The Malaysian Automotive Industry Post-Afta
1.0 Introduction
The automobile industry in Malaysia is closely linked to the history of Perusahaan Otomobil Nasional Berhad (PROTON). It is the national car project whose brainchild was none other than the Prime Minister Dr Mahathir himself. Prior to the incorporation of PROTON on 7 May 1983, the industry comprises mainly of assemblers of foreign cars such as Tan Chong Motors, the assembler for completely knock down (CKD) Nissan cars and Kah Motors, the assembler for CKD Honda cars.
Since the inception of PROTON and subsequently PERODUA, the country second national car company, Malaysia maintains several measures to protect its local automobile industry which includes a host of other automotive components, spare parts and accessories vendors supporting the national cars by imposing one of the highest tax duties on automobiles and motorcycles in South East Asia and probably the world plus a list of other non-tariff barriers. The measures include duties on passenger car which ranges from 140% to 300% (depending on capacity), a 10% sales tax, a graduated excise tax which ranges from 25% to 65% (with the national car receiving a 50% reduction in the tax), import quotas on foreign cars, non transparent licensing system that requires an “approved permit†on imported autos and local content requirements which ranges from 40% to 65% for autos produced in Malaysia by foreign companies.
As at November 2002, Proton command about 59.4%, while the second national car company PERODUA about 31.4% of the passenger car market in Malaysia.. Today, Proton and Perodua combined make up more than 85% of the passenger car market in Malaysia. (New Sunday Times - Cars, 19 Jan 2003, p.02)
However, all these are about to change when the Asean Free Trade Area (AFTA) agreement comes into effect beginning 2003. However, Malaysia has successfully deferred the implementation of the agreement involving the automobile industry to 2005. The reason given was that the local
The automobile industry in Malaysia is closely linked to the history of Perusahaan Otomobil Nasional Berhad (PROTON). It is the national car project whose brainchild was none other than the Prime Minister Dr Mahathir himself. Prior to the incorporation of PROTON on 7 May 1983, the industry comprises mainly of assemblers of foreign cars such as Tan Chong Motors, the assembler for completely knock down (CKD) Nissan cars and Kah Motors, the assembler for CKD Honda cars.
Since the inception of PROTON and subsequently PERODUA, the country second national car company, Malaysia maintains several measures to protect its local automobile industry which includes a host of other automotive components, spare parts and accessories vendors supporting the national cars by imposing one of the highest tax duties on automobiles and motorcycles in South East Asia and probably the world plus a list of other non-tariff barriers. The measures include duties on passenger car which ranges from 140% to 300% (depending on capacity), a 10% sales tax, a graduated excise tax which ranges from 25% to 65% (with the national car receiving a 50% reduction in the tax), import quotas on foreign cars, non transparent licensing system that requires an “approved permit†on imported autos and local content requirements which ranges from 40% to 65% for autos produced in Malaysia by foreign companies.
As at November 2002, Proton command about 59.4%, while the second national car company PERODUA about 31.4% of the passenger car market in Malaysia.. Today, Proton and Perodua combined make up more than 85% of the passenger car market in Malaysia. (New Sunday Times - Cars, 19 Jan 2003, p.02)
However, all these are about to change when the Asean Free Trade Area (AFTA) agreement comes into effect beginning 2003. However, Malaysia has successfully deferred the implementation of the agreement involving the automobile industry to 2005. The reason given was that the local