Policy on AP from MITI

Just got this "Policy On Approved Permit (AP) For Motor Vehicle" from the MITI website:

1. Import Licensing through Approved Permit (AP) was introduced in 1970 with the objective of promoting and providing opportunities for bumiputera entrepreneurs in the automotive sector.

2. In 1987, a review was undertaken on the AP policy involving all 269 AP holders:


DECISIONS
* There will be no APs considered to new non franchise companies with immediate effect. Allocation of APs is restricted to new franchise companies only.
* Allocation of APs for 153 companies were withdrawn due to:
- business not in operation;
- no showroom and service facilities;
- misuse of AP, i.e. selling of APs;
- improper management of account i.e. allowing unauthorised parties including non AP holders to manage the account.
* Continue APs allocation to existing 116 companies, comprising:
- 76 Open AP Holders (to import any brand of car from any country); and
- 40 Franchise Holders (to import specific brands and makes from its principal).
* Encourage the existing quota holders to join/form consortia:
- to enhance efficiency; and
- to be more viable in terms of access to financial, after sales service and showroom facilities.

CURRENT POLICY

3. COMPLETELY KNOCKED DOWN (CKD)
* APs for importation of CKD packs by manufacturers, assemblers or contract assemblers are based on requested by the companies.
* Companies must have valid Manufacturing License or Contract Assembly approval.
* Companies that are in direct competition with models produced by national manufacturers are required to export 80 per cent of production. Performance of export must be submitted to MITI on monthly basis.

4. COMPLETELY BUILT-UP UNIT (CBU)
* APs on Passenger Cars are divided into 2 categories:
- non-franchise APs (open APs) for new/used passenger car and multipurpose vehicle (MPV).
- franchise APs for specific makes and models of passenger car and MPV.
* A new franchise company is evaluated based on:
- valid franchise agreement between importer and the principal/manufacturer;
- direct importation of vehicles from the principal/factory overseas;
- the models have not been assembled/ marketed in Malaysia;
- 70 per cent bumiputera equity holding;
- proven financial and management capability; and
- availability of sales/showroom facilities and after sales service.
* Import restriction (parallel import) is granted on brands under exclusive franchise agreement.

5. ADMINISTRATION OF APs
* Allocation of APs
- For new franchise companies, annual allocation of APs is based on the number of distributors and dealers appointed.
- Subsequent annual allocation is based on previous year’s performance of import and sales.
- Company to submit the import and sales performance report by the 10th of every month.
- Documents to be submitted are copies of:
- Form JK69 (AP) – Approved Permit (AP) issued by MITI
- Form K1/K8 – Import declaration issued by Kastam DiRaja Malaysia
- Sales Invoice – Issued by AP Holders to the distributors/buyers
- Certificate of Vehicle Registration (JPJ); and
- Letter of Undertaking – Issued by the financial institution.
- APs will not be allocated if company fails to submit the relevant documents and information.
* Issuance Of APs
- APs will only be issued upon submission of original Bill of Lading.

6. IMPORTS FROM ASEAN
* Effective 1 January 2005 all categories of vehicles imported from ASEAN are subject to import duty of zero to 20 per cent:
- CKD for all vehicles – zero import duty.
- CBU for Passenger Car/MPV/4WD/Van/Bus – 20 per cent import duty.
- CBU for Motorcycle – 20 per cent import duty.
* Importation of new motor vehicles from ASEAN requires APs for the purpose of monitoring and collection of data.
* APs will be issued based on quantity requested by Franchise Holders.

7. IMPORTS FROM NON ASEAN
* Effective 1 January 2005 all categories of vehicles imported from Non ASEAN are subject to import duty of 10 to 50 per cent:
- CKD for Passenger Car/MPV/4WD/Van – 10 per cent import duty.
- CKD for Bus and Lorry – zero import duty.
- CKD for Motorcycle – zero to 10 per cent import duty.
- CBU for Passenger Car/MPV/4WD/Van – 50 per cent import duty.
- CBU for Bus – 30 per cent import duty.
- CBU for Lorry – 35 to 50 per cent import duty.
- C BU for Motorcycle – 40 per cent import duty.
* Current arrangement on import requirements from Non ASEAN will continue.

