Dr Mahathir says ending APs means ending Proton and Perodua
BY LEE SHI-LAN
November 28, 2013
Former Prime Minister Tun Dr Mahathir Mohamad (pic) today warned Putrajaya that abolishing the Approved Permit (AP) system would be the death knell of national carmakers Proton and Perodua.
In his blog, Malaysia's longest serving prime minister said without the AP system, foreign car manufacturers would flood the local car industry, leaving Proton and Perodua floundering.
"Malays and other Bumiputeras will be unable to enter the automotive business without the AP system because they are unfamiliar with the market," Dr Mahathir said.
As Putrajaya begins to take steps towards liberalising the automotive industry, Dr Mahathir said it was common for businessmen to do business with people they were familiar with.
"It is difficult to build trust with a business partner or agent when you do not know their background. Worse still, when you know the stranger has no capital and experience," Dr Mahathir pointed out.
"In the past, only a few Malays could afford to import used cars into Malaysia and this disturbed the implementation of the New Economic Policy.
"The objective of the NEP was to eliminate the identification of race with economic functions. To overcome this, the government allowed the importation of reconditioned Japanese cars.
"Aspiring Malay auto dealers were given APs. Even as times changed, the AP system continued for new and second-hand special models."
The demand is such that auto car dealers were prepared to buy the APs at high prices, Dr Mahathir said in his blog.
As part of their benefits, members of parliament are allocated one AP, regardless of the number of terms they have served, although it cannot be sold.
Dr Mahathir pointed out that there were similar systems for essential items such as sugar, flour, rice and other items.
"There are individuals who have benefited from this system for the past 80 years and become billionaires."
"There is no demand to stop these APs and the recipients live a charmed life. So if Putrajaya is reconsidering the AP system, it should include all APs and not just for cars," Dr Mahathir said.
Former Finance Minister Tun Daim Zainuddin came under attack from Malay rights group Perkasa yesterday for supporting the abolishing of the APs.
Perkasa vice-president Dr Zubir Harun said such a move would threaten the livelihood of Bumiputeras. He demanded the government revoke all gaming licenses in Malaysia.
Daim had expressed his support for Mercedes-Benz Malaysia Sdn Bhd president and chief executive officer Roland S. Folger, who suggested abolishing the AP policy.
Dr Zubir said now that Daim had become a corporate figure, he wanted to meddle in the livelihood of his own race. - November 28, 2013.
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Daim Calls For Abolishing Open Approved Permits For Cars
By Yong Soo HeongKUALA LUMPUR, Nov 20 (Bernama) -- Former finance minister Tun Daim Zainuddin has suggested that the government consider abolishing the open Approved Permits (APs) policy required for the import of vehicles to help reduce the cost of owning cars in Malaysia.
"Removing the APs would translate into cheaper cars for the rakyat," he said in the capital, Wednesday.
Daim was commenting on a statement by Mercedes-Benz Malaysia Sdn Bhd President and Chief Executive Officer, Roland S. Folger, who had said that such a move would mean cheaper cars and encourage car manufacturers to increase their investments to produce more affordable cars locally.
"For me, there is one way we can reduce car prices. It's a simple solution to the issue (and that is to) do away with open APs," Folger told The Sun newspaper recently.
Daim said the government would have to take positive steps in the soon-to-be-revised National Automotive Policy (NAP) in order to consider the interests of larger sections of the population rather than a selected few.
It has been reported that 98 companies are Open AP holders for the import of cars into the country.
Industry analysts have often debated how to make the local automotive industry more competitive, encourage greater investment and re-investment, and for cars to be more affordable locally.
Folger had also highlighted the fact that removing open APs would not hurt government revenue collection but would even serve to enhance its collection.
Industry analysts say that the government could do away with an extra layer of people in the business equation and pass on the cost savings to the rakyat as open AP holders charge several thousand ringgit for each transaction processed.
The cost savings could be used by the government to spur the industry further or channelled to more productive spending, they said.
Analysts suggested that the government could tender out the Open APs to earn more revenue, which in turn may reduce taxes for car buyers to make the cars more affordable.
Open APs are usually used by parallel importers to import re-conditioned luxury cars to sell them at slightly lower prices than the locally-assembled ones.
For example, an Internet check revealed that a new Mercedes-Benz E200 is sold from about GBP35,000 (about RM179,000) in Great Britain compared with RM366,000 for the same locally-assembled model in Malaysia.
A second-hand Mercedes-Benz E200 in Great Britain would be even cheaper by about GBP10,000 or about RM51,000, depending on the year of manufacture and mileage covered.
Grey importers, or open AP holders, then take advantage of the higher price differential in Malaysia to sell the 're-conditioned' E200 from between RM270,000 and RM290,000 each, even after paying for taxes.
This discount is often seen as 'advantageous' to the consumer but is at the expense of the manufacturer who has to incur additional costs like local procurement, assembly costs, branding and promotion, sales and after-sales service.
Doing away with open APs would also eliminate Malaysia as one of the top destinations for luxury second-hand cars in the world, the analysts noted.
They stress that the government would have to re-examine the whole automotive industry structure, including areas like the tax regime and end-of-lifespan of cars, to ensure that it can move forward since the national car makers have been around for almost 20 to 30 years as the first Proton Saga rolled out in July 1985 and the first Perodua Kancil emerged in August 1994.
The NAP was introduced on March 22, 2006 and subsequently revised in 2009 and 2012 aimed at promoting a competitive and viable domestic automotive sector, in particular, national car manufacturers.
It was also to promote Malaysia as an automotive regional hub, by integrating the local automotive industry into regional and global industry networks within the increasingly liberalised and competitive global environment.
Analysts also say that providing for greater competition would shake out the complacency among local car manufacturers and their local parts suppliers.
They hope that the revised NAP would look at the larger picture and help rejuvenate the local automotive industry to become a foreign exchange earner for the country.
--BERNAMA
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