Liberalise automotive industry policies, say industry players, experts

Malaysian Automobile Association (MAA) president Datuk Aishah Ahmad had noted for the record that its members “would like to see liberalisation brought forward with certainty so that they and their principals would be able to strategise future plans.

“Our existing taxes, particularly excise duties, are very high. We feel with a lower cost of vehicle ownership, the consumers would then have extra disposal income to spend on other types of goods which ultimately will benefit the country’s economy at large.”

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Nonetheless, she opined that any announcement of duty reduction, if any, must be done gradually over a period of time. It must also be handled with great care so as to avoid confusion in the market which could cause a severe disruption in sales of new motor vehicles.

“The experiences in 2006 were a good example whereby consumers held back purchases of new vehicles following the announcement of duty reduction by the government,” she pointed out in reference to the dip in total industry volume (TIV) from 552,316 units in 2005 to 490,768 in 2006 and a further decline to 487,176 units in 2007.

The automotive industry is expected to contribute six to eight per cent of gross domestic product by the year 2020 from the current 2.4 per cent, according to Malaysia Automotive Institute chief executive officer Mohd Madani Sahari.

The latest revision of the National Automotive Policy (NAP) is widely expected to address the development of energy efficient vehicles and the optimisation of internal combustion engines, as opposed to outright abolishment or revision of the underlying duty and tax structures presently in place.