Economists criticize Malaysia's continuation of Approval Permit (AP) scheme for car imports

Economists are expressing their disapproval of the Malaysian government's decision to maintain the longstanding approved permit (AP) scheme for car imports, labelling it as a regressive move.

According to an article published by FMT, Nazari Ismail from Universiti Malaya argues that removing the AP requirement would foster healthy competition between local and foreign-based carmakers, leading to improved quality and reduced prices for consumers. He believes this would be beneficial for the automotive industry and the public.

However, Nazari acknowledges that dismantling the AP scheme may result in the government losing substantial revenue from fees charged to permit holders.

On July 17, investment, trade, and industry minister Tengku Zafrul Aziz stated that the government had no intention of phasing out APs for car imports. Interestingly, the exemption will not apply to Tesla, which recently launched its operations in Malaysia and introduced its first offering to the local car market on July 20.

The government previously announced granting Tesla the exemption to boost demand for electric vehicles (EVs) and establish a support system for EV adoption in the country.

Carmelo Ferlito from the Center for Market Education points out that the government's decision to grant Tesla the exemption aims to give EVs a competitive advantage. He suggests using different mechanisms, like imposing varying sales taxes, to achieve similar objectives.

Ferlito believes that the exemption may give the impression of preferential treatment to a particular producer rather than the product itself, potentially affecting the government's relationship with other long-established suppliers in Malaysia.

In contrast, removing APs altogether would not only allow consumers to access more products at affordable prices but also create competitive pressure on local producers to improve their pricing and technology offerings. This could be a positive step towards enhancing the automotive industry's competitiveness and benefiting consumers in the long run.