The ministry of international trade and industry (MITI) has said it will meet with the Malaysian Automotive Association (MAA) next week to discuss on matters regarding vehicle price approvals and the ILP (Industrial Linkage Programme) applications. The latter pertains to incentives and duty exemptions that are taken into consideration when OEMs price their vehicles.
UPDATE: This article has been updated to include a statement by MITI on the vehicle price approval dated January 17, 2018.
This was confirmed by Ong Kian Ming, who is the deputy minister of international trade and industry, at a briefing session organised by the Malaysia Automotive, Robotics and IoT Institute (MARii) today.
“All these incentive applications will go through the ABDC (Automotive Business Development Committee) and this is one of the issues that have been brought up by MAA in terms of causing some delays in the releasing of the pricing of the cars,” said Ong.
“It’s important to clarify and to show the importance of the ABDC as a central focal point where all the different incentives that are being applied by the car manufacturers and OEMs can be proceed and the recommendations from ABDC can then be forwarded onto the ministry of finance to decide on the level of excise tax that can be adjusted or reduced,” he added.
Ong also explained the importance of the ILP and why it must go through the ABDC, stating that if car manufacturers want to obtain a higher exemption on excise tax, MITI would want to know what they can bring into the economy in terms of manufacturing activities as well as energy efficient/saving technology.
As MITI explains, the purpose of the ABDC is to evaluate and recommend the Industrial Linkage Program (ILP), Multi Sourcing Parts (MSP) and customised incentives for Energy Efficient Vehicle (EEV) under the National Automotive Policy (NAP) 2014. The recommendations by ABDC are for the consideration of the finance ministry when it comes to deciding the amount of duty reduction that will be extended to the vehicle companies.
“Let’s say if you get a higher exemption for excise tax, obviously we would want to see some of these cost savings be passed down to the consumers, so that people can have access to more affordable cars,” Ong noted.
The planned meeting will not only involve MITI and MAA, but also relevant stakeholders like car manufacturers and OEMs. Following this, the decisions and agreements that arise from this meeting will be announced to the press.
The issue of delayed vehicle price approvals has been affecting car companies in Malaysia for several months, as revealed by the Malaysian Automotive Association (MAA) earlier this week.
During a briefing session, MAA president Datuk Aishah Ahmad revealed that the association was going to seek a meeting with MITI to discuss the matter.
A response on the vehicle price approval was issued by MITI on January 17, providing some background on ABDC, which has been around since 2006. The committee consists of representatives from MITI, the finance ministry, the Malaysia Investment Development Authority (MIDA), MARii and the Royal Malaysian Customs Department (RMCD).
In its statement, MITI said “in the previous administration, some vehicle companies had obtained the incentives directly from the finance ministry, bypassing ABDC. Many of the applications were approved without comprehensive evaluation in determining the return of investment to the government.”
“However, in line with the aspiration of the new government, the finance ministry and MITI collectively agreed that the decision making process has to be transparent and fair and should be comprehensively deliberated by ABDC,” it continued. Meetings held by ABDC are on a monthly basis and special meetings will be convened, if necessary.