New Alfa Romeo Models

Sime Darby Auto Italia Sdn Bhd, (100% owned by Sime Darby Bhd.), the distributor for Alfa Romeo in Malaysia, recently unveiled six new models — 147, 156, 156 GTA, 156 Sportswagon, 166 and Alfa GT Coupe.

156 GTA


147

The event also marked the official launch of the Auto Italia headquarters and 3S (sales, service and spares) center at Glenmarie, Shah Alam.

Extra Info.

Milan Auto (M) Sdn Bhd. was the previous distributor of the marque in the country from 1990 until Fiat Auto terminated the franchise in 2003.

The Sime Darby group acquired the franchise for Alfa Romeo through Sime Cerah Sdn Bhd., absorbing some staff from the previous distributor in the process.

SIME Darby Auto Italia Sdn Bhd, managing director: Radzi Zainal

Sime Darby managing director-Motor Group (Malaysia): Rajan Thurairatnam

Alfa Romeo Sales Europe and Extra Europe Fiat Auto Spa sales coordination representative: Hans Hoegstedt.

Newspaper Reports:

NST

Star

NGV

With Petrol and Diesel prices showing rising it really makes sense to look for alternatives. If you are living in the Klang Valley, you might look at converting your car to run on natural gas.

This is not a new technology and has been proven in several countries with Argentina and Brazil leading in terms of the number of Natural Gas Vehicles (NGVs). At present most of the vehicles using NG in Malaysia are taxis.

Here I will discuss some of the advantages, disadvantages and future potential in Malaysia.

Advantages:
- Natural gas is much cheaper (at 63.5 sen/ litre) than either petrol or diesel.
- It is also much more environment friendly as gas burns more cleaner with less harmful emissions. All public vehicles in New Delhi, India have converted to run on natural gas.
- There is abundant supply and prices are quite stable.
- Govt. incentives. Road tax reduced - 25% for bi-fuel( use either NG and patrol or NG and diesel) and 50% for monofeul NGVs (only NG).

Disadvantages:
- High cost of converting to run on natural gas. At present in Malaysia the conversion kits costs about RM3500.
- Limited refueling stations around the country. At present a few stations are located - in Kuala Lumpur, Klang, Seremban, Johar Baru and Prai.

Looking at long queues of Taxis at KLCC and Kelana Jaya Petronas stations made me realize that it is not really feasible alternative at present.

Future Scope
- Conversion costs will definitely go down as more companies come in with more choices.
- The number of refeuling stations will increase in the future. According to a recent report, Petroliam Nasional Bhd (Petronas) plans to open 10 new NGV stations this year and 94 by the year 2010.

RELATED LINKS

- Asia Pacific Natural Gas Vehicles Association

- International Association For Natural Gas Vehicles

- Green Car Congress

The Malaysian Car Industry

I am amazed at the number of people who thought that ALL cars would get cheaper after the implementation of AFTA. (for those who didn’t know, AFTA stands for the ASEAN Free Trade Area). They were disappointed when 1st of January, 2005 came and went and car prices didn’t go down (in fact they went up). They were disappointed that they still were not able to afford their dream Mercs, BMW, Hondas and Toyotas.

For those who didn’t know, under the terms of the Common Effective Preferential Tariff (CEPT) Agreement, Malaysia initially agreed to put the tariffs for automotive parts to below the five percent level by 2003. The move was postponed to the year 2005, when the car industry was badly affected by the economic crisis in 1997/98.

However, I am surprised to find that so many people are ignorant of the fact that this applies only to foreign companies having manufacturing plants in ASEAN with local content of at least 40 percent in order to enjoy the preferential import duty. So luxury brands like BMWs, Mercedes Benz, Lexus, Ferrari and Porsche (as well as other makes) manufactured outside the ASEAN region will not be cheaper. Import duties on those cars still remain. Anyway, people who can afford to buy these cars will buy these cars. Even without the taxes, they are still above the RM100K mark. I still can’t afford to buy a car costing over RM80K anyway. How many of you can?

Then some people ask how come new Proton and Perodua cars are not cheaper. I disagree. They are cheaper. The new cars have better quality, extra features (like air bags, ABS) and service has improved. So for almost the same prices we are getting a better overall package.

Some people say that the Government should remove the taxes all together on all cars.

