Malaysia is taking steps to gradually scrap an import tax on cars shipped from Japan and Australia.
Analysts say, however, that the move toward opening up the automotive sector isn’t enough to bring down barriers that stifle the industry.
Foreign car makers and consumers have long grappled with the high tax structure imposed by the Malaysian government to protect local car makers. The government recently began dismantling some of the duties levied on imports under a free-trade agreement signed with the 10-member Association of Southeast Asian Nations, or Asean.
Malaysia once harbored ambitions to be the Southeast Asian regional automotive manufacturing hub. But it lost in the race to attract foreign car makers after Thailand–now dubbed the Detroit of Asia–showered investors with generous incentives.
Malaysia slaps cars imported from Japan and Australia with a duty of 15% and 13.6%, respectively. Under measures announced this week, the Southeast Asian country will reduce import duties and eliminate the tax by 2016 for cars from the two countries.
“The move is positive and a step in the right direction for the industry,” Aishah Ahmad, president of the Malaysian Automotive Association, told The Wall Street Journal. The trade group represents more than 50 car makers and assemblers of various foreign and local marques.
The move will benefit consumers by reducing prices of cars over the long term. But the overall impact will likely be minimal given that most Japanese cars are assembled in Thailand–where they are already exempted from paying imports duties under the Asean free trade agreement–before being shipped to Malaysia, said Ms. Aishah.
Out of the 627,753 units sold in Malaysia, only about 13,000 units were imported from Japan, according to the Maybank Investment Bank Bhd. Currently, there are no known car imports from Australia into Malaysia.
In the near term, however, prices for the imported Japanese cars are likely to remain high.
”At best, we believe that the price reduction by 2014 would be approximately 5%,” said Chong Lee Len, an analyst with Affin Investment Bank Bhd.
This is largely because in addition to import duties, Malaysia also imposes an excise tax of between 65% and 105% as well as a 10% sales tax. Those remained unchanged to try to protect national car makers, Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd.
”We are still studying the feasibility of reducing the excise duty as it is an important source of revenue for the government, contributing almost MYR 7 billion,” Mustapa Mohamed, the minister of International Trade and Industry, said at a news briefing.
The industry employs about 350,000 Malaysians, and the government has “to protect their interest,” Mr. Mustapa was reported as saying in remarks reported by local media and confirmed by an aide.
The latest development comes after the opposition party pledged to bring down car and other prices should they come to power ahead of what is expected to be the most competitive poll in Malaysia’s history. The election must be held by June 27. Although the ruling coalition is widely expected to retain power, it could lose seats in Parliament.
”Reduction in car prices must be gradual,” said Madani Sahari, chief executive of Malaysia Automotive Institute, an agency under the Ministry of International Trade and Industry. “And because of rising competition, local players have been taking steps to reduce prices''.
Original article from Wall Street Journal
0 comments:
Post a Comment