The government has no plans for a downward revision of excise duty for imported and locally manufactured cars, International Trade and Industry Minister Mustapa Mohamed told the Dewan Rakyat today.

He said a sudden reduction in excise duty will have a significant impact on the government’s revenue from excise duty now estimated at RM7 billion a year.

A reduction will also harm the overall growth of the domestic automotive industry, he said.

“The government is aware that the domestic automotive industry has to be  developed further to become more competitive and offer more benefits to the people, particularly in selling cars at a reasonable price,” he said when replying to Saifuddin Nasution Ismail (PKR-Machang) during Question Time.

Saifuddin wanted to know the main components in the National Automotive Policy (NAP) that are being reviewed and whether the government intends to lower the excise duty for made-in-Malaysia cars.

Mustapa said the government has unveiled several important initiatives under the NAP to tackle reduction in car prices.

He said the initiatives were introduced in the domestic automotive industry through introduction of many car models in the same segment and liberalising the local automotive industry by issuing new manufacturing licences for all segments of vehicles in the energy-efficient vehicles’ category.

The minister said the government will draw up a comprehensive strategy, encompassing a roadmap to oversee reduction in car prices in stages and establish a National Automotive Council approved by the Economic Council to closely monitor implementation of the NAP.

“Although car prices in Malaysia are higher than in neighbouring countries, after taking into account costs such as insurance, road tax and fuel, which are subsidised by the government, car price in Malaysia is actually lower than our neighbours,” he said.

Some manufacturers commit to lower prices

Mustapa said although the government did not intend to reduce vehicles excise duty structure, several local car manufacturers, through consultation with the government, have committed themselves to lower car prices.

For instance, Perodua, through the What’s up Graduate Progamme, has come up with a low monthly instalment scheme, 50 percent discount on maintenance cost for two years, insurance incentive and free driving licence, he said.

Mustapa said carmakers like Honda, Volkswagen, Chevrolet and Ford are also participating in the price reduction drive through various schemes.

“I was informed that several companies have already offered incentives while some are expected to make announcements on incentives to ensure that the people enjoyed lower car prices,” he said.

The minister gave an assurance that the policy and the NAP review will not be done in a haste but in stages after careful study and consideration.

The first phase of the NAP was implemented in June by giving priority to investments in energy-efficient vehicles while at the same time consultations are being held with several car manufacturers to consider similar incentives, he added.

- Bernama