Malaysia Budget 2022 Archive

  • BMW Malaysia weighs in on Budget 2022: tax-free EVs welcomed, charging network expansion to continue

    Last week’s Budget 2022 announcement brought some welcome news for the automotive industry, led by the proposal to eliminate all taxes on electric vehicles. This week, BMW Group Malaysia weighed in on the plan, issuing a statement from its managing director and CEO Hans de Visser.

    “We welcome the newly announced allocations in Budget 2022 that will further drive this shared vision for electrified mobility forward,” he said. “We celebrate with Malaysia on the latest announcement of full exemptions on import duties, excise duties, and sales tax for electric vehicles – which will not only increase uptake but encourage further development of the EV infrastructure and ecosystem to drive Smarter, Low Carbon Communities and Cities in the country.”

    Visser added that the announcements are aligned with BMW’s vision of electrified mobility, the company having debuted the BMW i brand in Malaysia back in 2015 with the i8 plug-in hybrid sports car. “As the country’s leading provider of premium electrified vehicles, we have already delivered over 21,000 electrified BMW and MINI [vehicles] to Malaysians to date,” he said.

    Additionally, BMW Group Malaysia remains committed to innovating, raising awareness on new and clean technology and developing the infrastructure for premium electrified vehicles, Visser said. “BMW Group Malaysia has been driving the change with electrification with our growing portfolio of fully electric vehicles here, and we look forward to continuing doing so with our upcoming fleet of next-generation BMW i vehicles.”

    Munich is betting big on the EV market in Malaysia, having launched the iX and iX3 SUVs this year, with the i4 four-door coupé also due to be introduced soon. The company is also working with Shell, GreenTech Malaysia and Tenaga Nasional to expand its charging network, which will include DC fast charging stations in places like highway rest stops, shopping malls and showrooms.

     
     
  • Budget 2022: EVs in Malaysia to be completely tax free soon – zero import and excise duties, free road tax!

    We’ve been waiting for the government to announce initiatives relating to electric vehicles for some time now, and during the tabling of Budget 2022 (Bajet 2022), we finally have a better idea of what they are.

    During his official address in Parliament, finance minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said that the government sees the potential of EVs to help reduce air pollution. As such, to support the development of the local EV industry, the government is proposing that EVs be completely exempt from import duty, excise duty and sales tax.

    If that isn’t enough, EVs will also benefit from a road tax exemption of up to 100% under the proposal, while an income tax relief of up to RM2,500 will be provided on the cost of purchasing and installing, renting or taking up hire purchase facilities, as well as subscription payments of EV charging facilities.

    The proposal involves 100% duty exemption for CBU electric cars up to 31st December 2023, and 100% duty exemption for CKD electric cars up to 31st December 2025. Clearly the plan is to kickstart the industry with CBU cars and hopefully local assembly activities can begin from 2024 onwards.

    It should be noted that the initiatives being proposed today have been mentioned long before the tabling of Budget 2022, as Malaysia Automotive, Robotics and IoT Institute (MARii) CEO Datuk Madani Sahari said in April that a dedicated policy on EVs being drafted at the time would involve exactly what Tengku Zafrul announced. To recap, the Madani said the policy would provide new EVs with zero excise and import duties, along with full sales tax exemption and zero road tax.

    As for the bit about income tax relief, this was brought up by international trade and industry minister Datuk Seri Azmin Ali earlier this month. At the time, the idea of providing income tax relief for both the purchase of EVs as well as for the installation of EV chargers was being considered, although as we just found out, it’s now only for EV chargers.

    Of course, while these initiatives were mentioned in the past, they were not officially presented until today. Keep in mind that while what was mentioned today is certainly astonishing, this is still a proposal (for now) and the initiatives mentioned are not set in stone just yet.

    Nonetheless, it’s encouraging to see that the government is considering such steps in the first place to promote EVs here. What are your thoughts on the matter? If you’re curious about just how much more affordable EVs could be, we’ve prepared some examples here.

     
     
  • Budget 2022: SST exemption extended again to June 30, 2022 – 100% on new CKD cars, 50% for CBU

    The government has announced that the current sales tax (SST) exemption for new vehicles has again been extended through to June 30, 2022.

