Malaysia's import duty removal plan to attract new original
equipment manufacturers
PETALING JAYA: The gradual
removal of the import duty on cars from Japan and Australia will encourage new
original equipment manufacturers (OEMs) to invest in the country, said industry
experts and observers.
“We believe that the gradual
opening up of the auto industry will further encourage new and existing
manufacturers to choose Malaysia as their production hub for the region,
especially for fuel-efficient cars,” opined MIDF Research in a report.
“The Government remains
determined to ensure that the consumer will be well-served as well as to build
more efficient and competitive cars in the auto industry,” it added.
Malaysian Automotive
Association president Datuk
Aishah Ahmad said she expected more
foreign investments from Australia-based car companies.
“We expect to see more car
companies from the premium segment coming to Malaysia. We also believe this
will encourage exports to Australia from the national car companies,” she
told StarBiz.
Earlier this week, the International Trade and Industry
Minister Datuk Seri Mustapa Mohamed announced that the import
duty on cars from Japan and Australia would be gradually reduced from the
current 30% to 0% by 2016.
He said the import duties would be reduced to 15% in 2013, 10% in
2014 and 5% in 2015.
There are three types of
duties on cars: the import duty, the excise duty, which is between 60% and
105%, and the sales tax, which is 10%.
Frost & Sullivan partner
and head of automotive and transportation practice, Asia-Pacific, Kavan
Mukhtyar said the impact on the market would depend, to a great extent, on the
timeline of the reduction in import duties.
“We expect there may not be
any immediate impact. However, for new model launches, OEMs would certainly
consider if it's feasible to import them fully built from Japan.”
By and large, since many of
the Japanese OEMs are already invested in Thailand, the imports would
predominantly be from Thailand. As such, this move may reduce prices only of
premium models that have low volumes in Asean.
Kavan added that the move by
the Government might have some marginal impact on the price of premium
vehicles.
“It would increase the range
of models available to the consumer in the premium segment. Unless excise duty
rates are reviewed, there may not be a substantial impact on the mass vehicle
market,” he noted.
As MIDF pointed out, the Government had been liberalising the auto
industry through the Asean Free Trade Agreement (Afta).
“The Afta measures include full elimination of import duties
effective Jan 1, 2010, the removal of quantity restriction for vehicles on
completely built-up (CBU) from Asean, and the liberalisation of the
manufacturing licence, as stated in the National Automotive Policy, as well as
the Free Trade Agreement (FTA) with Japan and Australia.”
Aishah said under the FTA with Japan, vehicles above 2.0 litres
had no duty.
“We don't see any potential impact on our members. Even Mazda is
bringing in vehicles below 2.0 litres from Thailand.”
MIDF noted that further
reduction in car prices would be realised via other FTA implementations, which
would come into force in 2016.
“Miti is currently talking to
the European Union, Turkey and Bangladesh on the FTA. The reduction in car
prices is also to ensure that the auto industry will be more efficient and
competitive.”
According to MIDF, among the CBU car models imported from Japan
are Mitsubishi (Lancer), Subaru (Imprezza, Forester, Legacy),
Suzuki (Kizashi, Swift Sport, Grand Vitara, SX4) Mazda (6, CX5, MX,
RX, CX7, CX9) and Toyota (GT86).
It is noteworthy that liberalisation of the local automotive
industry means that national car companies, Proton and Perodua, would need to
increase their competitiveness.
“According to Mustapa, the
car price reduction initiative should be implemented in stages, as this is to
allow the auto industry to organically adopt and adapt itself. It is necessary
to ensure that the auto eco-system is not affected,” noted MIDF.
“Currently, the auto industry
employs about 180,000 people directly and 70,000 people indirectly. Meanwhile,
the second-hand and resale market alone employs about 100,000 people.”
MIDF added that if the implementation was done abruptly, it would
not only affect the second-hand and resale market car value, but also the
Government tax revenue.
“About 60% of new car buyers
depend on the resale value of their existing cars to make their next purchase.
Meanwhile, revenue from car taxes generates a total of RM7bil to the
Government, and the revenue has helped it subsidise the costs of fuel and other
amenities.”
Source: The
Star
Date :4 March
2013
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