Import Duty on Cars

Apparently, the prices of cars will not be lower next year even with the lower import duty for ASEAN made cars (40% content made in ASEAN and assembled in ASEAN). There will be other ways to impose tax, just like they did for this year with higher excise duty.

The reason given is because the government does not want to lose revenue. Wow. I though the barriers to entry for foreign made cars is to protect our car industry. I didn’t know it was for revenue per se.

Obviously, some people skipped their economic class. They forget that with cheaper cars, there will be a higher level of disposable income to spend on other things. Worth billions of Ringgit mind you. Traders of other products will have better profits, more sales. Perhaps a huge chunk of this will be Malaysian made products. Car distributors will have better profit margins and sales. Better margins because they need not worry about prices being too high. And better sales because of the lower prices. More tax to pay with the profits. Revenue for government gained. People can buy better homes with the extra money. And hopefully buy more books. Better quality of life, obviously with higher disposable income. I don’t have hard figures to show you, but my point is, our economic policies shouldn’t be so myopic.

Weigh this against the artificial survival of our carmakers. It seems like the right impetus for them to get their act together, to take the opportunity of a freer ASEAN market. It won’t be so easy for Proton to die. It has 2 huge plants. The assets are worth something. If they can’t make their own cars, they can always do contract manufacturing or joint ventures ala Perodua-Daihatsu alliance. Our automotive parts manufacturers will have a bigger market to sell to. If we are inefficient, we just have to admit it and work on it. Not moan and groan and go against the spirit of the free trade agreement we signed. That’s bad faith. We can’t afford that in an interlinked free market.