    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.

    Originally scheduled to end on December 31 last year, the SST exemption was first extended to June 30, 2021, and then to December 31, 2021.

    As before, the percentage of SST exemption remains unchanged from what was announced before, with 100% exemption for locally-assembled (CKD) cars and 50% for fully-imported (CBU) cars. The exemption has resulted in reduced prices for passenger cars, although pick-up trucks are not eligible as they are classified as commercial vehicles

     
     
  • Budget 2022 – all auto and transport-related points

    Malaysia’s Budget 2022 (Bajet 2022) will be tabled by finance minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz in parliament at 4pm today. As with previous editions, we will be monitoring the finance minister’s speech for any automotive- and transport-related matters.

    It was previously said that initiatives to strengthen the local electric vehicle (EV) industry and green technology ecosystems are to be announced in Budget 2022, in line with the low carbon mobility objectives and green mobility agenda outlined in the recently-revealed 12th Malaysian Plan (RMK-12). Will there be incentives and carrots for EV makers and us consumers?

    We’ll also be on the look out for public transport and infrastructure news. Live updates will be posted here, so stay tuned.

    Child seat purchase subsidy

  • 50% subsidy up to RM150.
  • RM30 million allocation to benefit 188,000 people in the B40 category.
  • Free road tax (Lesen Kenderaan Motor) for OKU

    SST exemption extended till June 30, 2022 – full story here

  • Same terms: 50% sales tax exemption for CBU imports, 100% for CKD locally assembled passenger cars, MPVs and SUVs
  • Tenang insurance voucher for B40

  • Under Program Baucar Perlindungan Tenang, B40 category receives RM50 voucher for the purchase of life and PA insurance. For next year, this is increased to RM75.
  • Voucher can be used to buy comprehensive insurance for motorcycles below 150cc, from January 1, 2022.
  • Public transport

  • RM80 million allocation for the Dana Bantuan Sementara Bas Henti-henti to benefit stage bus drivers.
  • RM115 million allocation for unlimited bus and rail travel pass, RM50 per month My50 pass for Klang Valley commuters.
  • Subsidy for operations costs of less economic train services in rural areas.
  • Continuation of the Pas MyRail5 initiative for students.
  • Tax and duty exemptions for EVs – full story here

  • To support the local EV industry, government proposes full exemption for import duty, excise duty and sales tax for EVs.
  • 100% road tax exemption for EVs.
  • Individual income tax exemption up to RM2,500 for the purchase, installation, rental, lease and subscription for EV charging.
  • Rural infrastructure

  • Government has allocated over RM2.5 billion for rural infrastructure development.
  • Almost RM1.5 billion allocation for 519 km of rural roads and village connection roads, will benefit over 130,000 people.
  • RM107 million to install 7,000 units of street lamps for rural roads, maintain over 500,000 street lamps for rural roads, upgrade 20 bridges as well as early works for 30 new bridges.
  • Of the overall allocation, majority RM1.5 billion is for rural infrastructure in Sabah and Sarawak.
  • Major road projects

  • Government to continue major road infrastructure projects worth RM3.5 billion, including Pan Borneo Highway and the Central Spine Road.
  • JPJ services

  • JPJ will set up 20 mobile counters to serve rural population.
  • To provide access to government services outside of office hours, 100 kiosks with full computer facilities will be set up at UTC outlets. This will make JPJ transactions such as road tax renewal easier.
  • Innovation and autonomous vehicles

  • RM30 million for the implementation of Innovation Hub: Fourth Industrial Revolution (Hab Inovasi: Revolusi Industri Keempat) under Technology Park Malaysia as a one-stop centre for the innovation ecosystem. This is for the development of new technology clusters such as drones, robotics and autonomous vehicles. This hub is expected to benefit 10,000 future entrepreneurs.
  •  
     
  • Malaysia Budget 2022 suggestions: what to ask for – more SST relief, lower car tax, cheaper EVs and tolls?

    It’s that time of year again when the government prepares to table a new annual budget, and if you have some ideas of what should be included, you can submit your proposals for the Malaysian Budget 2022 at the ministry of finance’s official website.

