Dr M: NAP good step forward for local auto industry

Friday, March 24, 2006

(Bernama) -- Tun Dr Mahathir Mohamad says the just-announced National Automotive Policy (NAP) will undoubtedly clear the air on the issue of Approved Permits (APs) for the import of cars into the country, an issue that was much talked-about last year.

The former prime minister described the policy as "a good step forward" as it would it would not only clarify AP matters but also contribute much towards enhancing the country's automotive industry.

Speaking to reporters after the launch of the Islamic Development Bank's (IDB) 1440H Vision here today, Dr Mahathir said the NAP contained elements that were in response to complaints on the issuance of APs.

The government said the current AP system would be phased out by Dec 31, 2010 but added that APs would still be available after that date in limited numbers to ensure a sufficient choice for Malaysians.

The issuance of APs had been a hot topic among Malaysians with allegations that they had been awarded to certain companies and individuals.

However, Dr Mahathir said the effectiveness of the NAP depended on government's implementation of the policy.

He said unless there was some way of ensuring that the entry of foreign cars did not undermine Malaysia's national automotive industry, "we may suffer."

"So it is up to the government on how to handle that situation after 2010," he said.

Asked how the NAP would affect Proton, Dr Mahathir said the national car manufacturer seemed convinced that it could live with the new policy.

Analysts had said a lower duty structure would enable Proton to better penetrate foreign markets and these were duty lowering measures were consistent with the World Trade Organisation (WTO).

They said it was now up to Proton to undertake measures internally to be competitive continuously as it could not continue to operate under an environment with a high level of protection of protection because such protective barriers were coming down regionally and globally.

On the reduction of the import and excise duties, Dr Mahathir said the move would make the local cars more competitive.

"I think they (the government) have to reduce the excise duty if they want Malaysian cars to be more competitive. You can't have excise duty for Malaysian cars and not for foreign cars. I think the government wants to reduce the duty, most of the taxes," he said.

Under the NAP, the government had lowered import and excise duties to spur rationalisation of the local automotive industry, including the need for more efficient vendors supplying more cost-effective and quality parts.

The import duty reduction to 5.0 per cent is also to comply with the Asean Common Effective Preferential Tariff (CEPT) Scheme where the import duty for Asean cars (with 40 percent local content) is between zero and 5.0 per cent.

The move is to promote greater integration with the Asean automotive industry and accelerate Malaysia's adherence to the Asean CEPT Scheme by one and a half years. Malaysia was originally supposed to adhere by Jan 1, 2008.