Crying wolf again?

Low-income earners have been suffocated by car loans. The Insolvency Department recorded 116,379 bankruptcy cases in the country between 2005 and April 2012. Some 25 per cent of them were due to debts over vehicle loans, with 2,000 below the age of 25. 

Lim Sue Goan, Sin Chew

I returned to my hometown during the Hari Raya holiday and the highway was filled with cars on my way back. It is a common traffic landscape in Malaysia during festive holidays. 

If there is a high-speed rail in Peninsula, I believe that many would not choose to drive. Underdeveloped transportation causes crowded highways during long public holidays and the people would have to pay the of fuel consumption, environment pollution and accelerating the process of turning the country into a net oil importer. 

The surge in the number of road vehicles and the underdeveloped public transport are due to the unsound National Automotive Policy (NAP). The government has exerted great efforts to develop and protect national cars and thus, not keen in upgrading the public transport system, particularly in developing high-speed rail. 

Moreover, in addition to protecting national cars, the government also earns a great amount of income from car excise duty. Each imported car contributes at least RM10,000 to the Treasury and the government earns RM7 billion each year. 

The government does not impose restriction to limit car purchase. There are more and more tolled highways but the traffic is increasingly crowded. If the number of vehicles in Kuala Lumpur is not limited, even the Mass Rapid Transit Corp (MRT) project would not be able to solve traffic problems in the capital. 

It was reported recently that one of the main focuses of the upcoming NAP might include car price reduction in the next three or four years. However, the credibility of the report is not high if we calculate based on the benefits the government gets from car duties. 

In fact, car price reduction has long been speculated but it always ended up as the wolf crying story due to the protection of national cars and other factors. The previous NAP only increased the automotive industry incentives but did not touch the status of national cars. 

The car price reduction rumour this time might be related to the Pakatan Rakyat’s commitment of relaxing car excise duty after taking over the office. 

Low-income earners have been suffocated by car loans. The Insolvency Department recorded 116,379 bankruptcy cases in the country between 2005 and April 2012. Some 25 per cent of them were due to debts over vehicle loans, with 2,000 below the age of 25. 

The BN government might adopt other strategies to compete with the car price reduction commitment of the Pakatan Rakyat and it is unlikely to narrow the price gap between national and imported cars, to avoid setting a blow to national car sales, which has already been falling, and related industries. 

Moreover, reducing car prices will affect the situation as a whole. Car loan borrowers might end up overpaying the bank after the fall of car marker values. 

Comprehensive consideration is necessary for the adjustment of the NAP. It must not only protect national cars and duty revenues, but at the same time, also solve the people’s problem, including developing the public transport system to lighten the people’s heavy burden of car loans. 

Deviation in the NAP would also lead to the waste of resources. For example, bus services in Putrajaya gained less than RM2 million of annual income, causing them to suffer a loss of RM18 million each year. Ultimately, the government would be the one who pays the bill. 

In addition, the government also approved a RM400 million fund to help stage bus operators which are finding it difficult to continue with their services in various states. 

For ordinary citizens, food, clothing, housing and transportation are the basic necessities of life and thus, it is the government’s responsibility to solve the people’s traffic problems.