Economist - Retaining Approval Permit (AP) Would Hinder Healthy Competition!

Economists have slammed Putrajaya for keeping the approval permit (AP) mechanism for  imported cars, calling it a regressive action, according to FMT. They say that eliminating the restriction will promote healthy competition between domestic and international automakers, resulting in higher quality and reduced prices for customers.

According to Nazari Ismail of Universiti Malaya, such a shift will encourage indigenous automobile makers to improve their offers, benefiting consumers in the long term. However, he recognised that eliminating the AP programme could result in the government losing significant revenue from permit fees.

Despite widespread requests for reform, Tengku Zafrul Aziz, Minister of Investment, Trade, and Industry, said on July 17 to that the government had no intentions to phase out APs for imported cars. Interestingly, Tesla, which has recently joined the Malaysian market, was granted an exemption from the AP requirement on July 20 under the BEV Global Leaders Initiative (BEV GLI).

The exemption for Tesla was intended to provide electric vehicles (EVs) with a competitive advantage and to encourage the adoption of battery electric vehicles while also building a support system for the EV industry. While the objective was not improper in principle, Carmelo Ferlito of the Centre for Market Education observed that alternate mechanisms such as separate sales taxes to offer incentives would be preferable.

According to Ferlito further, the exception would convey the impression that preferential treatment was being given to a certain brand rather than a product. This might also undermine the government's relationship with other brands that have long operated in Malaysia. By removing the AP scheme for imported cars would lead to a broader range of affordable products for consumers and encourage local producers to compete and improve in terms of pricing and technology.