The Ministry of International Trade and Industry (MITI) today unveiled the latest edition of the National Automotive Policy (NAP), a government-led policy framework for the automotive policy into the year 2020.
In a presentation today attended by industry leaders and the media, MITI minister Mustapa Mohamed said the NAP will spur the development of Malaysia as a production hub for energy efficient vehicles (EEV) through market liberalisation and tax incentives.
Under the new NAP, consumers can reportedly look forward to car prices falling between 20% – 30% by 2018. The removal of current restrictions on the manufacture of vehicles with engine sizes below 1.8 litres, as the NAP promises, would lower prices through competition.
The automotive industry accounts for a 3.5% share of GDP (gross national product), Mustapa said, justifying the goverments firm support for the growth of the local automotive industry.
The main policy initiatives of the NAP are summarised as follows:
Energy efficient vehicle (EEV) manufacturing and assembly
The NAP opens the market for the manufacturing and assembly of vehicles with engine sizes below 1.8 litres, a market segment previously closed to new manufacturers.
Provided they comply with EEV standards, foreign and local investors alike will have unrestricted access to the local automotive market.
Under the new NAP, the third edition in a decade, there will be no foreign ownership restrictions on EEV manufacturers who wish to set up operations in Malaysia
Grants and soft loans to encourage investment and R&D (research & development) activity totalling RM2
billion over the next seven years to 2020.
Vender development will come under focus as MITI seeks to enhance exports to a projected 250,000 units by 2020.
Reduction in Car Prices
MITI has revealed a car price reduction framework for a gradual reduction in car prices up to 2018. In a gradual move over five years, car prices are projected to be between 20% to 30% lower.
The reduction in car selling prices consists of a mix of measures, chief among them the liberalisation of EEV investment to create a more competitive environment and enable market forces to play a greater role.
The current rates of excise tax have been maintained because of the importance of automotive tax revenue to the government’s coffers, estimated at RM9.86 billion in 2013
A decision to rationalise the tax structure is not expected until 2018.
The government will continue to support and assist the national car and motorcycle companies.
Under the Industrial Linkage Programme (ILP) customised excise tax rebates will be granted based on the amount of local content at the manufacturing level.
Provision of funds to enhance the competitiveness of Bumiputera companies in the areas of technology, supply chain and human capital development.
The 2009 decision to abolish the open AP (approved permit) system by December 2015 has been put under review by a consultative body.
Safety standards and regulations
The vehicle reconstruction and recycling industry will come under government regulation in a push to improve safety standards.
Safety and crash test standards will be aligned to international norms through gradual compliance to ‘whole vehicle type approval’ regulations.
Framework for the introduction of voluntary passenger vehicle testing regulations.