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National Automotive Policy 2010

The “good feelings” brought by some benefits in the 2010 Budget have been wiped off by the new National Automobile Policy (NAP). The government will continue protecting domestic cars, making the public suffer.

As expected, the revised NAP will not lower car prices and the government will maintain the high import duty and excise duty as the taxes were important “revenue sources for the Government.” In fact, it is meant to protect domestic cars.

It is disappointing that the automotive industry has not really moved towards openness, which has contravened the Prime Minister’s commitment to implement economic liberalisation. A protection which is too strong will undermine the country’s efforts to attract foreign investment.

The new NAP shows a little signs of liberalisation, such as foreign firms will be given manufacturing licenses to hold 100 per cent equity in firms producing luxury vehicles. However, foreign firms are allowed only to manufacture luxury vehicles with an engine capacity of more than 1,800 cc and costing more than RM150,000, which are not the selling point of Proton.

The government made a promise in the NAP announced in March 2006 that the open approved permits (APs) would be terminated on 31 Dec 2010. But under the new NAP, the promise has changed and the new deadline is 31 December 2015. If even a promise can also be changed, how can we expect confidence from foreign investors?

Other protective measures are, starting from June 2011, imports of used automotive parts and components will be prohibited and imports of used commercial vehicles will also be prohibited effective 1 Jan 2016. It is not open at all. If a foreign automobile company wishes to set up a factory in Southest Asia, it is not going to choose Malaysia.

Another impact on car owners would be the mandatory roadworthiness inspections for vehicles aged 15 years or older before road tax renewal and old vehicles may also be prohibited on the road in the future. The mandatory roadworthiness inspections will further burden low-income earners. Currently, there are about 2.7 million vehicles aged above 10 years on the road. Puspakom should have a great business volume and thus, it should pay the government additional taxes.

In order to protect the environment, developed countries usually have a set of regulations to phase out old vehicles. But the government will provide subsidies and preferences. In fact, the subsidies come from automobile firms as they will benefit from the relevant laws, especially for domestic cars.

The government starts the implementation of the mandatory roadworthiness inspections before having a comprehensive policy. It is indeed a big hit for the used vehicle market.

With an underdeveloped public transportation system, cars have become a necessity for Malaysians. But domestic cars, including national cars, are more expensive than foreign cars (Tata Nano from India costs only US$1984). As the government continues protecting domestic cars and refuses to open up the market, it will force the people to forever “work” for cars. How can the little tax deduction allowed by the Budget offset the people’s losses?

The government claims that it wants to transform the country into a high-income country. But before we can see any specific programs to increase revenue, the burden has been aggravated. We have to pay annual service taxes for credit and charge cards and the government wants to impose the goods and services tax (GST) in the future. As our incomes are not able to catch up with surging housing and car prices, what’s the use to feed on illusions?

I have only one word for the revised NAP: Disappointing!

~ By LIM SUE GOAN/Translated by SOONG PHUI JEE/Sin Chew Daily ~

Source : Sin Chew Daily

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