No cuts in car duty

KUALA LUMPUR - The government has no plan to reduce the excise duty of imported and locally-manu­factured cars.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said this is because a sudden cut will have a significant impact on government's revenue from excise duty, now estimated at RM7 billion a year.

A reduction will also harm the overall growth of the domestic automotive industry, he told the Dewan Rakyat today, when replying to Datuk Saifuddin Nasution Ismail (PKR-Machang) who wanted to know which components of the National Automotive Policy (NAP) were being reviewed and whether the government intends to lower the excise duty for Made-in-Malaysia cars.

"The government is aware that the domestic automotive industry has to be developed further to become more competitive and offer more benefits to the people, particularly in selling cars at a reasonable price," he said.

Towards bringing about a reduction in car prices, Mustapa said the government had unveiled several important initiatives under the NAP which include the introduction of many car models in the same segment and liberalising the local automotive industry by issuing new manufacturing licences for all segments of vehicles in the energy-efficient vehicles' category.

Mustapa said the government will draw up a comprehensive strategy, encompassing a roadmap to oversee reduction in car prices in stages and establish a National Automotive Council approved by the Economic Council to closely monitor NAP implementation.

"Although car prices in Malaysia are higher than in neighbouring countries, after taking into account costs such as insurance, road tax and fuel, which are subsidised by the government, car prices in Malaysia are actually lower than our neighbours," Mustapa said.

He added that although the government did not intend to reduce the excise duty structure, several local car manufacturers, through consultations with the government, have committed themselves to lower car prices.

For instance he said Perodua, through its What's up Graduate Progamme, has introduced a low monthly instalment scheme, 50% discount on maintenance cost for two years, insurance incentive and free driving licence.

Mustapa said car manufacturers like Honda, Volkswagen, Chevrolet and Ford are also participating in the price reduction drive through various schemes.

"Several companies have already offered incentives while some are expected to make announcements on incentives to ensure that the people enjoy lower car prices," he said.

Bernama reports that the minister also gave an assurance that the policy and the NAP review will not be done in haste but in stages after careful study and consideration.

The first phase of the NAP was implemented in June by giving priority to investments in energy-efficient vehicles while at the same time consultations are being held with several car manufacturers to consider similar incentives, he added.

Meanwhile, Hemananthani Sivanandam reports that in replying to a supplementary question from Datuk Ismail Kassim (BN-Arau), Mustapa said the government has also no plan to introduce cash rebates as an incentive for people to purchase hybrid or energy-efficient vehicles (EEV) as it would involve a lot of funds.

"Currently, to attract consumers, the government has lifted the import duties for EEV while major car companies were given incentives if they set up their manufacturing operations locally," he said.

Mustapa said the incentives given by the government to major companies had paid off as Honda had recently set up an EEV factory in Malacca with about RM1 billion in investments.

He said the new factory provides 1,000 new job opportunities for the locals as well as the production of some 50,000 EEV assembled locally to be sold within the country as well as to other Asean countries

-thesundaily