Fortunately, the new national automotive policy is still in the draft stage. But after losing the pace of investment for the past 20 years, it looks like there will be more of the same as government custodians appointed to grow the automotive industry try desperately to fix the problem but will fail because they don’t recognise the issue.
First, the central issue about investment flight to Thailand and more recently to Indonesia is that the Europeans and Japanese automotive investors have a choice.
And they don’t particularly fancy having to share their plans, strategies and intellectual properties with a civil service officer in order to apply for customised incentives as proposed in the draft of the new automotive policy.
Whereas Thailand and Indonesia clearly specify the incentives, which are applicable to all investors, in a level playing field. This is a formula that works for the two nations. Why does the Malaysian government continue a customised incentives policy which has failed to produce the desired results?
Incentives must be laid out clearly so that investors know for certain that if they want to invest RM100 million or RM1 billion, they’ll get the same incentive as someone who invests RM100 million or RM1 billion.
This brings us to the second problem. Why does the draft automotive policy focus the incentives only on electric vehicles (EVs)? The automotive policy must be forward-looking and aim to achieve the objective of decarbonisation in the context of the global climate crisis and the response of the international community.
It should allow the private sector – car makers and car buyers – to choose the technology.
Coincidentally, Akio Toyoda said that his company, Toyota Motor Corp, would persevere with its hydrogen fuel cell technology for its cars, including its first such, the Mirai. Even Honda has been technology-inclusive in its destination to carbon-neutrality – it has announced that all its cars will be EVs using fuel cells by 2040.
Toyota is the biggest backer of fuel cells among global automakers. It formed a joint venture last year with five Chinese companies – Beijing Auto, Dongfeng Motor, FAW, Guangzhou Automobile Group, Beijing SinoHytec – and the Beijing-based entity called United Fuel Cell System R&D is majority-owned by Toyota.
What if Honda wanted to invest also in hydrogen fuel cell R&D in an Asean nation? Will Malaysia stand a chance based on the current draft policy and hoary customised incentives?
Is Malaysia then going to score an own goal if its new auto policy excludes fuel cells. Or does the Malaysia Automotive Robotics and IoT Institute (MARii) draft auto policy also include fuel cells. We ask for more clarity from the international trade and industry ministry and MARii, its agency.
Several days ago, MARii chief executive Madani Sahari said that Malaysia is ready to offer a handsome tax incentive to accelerate EV development in the country in its soon-to-be announced accelerated EV policy under the National Automotive Policy 2020.
In the Bernama report, he said: “Currently, we are implementing customised incentives, depending on your economic benefits, then the incentive will be customised accordingly. But under the new EV accelerated policy, there are fixed incentives.
“There is one part of fixed incentives in terms of the excise duty, import duty and sales tax, in terms of what users and the industry is going to enjoy.
“But on top of that, if you are bringing into Malaysia something extraordinary, we are willing to consider even higher levels of incentives and that one will be customised exactly to the level that you are bringing into the country,” he said during a webinar session with Eurocham Malaysia’s automotive sector committee on A New Start for EV In Malaysia.
If there are original equipment manufacturers (OEMs) that intend to really make it big in Malaysia, Madani said they can enjoy that level of fixed incentives, which is for everybody, on top of other special incentives.
“In terms of tax incentives (for buyers), the accelerated policy is being finalised and we are looking at expanding the scope of incentives to include users in order for them to enjoy incentives as they buy EVs,” he said.
Madani said users would generally enjoy benefits in terms of direct incentives either in the form of road tax, green parking scheme, charging installation as well as toll rebates.
“This mechanism is in the final approval (stage) by the government but apart from that, as far as the industry is concerned, in principle, we are really going for a handsome level of tax exemption, either in the form of a huge tax reduction in terms of excise duty, import duty and sales tax for EVs,” he added.
For the new accelerated policy, Madani said it is hoped that the policy could be brought to the Cabinet by June for approval, before announcing it in July.
“The scope of the new policy will include passenger cars, scooters, motorbikes as well as commercial vehicles. It will also include OEMs, manufacturers of EVs as well as companies that are using EVs as a form of service, such as SoCar and Grab,” he said.
For this time around, Madani said MARii is very specific in terms of policy and the association has catered for and facilitated the needs from various angles so as to enhance the EV ecosystem in the country.
He said under the accelerated policy, MARii has categorised the next sector to be promoted in Malaysia which is the next generation of vehicles, consisting of green vehicles, where EV is one of the dominant sectors.
The views expressed are those of the writer and do not necessarily reflect those of FMT.