NAP 2014 announced

NAP 2014 announced

by -

The new National Automotive Policy, better known as NAP 2014, was announced today by the Minister of International Trade and Industry Dato’ Sri Mustapa Mohamed at a press conference attended also by key industry players of country.

Prior to unveiling details of the policy, Mustapa spoke at length about an ‘unprecedented’ process of engagement in the last 18 months where all stakeholders of the industry were consulted for their feedback. According to Mustapa parties included in these discussions were OEMs, vehicle and component associations, aftermarket assocations, ministries and agencies, institutions of higher learning, financial institutions, NGOs, and members of the blogging and social media community.

Key themes in NAP 2014 include a stated aim to make Malaysia the regional production hub of energy efficient vehicles (EEV) and promoting the increase of local assembly of motor vehicles in the country. The NAP targets to have the Malaysian automotive industry export 250,000 vehicles of all brands by 2020; a substantial increase from current levels, which sees only about 20,000 Malaysia-assembled vehicles exported. The policy bullishly forecasts a total production volume of 1.25 million vehicles by 2020, with domestic industry volume to hit 1 million units at the time.

To avoid confusion, the Government has specified a clear definition of what constitutes an EEV in its books, and it is not restricted to merely hybrid or electric vehicles. To qualify as an EEV, a given vehicle must meet the stated fuel efficiency requirement relative to its kerb weight. For example, micro cars weighing below 800kg must consume less than 4.5 l/100km whilst large 4x4s weighing between 2,051 and 2,350kg is defined as energy efficient if they consume less than 11.5 l/100km.

The benchmark fuel consumption figures to be taken by the Government will be the New European Driving Cycle (NEDC), though it was not made clear if kerb weight here is taken based on European practice which includes a 75kg for its driver. Models not tested under the NEDC will need to undergo testing at certified labs if they are to apply for EEV incentives from the Government.

Unlike similar policies drawn up by neighbouring Thailand and Indonesia, Malaysia’s NAP 2014 will not have any investment prerequisites imposed on the vehicle manufacturers – no commitments of any sort to volume, investments, or equity. Incentives will R&D and training grants, infrastructure facilitation, lower taxes, and expatriate allowances, but specifics will be on a customized basis, subject to outcome of individual discussions between the Government and manufacturers. In other words, the incentive on offer to each company is dependent on the outcome of its negotiations with the Government.

It is important to stress that the EEV incentives are applicable only to locally-assembled CKD models; fully-imported EEVs are subject to the same level of import and excise duty as regular models. Stocks of hybrid and electric vehicles that cleared customs before 31 December 2013 will not be subject to import and excise duties. Moving forward, fully-imported hybrid and electric vehicles will be taxed based on their engine capacities and power outputs respectively.

Locally-assembled hybrid vehicles will continue to enjoy exemptions till the end of 2015 whilst locally-assembled electric vehicles (assuming somebody gets around to assembling one) is extended to the end of 2017. Beyond these dates, incentives are extended based on the ‘strategic value of these CKD investments’.

On the subject of motor vehicle prices, Mustapa’s ministry MITI has formulated what it describes as a car price reduction framework which aims to achieve an overall 20-30% drop in car prices over the net five years. Underlying principle of this framework revolves around liberalization of the industry, but the specifics on quite how the price drops are to be achieved are not made clear, though what we do know is that it will not involve any reduction in duties. The minister revealed that in 2013, import duty, excise duty, and sales tax of motor vehicles added a total of RM9.8 billion into the Government’s coffers, and there is naturally no intention to cut that revenue stream at this point in time.

Meanwhile, the contentious Open APs, which was scheduled for termination by 31 December 2015, is now the subject of an ‘in-depth’ study scheduled for presentation later this year. Also not mentioned in the policy are concrete plans of any sort on road maps to the adoption of clean fuel.


Leave a Reply