High-octane heartbreak in Langkawi supercar haven

 A new tax policy means that idyllic Langkawi is no longer a shimmering utopia for ultra-wealthy supercar enthusiasts, a playground where the roar of a V12 engine was not uncommon.

For most people, idyllic Langkawi in the sparkling clear emerald waters of the Andaman Sea was a holiday paradise that included duty-free chocolate shops, premium dining and fine wines.

But it was also a utopia for ultra-wealthy supercar enthusiasts, a veritable playground where the roar of a V12 engine was not uncommon. For over two decades, Langkawi was their sanctuary.

There’s nothing quite like ordering a new supercar with all the desired customisations and full factory warranty, delivered duty-free in Langkawi – but a federal budget announcement last October has dashed many a supercar dream.

In a move that felt less like a policy shift and more like a misguided airstrike, the federal government slapped a RM300,000 valuation cap on duty-free cars – in effect, wiping out the duty-free advantage by bringing the full spread of mainland taxes into play.

Remember, the price of a supercar, new and duty free, usually starts from RM800,000 – or more than an entry-level BMW or Mercedes-Benz on the mainland. The new valuation cap means the buyer is faced with a 30% import duty, then 105% excise duty and a final 10% sales tax on top of the sale price of the car.

Goodbye, new Ferraris, new Lamborghinis; hello, parallel imported one-year old supercars.

JPJ crackdown

Is it a coincidence that this crackdown followed high-profile headlines about seized supercars whose owners played fast and loose with the 90-day “tax-free holiday” rules? Perhaps. Or perhaps it’s the federal government’s way of sending a “get well soon” card to Kedah, the state that has famously swung toward PAS, the opposition party in the federal parliament.

Perhaps it’s a strategic move by those in Putrajaya to undermine the economic appeal of a Kedah and Langkawi under the rule of their political rivals, in an election sweep which famously saw Dr Mahathir Mohamad, the island’s former patron, being unceremoniously rejected at the ballot box to the extent of losing his deposit?

After all, nothing says “we’re watching you” like drying up the revenue streams that once kept the island’s luxury automotive ecosystem humming. The collateral damage is, frankly, hilarious in a tragic sort of way. There is a growing silence at specialised warehouses and garages that once bustled with technicians perfecting the art of multicylinder engine tuning, and the supercar salesrooms are deserted.

Luxury restaurants that once catered to groups of supercar owners now have more of an echo and a lot less the clatter of patrons enjoying fine dining. In a master stroke of economics irony, the government closed a “loophole,” but in doing so, managed to turn the island’s premium tourism sector into a shadow of its former self. Win one, lose one.

Alas, since Mahathir stepped back from the corridors of power, Langkawi’s lustre has dimmed, tourism has declined and the domestic economy is losing its vitality.

What can be done

In hindsight, the anti-supercar policy seems more of a reaction against those supercar owners who evaded paying road tax and who abused the 90-day-a-year pass by which owners of Langkawi-based supercars could enjoy duty-free motoring holidays on the mainland.

This is like using a hammer to kill a fly. Enforcement of existing provisions, such as the bank guarantee required of supercars leaving Langkawi, should be enough to dampen abuse. The new rule benefits no one except the holders of Open AP import permits, who are already a community privileged and wealthy enough and who probably don’t want to attract more attention to themselves.

Perhaps one day, sanity will prevail, and the pre-budget duty-free status of supercars will be restored.

“Let the millionaires enjoy their duty-free supercars because they’ve worked for their money and they spend money in the island,” said Anthony Wong, a tourism and hospitality veteran who has invested in Langkawi since 1991. “Langkawi is 90% about tourism and the government must focus on tourism. It must develop a variety of tourism products to provide jobs for the people.”

Until then, Langkawi seems to have fallen back under the mythical curse of Mahsuri, the legendary princess of ancient times who was said to have cast a dark spell on the island. - FMT

Yamin Vong’s closest brush with supercar-owner status was his former 6-cylinder, turbocharged Nissan Skyline, acquired for a neighbourly RM30,000.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.