    Now, there’s no guarantee that what we, the rakyat, suggest will be included in Budget 2022, so here’s to hoping a collective voice still holds some weight in deciding federal matters. Since we’ll have wait for Budget 2022 to be tabled to find out what the government decides upon, here are some plausible implementations that we can think of.

    As a side note, if you want a recap of what was included in last year’s Budget 2021, we’ve compiled all relevant automotive- and transport-related points in a much earlier post. We’ve been covering these announcements for over a decade now, so refer to those posts if you would like to know more.

    A further extension of the SST exemption period for cars?

    When the first movement control order was implemented last year, new car sales took a big hit as dealerships were forced to close. In an effort to spur demand in the automotive sector, the government introduced the Penjana economic stimulus plan that granted a 100% sales tax exemption on locally-assembled (CKD) models and 50% on fully-imported (CBU) models.

    Initially effective from June 15 until December 31, 2020, the sales tax relief would later be extended to June 30, 2021, and again to December 31, 2021 under the Pemerkasa+ plan. However, even though consumers benefitted from reduced car prices, car companies still found it a challenge to fulfil existing and incoming orders.

    This was because of the different lockdowns put in place mere months ago, which resulted in car factories and showrooms being closed. Further compounding the problem are disrupted supply chains, which is only made worse by ongoing global chip shortage.

    In July, the Malaysian Automotive Association (MAA) asked the government for another extension to the sales tax exemption in order to “make up for lost time,” so to speak. This will certainly benefit a lot of car buyers, some of whom are still waiting for their new ride and hoping it is registered before the current Penjana sales tax relief end date.

    Do you think this discounting (at the expense of tax collection) has gone on long enough, or should it be extended further?

    Less fuel subsidy, but lower car tax?

    A lot of Malaysians have been calling for cheaper cars, and one way to achieve that is by reducing the tax on them. It sounds simple enough, but this isn’t something that can be implemented hastily, as the government will have to recoup the losses from reduced car taxes elsewhere.

    One idea that has been mooted before is to remove fuel subsidies, which could offset the revenue the government losses if it reduces car taxes. With this, motorists will be paying market price for fuel, but those looking for new cars will get to buy them at cheaper prices. Technically, Malaysians will be paying the real “market price” for both new cars and fuel, rather than artificially inflated (with taxes) or subsidised rates.

    An argument against this approach is that this will only benefit those with spending power, i.e., those who can afford to buy new cars, while being a negative for everyone else. If you already own a car and don’t plan to buy a new one anytime soon, you’ll still be forced to pay higher fuel prices with little to no benefit to you.

    A small advantage is that cheaper car prices could make it easier for car buyers to upgrade to models that offer better fuel consumption than what they currently own. Of course, high fuel prices can affect a lot more than what you pay at the pumps, as we’ve seen in the past that the effects extend to everything from the price of your teh tarik to essential goods, all on the ground of “higher costs” relating to transportation.

    Again, it sounds simple enough, but this can be a very slippery slope to take, with major consequences either way. With that in mind, should we keep things status quo, or make the jump? What do you think?

    Cheaper tolls, introduce congestion charge?

    Another sensitive subject. While we are not going to touch on the various political promises that have been made, toll prices remain one of the biggest talking points among Malaysian motorists, with plenty of opinions thrown around.

    One suggestion that has been put forward in the past was to introduce a congestion charge system. With this, the amount you pay at tolls would vary depending on the time of day, i.e., higher during peak hours, but cheaper rates or even free during off-peak periods.

    Over the years, we’ve also heard calls for tolls to be abolished completely, but whether that’s actually achievable is another matter. It has happened before in certain locations, but with active contracts involving concessionaries, it’s no easy feat and we’ve been told it’s an incredibly costly endeavour.

    Incentives for electric vehicles (EVs) and better charging infrastructure

    In the past few months, we’ve seen car companies announce their commitment to introduce EVs in neighbouring countries, but Malaysia appears to be lagging behind. In countries like Thailand and Indonesia, the local governments there are actively luring car companies to set up an EV hub, and incentives play a major role in this initiative.

