Business

Thursday October 29, 2009

New measures, tax incentives announced to attract investments in automobile industry

By IZWAN IDRIS


KUALA LUMPUR: Domestic car tariffs have been kept at current rates, but the Government unveiled yesterday a series of new measures and improved tax incentives aimed at attracting fresh investments to spur the industry’s growth following the review of the National Automotive Policy (NAP).

The Malaysian Automotive Association (MAA) expects car prices to be maintained after import duties were left unchanged.

“If the car companies are more efficient, then perhaps they can look at reducing prices but this is unlikely,’’ MAA president Datuk Aishah Ahmad told reporters after the press briefing yesterday by the International Trade and Industry Ministry (Miti).

International Trade and Industry Minister Datuk Mustapa Mohamed (second from right) greeting Malaysian Automotive Association president Datuk Aishah Ahmad at the briefing yesterday. Also present are (from left) the ministry’s secretary-general Tan Sri Abdul Rahman Mamat and deputy ministers Datuk Jacob Dungau Sagan and Datuk Mukhriz Mahathir.

At the press conference, Minister Datuk Mustapa Mohamed said the Government had decided to keep import duty and excise duty at current rates as the taxes were important “revenue sources for the Government.”

But he reiterated that the Government would continue to “honour its international commitment” under Asean trade agreements and other existing and new free trade agreements (FTAs) with regard to import duties.

It is estimated that the Government collects between RM6bil and RM7bil every year in duties for vehicles sold in the country.

Miti has also come up with a new timeline to phase out the existing approved pertmit (AP) system for importing cars into the country.

The thrust of the NAP review, Mustapa said, was to foster “a more competitive industry and freer market.”

To help achieve this, Miti will issue new manufacturing licences and allow 100% foreign equity ownership for select high-impact segments in the automotive industry effective Jan 1.

The high-impact segments include manufacturers of luxury passenger cars with engine capacity of at least 1,800cc, with an on-the-road price of RM150,000 and above.

Makers of hybrid and electric vehicles, pick-up trucks, commercial vehicles and motorcycles with engine capacity of at least 200cc also fall under this category.

A better tax break structure will also be introduced next year to encourage the export of value-added automotive parts and components.

“This reflects the country’s goal to expand the amount and quality of exports,’’ Mustapa said.

However, the freeze on new licences for reconditioning and reassembling (rebuilt) activities remains.

Mustapa said the Government plans to prohibit imported used parts and components from June 2011 onwards.

This will be followed by a ban on imported used vehicles from Jan 1, 2016.

The prohibition of imported second-hand parts was due to “safety and environmental concerns (arising) from the practice of importing used parts and components without any restrictions or mandatory testing,’’ Mustapa said.

Under the NAP review, all vehicles over the age of 15 years will have to go for mandatory annual inspections as a requirement for road tax renewal.

This is the first step toward the full implementation of a vehicle end-of-life (ELV) policy.

“The transport ministry will formulate a roadmap to reach full implmentation of the ELV policy,’’ Mustapa said.

The ministry will also accord priority in the 10th Malaysia plan for the full establishment of vehicle type approval (VTA) standards and facilities.

The Government is also planning to raise the standard of fuel sold in the country under the NAP review.

The development of the so-called green technology was also highlighted under the review, and a comprehensive package of fiscal incentives has been drawn up to promote the growth of hybrid and electric vehicle technology in the country.

Related Stories:

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No open APs after 2015

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