The logic is simple. Cars become cheapr and we can all afford the foreign brand that we have all been dreaming about. Yes!It would mean the end of the Malaysian automobile industry. Who cares about the consequences. Some people couldn’t care less but let us try to answer some questions:

- How many vendors companies have been developed and depend on Proton and Perodua for their survival?
- How many people are employed by these companies?
- Are you aware that the taxes obtained from the import of foreign cars into Malaysia are used for supporting public facilities?

Selling to a foreign car company may mean killing the Proton brand, loss of jobs and of course money moving away to other countries.

Of course there is always the question, "How come Korean cars are so cheap?" Why can't Proton be like them?

I simply have no good explanation. Proton and Perodua have to find the answers if they are to survive and remain competitive. Maybe I can blame it on dumping – that is, the practice of selling goods in foreign markets at significantly lower prices than either in the home market of in other markets. Many companies do this in order to build up their market share. The Japanese did it in the US. Proton does it too – for example, cars sold in UK are reportedly cheaper than in Malaysia or have better specs.

However, having said that I feel that the Malaysian companies have to find out how the Korean (and now the Chinese) car companies have been able to come up with winning designs and even penetrate the tough US market (which Proton and Perodua hasn’t been able to do so far).

Proton CEO's Contract Not Renewed

The board of directors of Proton Holdings Bhd group has announced yesterday that it will not renew CEO Tengku Tan Sri Mahaleel Tengku Ariff's contract. He will retire on Sept. 30 and goes on leave from today.

Mahaleel joined Proton in 1996 and was appointed CEO on April 1, 1997. I guess this announcement was expected as the differences between the CEO and the Board had been well publicized.

Despite the complaints and criticisms against him. it should be noted that, Proton moved from being only an assembler to a full fledged manufacturer of cars during his tenure. He made it into one of the most profitable companies in Malaysia.

Some people may argue that this was due to the fact that it had been supported/ protected by the government but several other companies, which received the same support/ protection were not that successful.

An four member interim executive committee (exco) has been established to assume the responsibility of the group CEO from today, pending the appointment of a new chief executive officer.
The exco comprises of:
-Datuk Mohammed Azlan Hashim (Proton Holdings chairman)
-Badrul Feisal Abdul Rahim (Proton board director)
-Datuk Kisai Rahmat (Proton’s director of operations )
-Datuk Kamarulzaman Darus (CEO of Proton Tanjung Malim Sdn Bhd)

The later two were named as joint chief operating officers (COOs),

Newspaper Reports:

- Star

- NST

Related Posts:

- Tengku Mahaleel in Trouble

Mitsubishi Motors back in Malaysia

Mitsubishi Motors is back in Malaysia after a gap of 20 years. It withdraw sales from the market after it became Proton partner.

EON Auto Mart Sdn. Bhd., a unit of EON will sell the entire range of Mitsubishi passenger cars and light commercial vehicles in Malaysia besides takign care of the after sales support.

Mitsubishi Motors Malaysia Sdn. Bhd. the joint venture company between Edaran Otomobil Nasional Bhd (EON) and the Mitsubishi Corporation of Japan (48:52), was established in March.

According to their chief executive officer, Fumihiko they are targeting to sell 400 to 500 units of vehicles for its six newly launched models.

The car models with their prices (On the road with insurance and roadtax, West Malaysia)are given below:


-Mitsubishi Lancer (1584 cc): RM102,309.50


-Mitsubishi Colt (1499 cc): RM121,953.50


-Mitsubishi Grandis (2378 cc): RM211,218.20


-Mitsubishi Lancer Evo IX (1997 cc): RM284,363.90

-Mitsubishi Outlander (2378 cc): RM187,520.20

-Mitsubishi Storm Double Cab (2477 cc): RM87,998.20

The AP Issue

The issue of Approved Permit (AP) saga was first raised up by Tun Dr. Mathir Mohamad, former PM of Malaysia and now Proton's advisor.

On the 18th of July, the Malaysian Government released the list of Approved Permit (AP) Click here ...

Also read:

The Star report

The NST report

I never thought we would see this day. The Prime Minister Dato' Seri Abdullah Bin Haji Ahmad Badawi proves that he is willing to take action.

Today Datuk Seri Rafidah Aziz says the "AP Kings" deserved the permits .
Read here