The Malaysia Automotive Component Parts Manufacturers (MACPMA) has shared its viewpoint on the OMV/402 matter. In an official statement issued to paultan.org, the association said the implementation of OMV/402 may result in a drastic reduction in vehicle production, which just hit an all-time high of 790,347 units in 2024.
“When implemented, the OMV excise duty revision will cause an average price increase of between 10% to 30% for CKD motor vehicles. This is expected to dampen the sale of all motor vehicles,” said Chin Jit Sin, president of MACPMA.
“Though the implementation of the OMV has been deferred to Jan 2026, motor vehicle manufacturers will stop making new investments immediately to produce new models of motor vehicles in Malaysia, and just bring in CBUs from other ASEAN or RCEP countries, since there is less difference in the cost of CBU versus CKD vehicles,” he added.
Both situations are said to result in lower volume of locally-assembled (CKD) vehicles, which has a knock-on effect for component manufacturers in Malaysia. The association pointed out that the current automotive industry contributes to more than 4% of Malaysia gross domestic product (GDP) and provides employment to over 200,000 people. Lower production volumes could also cause plant closures and job losses, it added.
With more fully-imported (CBU) vehicles being brought into Malaysia due to smaller price difference compared to CKD vehicles, this can also tip the balance of trade for the automotive sector to be more import-heavy.
So, what’s the deal with OMV/402? We have an entire post on this topic but in a nutshell, its implementation, which is scheduled for January 2026, would cause the prices of CKD cars to go up by as much as 30%.
This is because OMV/402 stipulates a new methodology of calculating a CKD vehicle’s open market value (OMV), which influences how much tax is to be paid and therefore, its selling price. OMV is defined as the final market value of a CKD vehicle ex-factory, before the government imposes excise duties on it. The PH-era regulations set that in calculating OMV, one must take into account not just the profit and general expenses incurred or accounted in the manufacture of a vehicle, but also of its sale.
This has long been in the making and started with the Excise (Determination of Value of Locally Manufactured Goods for the Purpose of Levying Excise Duty) Regulations 2019, or OMV excise duty revision as we call it.
The regulations were supposed to come into force in 2020, but 22 days into that pandemic year, MAA announced that the finance ministry had deferred implementation to 2021. By end-2020, it was deferred again, and MAA appealed to the government in 2022 for continued deferment, which was successful – a two-year deferment was granted, until December 31, 2024. The latest deferment is until December 31, 2025.
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squeeze, squeeze and squeeze the rakyat dry, this govt is causing a lot of pain to the rakyat, govt usually works to make the life easier for the rakyat but this one is doing the opposite, the e-invoicing is another misguided attempt to close all space around and unnecessary burden the rakyat, its adding so much more works to smaller traders and many may not survive.
Who did you vote for?
I view with concern what proton CEO presented. Among 35new model of China imported car only 1 truly is CKD. Moreover majority of them have no localisation. With this new excuse duty will make more localisation more expensive? Will it kill our local automotive part manufacturers?
I know Malaysian and gov wants to see msia to thrive in automotive export and also automotive parts export. But clearly now with influx of cheap Chinese made cars, it is clearly not helping our local automotive sector to grow as exporter. Gov and automotive industry should look into how to lower localised parts cost!!! Not making it more expensive.
Malaysia government or government officials especially those heads got no strategies at all as how to manage in balancing act between CBU and CKD.
They only gaji buta only and talk or response with rubbish all the while
Malaysia becoming first world liking first world products but still living with 3rd world mentality government servants
Heloo pls wake up or get re educated.
Tau pun…
how come parts president is chinese? isnt auto industry supposed to be for bumi?
This website is for car and motorcycle discussion. Not for your racist sentiment.