Cars

Published on July 27th, 2019 | by Daniel

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Why Keep The AP Kings? We Ask MITI’s Deputy Minister

At a recent automotive conference we asked the deputy Minister why the continued use of Approved Permits in Malaysia. His answer as simple. It is political. End of story.

The Minister also explained that the volume of vehicles imported in by AP holders in Malaysia is just a fraction of the total volume of cars sold in Malaysia. The issue here is not the volume but the total ‘value’ of the cars brought in by AP holders and the loss of tax revenue for the Malaysian tax department as used reconditioned cars pay a lower tax as compared to new cars imported in by their principals.

For example, a brand new BMW 3 Series or Bentley Continental imported in by the brand owners in Malaysia will be charged the full import tax value. Then the brand owners have expensive showrooms (rental and utilities will be high) professional staff, after sales, warranty and marketing and promotional expenses which all end up in the hands of Malaysians who then spend most of this money in the Malaysian economy.

 

Now……with a used reconditioned Bentley or BMW 3 Series, the import tax paid to the Malaysian tax department is much lower (money collected less) and the AP dealer has a simple showroom with no after sales, no warranty, no promotional expenses, just some marketing expenses with local online car sales websites and their profit margins are almost 100-150% more than what the official brand owner would make.

Then there is no distribution of this profit in the Malaysian economy as most of this money is used overseas.

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