PEKEMA: Reconsider Abolishing Open APs, Article 153 Covers Rights To Open APs

The Malaysian Association of Malay Vehicle Importers and Traders (PEKEMA) has urged the government to reconsider any move to abolish Open APs (Approved Permits), permits given out to Bumiputera parallel importers of reconditioned cars.

PEKEMA President Datuk Zainuddin Abdul Rahman, who met the Council of Eminent Persons yesterday to discuss the matter, said that it is important for consumers to be given the choice of purchasing reconditioned cars, as it keeps prices of officially imported cars in check.

“With Open APs, we can control the prices of new vehicles. They (authorized importers) can’t increase prices as they wish as they need to maintain their competitiveness against us parallel importers,” said Datuk Zainuddin.

At the same time, Datuk Zainuddin acknowledged that there are weakness in the existing system, as some recipients of Open APs are not involved in the business, and merely re-sell the APs to other dealers.

“We cannot deny that there are some AP holders who are not in the business, we will leave it to the government on best course of action to address this,” he said.

He also called for the government to abolish the current RM10,000 levy charged to every Open AP.

“There are about 800 types of APs in Malaysia and only an open AP (used by car traders) is charged such a high fee. And the question is for the open AP, why does it have to be paid?

“The previous government promised 40 per cent of the collection will be channelled back to Pekema for the use of our members to upgrade exhibition centre and as a capital.

“In fact, the 40 per cent (collection) will be used to help finance Bumiputera entrepreneurs who want to venture into the automotive business and the remaining 20 per cent to the Malaysia Automotive Institute (MAI).

“However, this is not the case as only less than one per cent of the collection was contributed to Pekema members, while the rest goes to MAI,” said Datuk Zainuddin.

He also added that the giving out of Open APs is protected by Article 153 of the Federal Constitution, which grants special rights and privileges to Bumiputeras.

“There’s no such thing as abolishing APs because this comes under Article 153 for Bumiputeras. It’s not easy for the government to abolish APs just like that,” he said.

What Is An AP?

Approved Permit or AP, is an import-control mechanism based on the Malaysian Customs Act 1967. Items that fall under the list of controlled imports include cars, motorcycle helmets and equipment to manufacture drugs and optical discs. Depending on the item, APs are issued either by the Ministry of International Trade and Industry (MITI) or other relevant government bodies.

For cars, there are two types of APs issued by MITI: Franchise APs that are given out for free to franchise holders of car brands registered with MITI; and Open APs that are sold to parallel importers at RM10,000 a piece to import cars of any brand.

The total number of APs issued each year is capped at 10 per cent of the number of locally-assembled cars in the preceding year. Sixty per cent of APs are given to Bumiputera Open AP holders while the remaining 40 per cent are given to franchise holders, the majority of which are Bumiputera-owned. 

The actual number of Open APs given out each year however is unclear as the information is not made public.

Under the 2009 National Automotive Policy, Open AP was supposed to be terminated by 31 December 2015 while Franchise AP was to be terminated by 31 December 2020, but MITI later back-tracked on the policy.