THE Federation of Motorcar and Credit Companies of Malaysia has proposed that the government allow the export of used cars and also offer incentives to owners of old cars to have them scrapped.
Federation president Datuk Tony Khor said the proposals had been brought up at a meeting with the International Trade and Industry Ministry last week.
At that meeting, the federation laid out basic guidelines on how its proposals could be implemented.
We believe exports and scrapping could help spur growth in the local car industry. Khor said when contacted by StarBiz.
Countries such as Singapore and Japan have been very successful in exporting used cars, while the United States resorts to scrapping to get rid of old motor vehicles.
Khor said government support would be very crucial, as cars were subject to a very high tax regime.
In Singapore, a tax refund is given for used cars exported. We are pushing for a similar scheme, he said.
As for scrapping, Khor said some monetary incentives should be given to those who voluntary opt for their cars to be sent to the scrap yard.
In the island republic, where a number of taxes such as additional registration fee (ARF) of 130%, import duty of 20%, sales tax of 4% and a very expensive certificate of entitlement (COE) are imposed on car buyers, a refund, in terms of credit transfer is given to those selling their cars for export.
The refund on the COE (which is valid for 10 years) is a percentage of the number of outstanding years of the COE, while the ARF can be as high as 80% or 90%. No refunds are given on import duty and sales tax.
The government does not pay cash for the refund, but a credit transfer is given to the owner for the purchase of a new car. For those who are not buying a new car, the credit transfer can be made to a third party, and cash payment made by the car dealer through some pre-agreed arrangement.
Khor said for scrapped cars, an incentive payment could be in terms of a credit transfer to purchase a new car, perhaps towards the down payment for a Proton or a Perodua.
Used cars from Singapore have long thrived in such markets as Britain, Sri Lanka and New Zealand. Malaysia bans imports of used cars from Singapore.
Khor said exporting and scrapping used cars could help reduce the number of old cars, which are expensive to maintain and cause pollution.
About half the slightly more than 5 million cars registered in the country are more than seven years old. This is based on the total industry volume in the seven years between 1997 and 2003 of about 2.5 million units. The first generation Proton, the Saga (manufactured in 1985), is still very much a familiar sight on Malaysian roads.
Khor said if one million cars a year could be exported and scrapped, there would be more room for sales of new cars in the country.
A Japanese car manufacturer said this should have been implemented a long time ago to help boost Proton sales in the local market.
In Japan, our manufacturers concentrated on our home base for a good number of years before we got the economies of scale. Exports (of new cars) only came later, he said.