    By comparison, Malaysia’s EV policy is still a work in progress and we’ve yet to get anything conclusive; it was originally supposed to be announced in Q1 this year. Back in May, Malaysia Automotive, Robotics and IoT Institute (MARii) CEO Datuk Madani Sahari said the upcoming policy is in the final approval by the government and that a “handsome level” of tax incentives will be offered to car companies.

    Of course, a market packed with EVs must also be supported by better charging infrastructure, which is still somewhat limited here. ChargEV, which is one of the leading EV charging network operators here, currently has 326 charging stations available in 223 locations in Malaysia, most of them located in the central region.

    Again, both specialised incentives for EVs and additional charging infrastructure will incur considerable costs to the government. Whether this is a price worth paying for now, is up to your own opinion.

    On one hand, there’s an argument to be made that EVs are currently toys among the rich and privileged, and that any movement in this department (and the considerable costs involved) will only benefit them, and not the rakyat marhean, so to speak. On the flipside, we also risk being left behind if things stay the same.

    This is another instance of a chicken and egg situation: some say that EVs are not viable until a comprehensive charging infrastructure is established, yet is there a real need to set one up if there are no affordable EVs that you and I can buy in the first place?

    An easy solution (to say, not implement) would be to cover both grounds: offer generous incentives to make EVs affordable, and at the same time build up the charging infrastructure to support them. The thing is, is this something the government should tackle in the here and now? Do discuss below.

    A clearer National Automotive Policy (NAP)

    In February last year, the National Automotive Policy 2020 (NAP 2020) was launched and was aimed at developing the country towards becoming a regional leader in automotive manufacturing, engineering and technology, enhancing on the previous NAP 2014.

    While the roadmap covered things like Next Generation Vehicles (NxGVs), Mobility as a Service (MaaS) and Industry 4.0, it doesn’t make it easy for regular folk who just want to know if car prices will go down as a result of it.

    Later in July, it was revealed that NAP 2020 would be restructured to ensure the country’s automotive sector remains competitive following the Covid-19 pandemic, but any updates have yet to be formally announced.

    At the time, minister of international trade and industry Datuk Seri Azmin Ali said the exercise will see the government intensify its efforts to attract more investments in high-technology segments and environmentally-friendly vehicles as well as in the development of a local skilled-workforce. As mentioned with EVs, incentives are one way to lure in would-be investors, so it is something that should be clearer explained in the NAP.

    A new road tax system?

    For the longest time here, a vehicle’s road tax in Malaysia is calculated based on engine capacity, but this can be considered a rather archaic system and in no way reflects a car’s fuel consumption and carbon emissions.

    While this may have made sense at some point in time, the recent trend of engine downsizing and electrification has made a mockery of this system. For instance, a premium car with a modern turbo engine will have a cheaper road tax compared to a much smaller, budget vehicle running a larger naturally-aspirated engine. Let’s not even start on the different rates applied to SUVs and vehicles registered in Sabah and Sarawak.

    If the government wants to promote the uptake of cars that are more environmentally-friendly, rewarding those who purchase such cars with lesser road tax seems fair. In Europe, road tax is based on a vehicle’s CO2 emission level, so the lower it is, the less an owner pays.

    So, what would be your ideal road tax system? Should we stick to the current displacement-based structure, or move to something that is more relevant such as emissions, weight, age, usage or perhaps any combination of those. Do give your suggestions below.

    Anything else auto-related you want to ask for?

    Besides these suggestions, are there anything else that you want to ask for? Better public transport, or perhaps even a move towards having EV taxis to help shift public opinion on the matter (Singapore has just started this), maybe?

    However, do bear in mind that the country is not exactly in the best of health (literally and financially) at the moment, and there may be other pressing issues that should be taken care of first before making any changes above. After all, what some people want may not be what everyone needs right now.

    That said, since there is an opening for any of us to offer suggestions, do ask away. In the meantime, do let us know what you think of our suggestions and share your own in the comments section below.

     
     
 
 
 

Latest Fuel Prices

PETROL
RON 95 RM2.05 (0.00)
RON 97 RM3.02 (-0.03)
RON 100 RM3.74
VPR RM3.90
DIESEL
EURO 5 B10 RM2.15 (0.00)
EURO 5 B7 RM2.25 (0.00)
Last Updated 02 Dec 2021