MITI Insists Tough New EV Rules Aren't Just To Protect Proton & Perodua From China Competitors

We are barely over a week into Malaysia's controversial new EV import policy, and the "protectionism" debate is already boiling over. While consumers are furious that the strict RM200k price floor effectively bans cheap, imported China EVs, MITI is stepping up to defend the move. 

In a parliamentary exchange with Julau MP Datuk Larry Sng, who questioned why EVs are being policed so aggressively compared to traditional petrol cars, Deputy Minister Sim Tze Tzin laid the cards on the table. The ministry is doubling down on its stance, making it clear that the era of easy imports is over because Malaysia needs to build its own industrial powerhouse, not just act as a passive consumer market.

"We Want an Industrial Base, Not Just a Consumer Market"

Sim explained that the liberal, tax-free environment we enjoyed from 2022 through 2025 was simply "Phase 1", a temporary window to spark early adoption and get charging stations built. Now, Malaysia has transitioned into Phase 2, where the name of the game is localisation.

"The government allows the importation of CBU (fully imported) vehicles — no problem — that is with the purpose of complementing the domestic market supply without undermining the development of the national automotive industry."

— Deputy Minister, Sim Tze Tzin

The harsh reality? The government wants foreign brands to stop just shipping finished cars to our ports. They want them to set up physical Completely Knocked-Down (CKD) assembly lines inside Malaysia so local vendors, parts suppliers, and high-skilled workers actually benefit from the global EV boom.

If we keep importing cheap city-runabouts without forcing local assembly, Malaysia will remain "just a market" instead of building a resilient industrial base.

Read: MITI Breaks Silence: The Truth Behind the '80% Export' Ultimatum

The Comparison Nobody is Talking About: Petrol Cars Have Faced This for Decades

One of the most interesting points Sim raised to counter the "protectionism" narrative is that this type of policy isn't actually new, we’ve just been living in an artificial EV bubble for the last four years.

When you look at the traditional Internal Combustion Engine (ICE) market, the Malaysian government has been using regulatory gatekeepers for decades. Fully imported petrol cars have long been strictly limited to engine capacities of 1,800cc and above to prevent them from directly cannibalizing the local manufacturing ecosystem.

So why are the rules for EVs structured around a pricing floor (RM200k CIF) and motor power (180kW) instead of engine size? Sim pointed out that the two industries are at completely different stages of development, which requires a totally different tax approach.

The Secret Battle Against "Tax Under-Declaration"

This is where the math gets high-stakes. While traditional petrol cars face massive, progressive excise duties based on engine size, fully electric vehicles currently enjoy a flat excise duty rate of only 10%.

Because that 10% tax rate is so incredibly low, it creates a massive loophole for sneaky distributors to "under-declare" the actual cost of their incoming cars at customs, allowing them to pay pennies in taxes.

"With the lower excise duty rate, determining the import value of electric vehicles becomes more critical to ensure that the basis for taxation is accurate to reduce the risk of under-declaration of import values below their actual value."

— Deputy Minister, Sim Tze Tzin

By hard-coding a strict RM200,000 CIF (Cost, Insurance, and Freight) baseline, the government is essentially cutting off tax evasion at the border, ensuring that state tax revenues are safeguarded while the local supply chain gets the breathing room it needs to mature.

MITI is doubling down: the rules are here to stay. While consumers might miss the influx of cheap, imported foreign options, the government is betting big that forcing global brands to build factories locally is the only way to keep Malaysia from becoming an economic bystander in the green transition.

Read: RM300,000 Is The New Entry Level: 10+ Popular EVs That Won't Survive MITI’s July 1 Rule