KUALA LUMPUR: About 90% of Malaysians, especially those from the B40 and M40 groups, will not be affected by the implementation of the open market value (OMV) tax structure for locally assembled completely knocked down (CKD) vehicles, says Sim Tze Tzin.
The Deputy Investment, Trade and Industry Minister said the Excise (Determination of Value of Locally Manufactured Goods for the Purpose of Levying Excise Duty) Regulations 2019 apply to all locally manufactured goods, not just vehicles.
“The government has conducted simulations on the implementation of this tax and found that the vast majority which is over 90%, will not be affected, particularly among the B40 and M40 groups,” he told the Dewan Rakyat on Monday (Feb 23).
Any minor impact may involve luxury branded vehicles, which could see a slight price increase. However, this does not affect buyers from the B40 and M40 groups, who generally do not purchase luxury vehicles,” he added.
The implementation of the excise duty has been deferred for five years. The five-year period will end on June 30.
“To ensure that companies making significant investments and generating broader economic spillovers are not placed in a ‘worse-off’ position, the New Customised Incentive Mechanism (NCM) has been introduced."
Under the NCM, companies that demonstrate significant investment commitments, increase genuine local content, and contribute to vendor development and exports are eligible for higher excise duty exemptions. This approach aims to minimise the impact of implementing the regulations, particularly for new vehicle models."
“For existing models in the market, the government will also ensure that any impact on vehicle prices remains at a minimal level, especially for affordable vehicles for the B40 and M40 groups, based on approved tax incentives,” he added.
He was responding to a question by Khairil Nizam Khirudin on the long-term strategies to ensure Malaysia's CKD automotive industry remains competitive, and the measures taken to protect B40 and M40 buyers from increased vehicle costs when the full implementation of the OMV tax structure for CKD cars comes into effect.
