Committee collectively decides on tax incentives for auto firms to ensure transparency, says MITI

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KUALA LUMPUR (Jan 17): The Ministry of International Trade and Industry (MITI) explained today that the decision making on tax incentives for vehicle companies is deliberated by a comprehensive committee to ensure the incentives are granted and distributed only to worthy and entitled recipients, according to the prescribed regulations and guidelines. 

In the previous administration, some vehicle companies had obtained the incentives directly from the Ministry of Finance (MOF), bypassing the Automotive Business Development Committee (ABDC), whereby many of the applications were approved without comprehensive evaluation in determining the return of investment to the government, MITI said in a statement.

"In line with the aspiration of the new government, MOF and MITI collectively agreed that the decision making process has to be transparent and fair and should be comprehensively deliberated by ABDC," it added.   

MITI was responding to the front-page report in The Edge Financial Daily today on the Malaysian Automotive Association’s (MAA) criticism of the government for allegedly delaying the approval of new car pricing. 

In the report, MAA president Datuk Aishah Ahmad said the MOF “does not want to make decisions” on the tax incentives issue.

“Everything is channelled back to the ABDC. So all goes to this committee and you must get everybody to sit together,” Aishah was quoted as saying. 

MITI, in its statement, clarified ABDC is not an entirely new setup as mentioned in the report. 

It pointed out that the committee was established in 2006 to facilitate a collective decision making process in determining the quantum of incentive to be extended to vehicle companies.  

"Since 2006, members of MAA have been applying for incentives to ABDC. In the decision making process, the cost benefit analysis (CBA) is also considered by the committee," the ministry said.  

"The objective of ABDC is to evaluate and recommend the Industrial Linkage Programme (ILP), Multi Sourcing Parts (MSP) and customized incentives for Energy Efficient Vehicle (EEV) under the National Automotive Policy (NAP) 2014," MITI said, adding recommendations by ABDC are for MOF to consider in deciding the amount of duty reduction to be extended to the vehicle companies. 

MITI noted the approval letter from MOF also explicitly stipulate that the gains from the incentive received by the vehicle companies are to be passed down to the rakyat. 

"MITI will always strive to ensure public funds and taxpayers money are utilised optimally for the benefits of the rakyat," it added.   

ABDC comprises representatives from MITI, MOF, Malaysia Investment Development Authority (MIDA), Malaysia Automotive, Robotic, and IOT Institute (MARii), and the Royal Malaysian Customs Department.