Universiti Malaya’s Nazari Ismail said removing the requirement would allow for healthy competition between local and foreign-based carmakers.

“That will spur domestic carmakers to improve quality and reduce the price. These are all good for consumers,” he told FMT.

However, Nazari acknowledged that dismantling the scheme may cause the government to lose substantial revenue in the form of fees charged to permit holders.

On July 17, Bernama quoted investment, trade and industry minister Tengku Zafrul Aziz as saying the government had no intention of phasing out APs for car imports.

That requirement, however, will not apply to Tesla, which launched its operations in Malaysia and introduced its first offering to the local car market on July 20.

The government had previously announced that the global electric vehicle maker had been granted the exemption in a bid to boost demand for battery electric vehicles and develop a support system for its adoption.

Carmelo Ferlito of the Center for Market Education noted that the government’s move to grant Tesla the exemption was aimed at giving electric vehicles (EVs) a competitive advantage.

“This is not wrong in principle, but I would have preferred (that a different mechanism be used such as imposing) different sales taxes, for example,” he said.

Ferlito said the exemption gave the impression that preferential treatment was being granted to a producer rather than for a product.

“This may create an issue in the government’s relationship with other suppliers who have operated in Malaysia for a long time.

“Removing APs will not (only) allow consumers to have access to more products at a more affordable price, but it will also create a competitive push for local producers, forcing them to improve on price and technology,” he said.