Pressure is building for Malaysia to reform a murky corner of its automobile industry, a system of importing cars that critics regard as fertile ground for corporate cronyism, a Reuters report said.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Former prime minister Mahathir Mohamed, architect of the domestic car making industry, added his voice to the calls for reform on Wednesday, for once sharing some common ground with critics of the system over past decades, the report added.
“We can’t understand this,” national news agency Bernama reportedly quoted Mahathir as saying about vehicles imported into Malaysia at prices below their cost, a scenario Mahathir says limits the effectiveness of national car maker Proton.
“That is why we ask for the list of APs to be made public, then we will know whether the foreign-made cars are being protected or Proton is being protected,” Mahathir, who is an adviser to Proton, was quoted as saying.
Reuters said Approved Permits, or APs as Malaysians usually refer to them, are a system of special licences that give unnamed individuals the right to import fully assembled cars into Southeast Asia’s biggest passenger car market – they are given only to firms majority-owned by ethnic Malays, in a policy going back several decades.
The news agency said Mahathir’s remarks placed him in rare agreement with Malaysia’s opposition, which also opposes the licence system.
“It’s a source of cronyism where the government pursues the opportunity to give largesse and keep their supporters happy,” Lim Guan Eng, chief of the Democratic Action Party, told Reuters.
Malaysian newspapers reportedly say some dealers dodge import taxes by under-declaring the value of the cars they bring into the country.
Reuters said Mahathir has called for the government of prime minister Abdullah Ahmad Badawi to publish the names of licence holders in a bid to stop this practice.
“The foreign cars are also protected because if they come in with a very low landed price, in a way it is protected,” Bernama quoted Mahathir as saying.
Reuters said Malaysia is about to unveil a new auto policy that critics hope will revamp the AP system – it has also been criticised by foreign carmakers for lack of transparency in the local market.
Lim reportedly called the licence system rent-seeking economics, saying holders could sell them and make up to 30,000 ringgit ($US7,895) per car – it was bad for the economy, and one of the reasons why Malaysia was lagging some of its neighbours, he added.
Reuters noted that Proton, battling stiffer competition and rising raw material costs, saw its market share slip to 44% last year, despite tax breaks and other government assistance.
