or 26,775 more vehicles sold last month compared to the 17,500 units sold in August. Sales were down 13,483 units or 23.3% in September year-on-year compared to 2020, while total industry volume for the year to date stood at 318,874 units, or 25,145 units (7.3%) down from the same period last year.

Further, subsequent relaxations of restrictions saw the return of test drives in Phase 2 of the national recovery plan, while Phase 3 allowed unvaccinated individuals to visit showrooms and car washes. Interstate travel has once again been permitted from October 11, and the use of a vehicle’s full seating capacity was allowed again from October 18.

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