MITI Lists Out Steps To Improve Incentive Approvals, Lower Car Prices

The Ministry of International Trade and Industry (MITI) has updated members of the media regarding the lengthy approval process on EEV incentive for locally assembled vehicles.

The matter was earlier highlighted by the Malaysian Automotive Association (MAA) in which its president mentioned that many approvals are yet to be confirmed, delaying the launch and ultimately cash flow of car companies.

In the news report by The Sun daily, Deputy International Trade and Industry Minister Dr Ong Kian Ming said the Automotive Business Development Council (ABDC) will take about two days to process and make recommendations to the Finance Ministry (MoF) on the incentive applications by carmakers under the Industrial Linkage Programme (ILP), and about a week for customised incentives.

The ILP, introduced since 2006, is an incentive programme to encourage more localization of components and parts when assembling a passenger vehicle. Franchise holders enjoy excise duty reduction as a result of their localization activities.

Common items that are localized include wire harness, cooling system, alloy wheel, tyres, interior plastic trimmings, bumpers, windshield glass, windows, rubber linings, and suspension components.   

Ong said the present process flow and client charter of ABDC will be strengthened and shared with the industry to ensure timeliness and transparency of the process in evaluating incentive applications.

Pricelist for BMW products in Malaysia include the savings that buyers are enjoying thanks to the government incentives

“MITI will enhance the client charter so that there will be greater transparency and understanding of the deliverables that MITI will have with MAA in terms of the time frame of processing these applications within the context of ABDC and continue the engagement with stakeholders in this process,“ Dr Ong told the members of the media yesterday.

ABDC meetings will be held twice a month, double the frequency did previously, and a schedule of the meetings will be circulated to the industry to reduce the turnaround time.

Meanwhile, MARii (formerly known as MAI), will review the Cost-Benefit Analysis (CBA) process on the ILP as the MAA has raised the need for more transparency on the details. The CBA process is done when customized incentives (higher than ILP standards) are requested due to the larger investments by franchise holders, such as exports programmes by BMW Group Malaysia, Mazda, and Volvo.     

“It’s a win-win situation for everyone. MAA members, OEMs can sell more cars; consumers benefit from lower car prices and MOF collect more in excise duty as a whole because of increased volume. This is something that we want to work towards for all the car models,” said Dr Ong.

Main image: Photo from Facebook page of YB Dr Ong Kian Ming