Bumi car traders urge new government to retain AP system

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KUALA LUMPUR (July 10): The Malaysian Association of Malay Vehicle Importers and Traders (Pekema) has urged the new Pakatan Harapan government not to abolish the open approved permit (AP) scheme to import cars, claiming the system has helped improve the socio-economic conditions of Bumiputera entrepreneurs, while keeping the automotive industry competitive. 

“The very existence of the open AP will regulate the new car price. With AP, traders will not be able to jack up the prices as they wish, as they need to match prices offered by other importers in the market,” said Pekema president Datuk Zainuddin Abdul Rahman.
Under the Customs Act 1967, government agencies such as the Ministry of International Trade and Industry (MITI) are allowed to issue APs for the import and export of goods. 

In December 2015, MITI announced it will continue rolling out the open AP system, which will leave consumers spoilt for choices to buy imported cars at competitive price. 

This was a U-turn from its original plan to scrap the AP system altogether. 

Previously, under the National Automotive Policy introduced in March 2006, MITI had said that the government will phase out the AP system from Dec 31, 2015, to pave the way for a market liberalisation and competitive automotive industry. 

However, after a backlash from Bumiputera entrepreneurs, MITI agreed to retain the open AP system, which was found to have provided direct middle and high income employment opportunities for 3,800 people, and generated an annual revenue estimated at RM2 billion through collection of taxes and fees. 

“Tun Daim Zainuddin said many wished to see the system being abolished, but I told him to take into considerations the money involved throughout the years. It will not be easy for the government to do away with the system just like that,” Pekema’s Zainuddin told reporters today, after meeting with the five-member Council of Eminent Persons. The council is headed by Daim, a former finance minister. 

Zainuddin said abolishing the AP would go against the spirit of Article 153 of the Federal Constitution, which grants the Yang di-Pertuan Agong with power to safeguard the interest of the Malays and Bumiputeras from Sabah and Sarawak. 

“Why would the government abolish a system that stays true to what’s dictated in the Federal Constitution? That’s unfair,” he added. 

Instead of abolishing the AP system, Zainuddin said the government should improve the management of the AP system and award the scheme “to those who remain true and steadfast in conducting businesses.”

At the same time, Zainuddin also called on the government to waive the RM10,000 fee imposed on open AP holders, as they had not received any returns promised by the previous government, although it has purportedly collected some RM2.7 billion from 2010 to 2017.

Under Budget 2010, the government announced it will charge RM10,000 for an open AP to import and export used vehicles. 

“There are about 800 types of APs in Malaysia and only an open AP is charged with a fee. It is not hard to calculate. The government collects RM10,000 from 35,000 AP holders, so it means they will get RM350 million every year,” Zainuddin said.

Zainuddin claimed the previous administration had promised to distribute 40% of the fee collection to Pekema members, 40% to Bumiputeras who wish to join the industry, and 20% to the Malaysian Automotive Institute (MAI).

“But not even 1% of Pekema members got it, new Bumiputera industry players got nil, and only MAI got their allocated 20%,” he added. 

Previously, the Federation of Malaysian Consumers Associations (Fomca) had suggested to the government to scrap the AP system, to help reduce the price of goods, as there were elements of monopoly involving some of the AP holders.