Removing APs, import duties, and red tape

 

One of the most emblematic faces of our country’s convoluted trade and economic policies has to be approved permits - or APs - which give its owners the ridiculous right to import goods in a restricted list such as cars, foods, construction materials, and others.

Introduced in the 1970s with the excuse that it would help promote trade and business, especially among bumiputera who are mostly the recipients of this favoured, flawed mechanism, it has done exactly the opposite.

It has restricted trade by allowing only the favoured few access to certain sectors of the market, which resulted in extreme profiteering, raised the cost of doing business, and resulted in much higher prices for a range of goods from cars to cement, concrete, steel, and food.

Additionally, a system of import permits, bureaucracy, red tape, and outright corruption through favouritism for some has exacerbated the problems caused by APs.

The entire process of importing from overseas at minimal cost and hindrance has been compromised, leading to high prices for all manner of consumer items. 

It is estimated that some 60 percent of all food items are imported. This amounted to RM76 billion in 2022. 

If the current Madani government is keen to unshackle the economy from its chains and become vibrant, dynamic, and efficient, these obstacles must be removed forthwith so that the benefits of a free-market system - one of which is sourcing from the lowest cost producers - flourish.

This will help free the economy from some of its major current fetters.

Approved permits

Let’s begin with the notorious APs. International Trade and Industry Minister Tengku Zafrul Abdul Aziz blithely announced in July that there was no intention to do away with APs, although Tesla was given an outright exemption from APs for the sale of their cars, which are at the high end of the market.

If Tesla can be given such an exemption in the name of technology, why can’t any other manufacturer?

Let the floodgates open to anyone whose cars may be of interest to Malaysian buyers whether they are electric, hybrid, or not. And let them benefit directly from it, not some protected crony.

Fortunately, a few days ago, Economy Minister Rafizi Ramli said there is a paper for a review of APs which will be tabled to the National Economic Action Council before November.

Economy Minister Rafizi Ramli

But really, there is no need for this, APs can be removed by administrative fiat immediately. To take such a long time to remove this long-festering impediment to the economy is a reflection of the slow, ponderous speed with which the Madani government moves for reforms. 

One hopes APs can be extinguished by budget day on Oct 13, along with the announcement of other economy and business-friendly moves. That will give a badly needed fillip to that overused term called Madani and give it some meaning.

Import duties

If there is one thing that may happen in this budget, it is the subsidy rationalisation programme which is expected to save some RM15 billion a year through targeted instead of blanket subsidies.

Targeted subsidies will give direct grants to the poor to overcome difficulties from subsidy withdrawals.

This is a welcome move. But as it rolls back subsidies, the government should also simultaneously roll back duties, especially import and excise duties, which result in higher prices for many products far above their cost of production overseas. This has helped to increase inflation and prices.

The prime examples are cars and motorcycles which are twice or more expensive because of the heavy protective duties imposed to mollycoddle the national car and motorcycle projects such as Proton, Perodua, and Modenas which basically sell rebadged conveyances.

It’s time to establish a timeline to progressively remove these duties, not only for cars and motorcycles but for other consumables as well.

That will help the rakyat enjoy lower prices for these goods on the world markets.

Red tape and corruption

Excessive bureaucracy always creates corruption because of the opportunities it offers for money to oil the wheels and speed up processes.

One easy way of speeding processes up is to declare what is required for any approvals - if these requirements are met, approval is automatic.

Then, there will be no more waiting for approvals from local authorities, including city halls, local councils, and town councils to get approvals.

Also, tie - yes, tie - the arms of authorities. If there are those who are errant, give them a reasonable time to comply instead of harassing both businesses and customers. And stop arresting staff even when they have permits.

If the authorities want a proper handle on these, just talk to many of the small businesses such as restaurants, shops, traders, bars and pubs, health centres, etc., and find out from them the extent of constant harassment they face from authorities who are supposed to facilitate their businesses, not place obstacles. Unless of course, they pay.

If red tape and corruption are not cut to the bone, the economic cost to the country will be tremendous and those who want to lift their lot in life by honest endeavour will face near insurmountable obstacles to better themselves.

Where is the Madani (variously equated to citizen, townsman, polite, sociable, urbane) in that?

If the Madani government could do some of these things mentioned here in the forthcoming budget to stimulate the economy, then it would have achieved something. Otherwise, it will be the usual mere talk but no action - yet again. - Mkini

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P GUNASEGARAM likes this simple saying by Arthur Laffer: A faster-growing economy means lower unemployment and higher incomes, resulting in reduced unemployment benefits and other social welfare programmes.

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.