File photo shows Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed (second left), at the unveiling of the National Automotive Policy (NAP) 2014 in Kuala Lumpur January 20, 2014. — Picture by Choo Choy MayKUALA LUMPUR, Jan 24 — Malaysia’s ambition to unseat Thailand as the region’s automotive centre was unlikely to be achieved with a National Automotive Policy based on the “Ali-Baba” system of patronage, the Wall Street Journal said today.
Suggesting that policies contained in the National Automotive Policy 2014 (NAP 2014) announced this week continue to encourage a culture of political nepotism, the international business daily said scant progress was made towards opening up Malaysia’s sheltered automotive market.
Instead, it said Putrajaya was simply pursuing a form of “import substitution” by getting carmakers to opt for local-assembly in return for access to the domestic market and other goodies.
“This will be profitable for the foreigners, and some of those profits will find their way into the pockets of the politically influential,” the WSJ wrote in a biting editorial today.
It categorised the arrangement as the so-called “Ali-Baba” enterprise often mocked by locals, in which a Malay front-man provides the “political juice” for a business operation run by a local Chinese partner.
The international business daily also pointed out that the NAP2014 contained no move to phase out the excise duties introduced to shield national carmaker Proton from competition and was likely to retain the controversial Approved Permit (AP) despite plans for its discontinuation.
It also suggested that the energy efficient vehicles (EEV) policy at the centre of the National Automotive Policy 2014 (NAP2014) announced this week was a cursory attempt to liberalise a market already “run into the ground by domestic heavyweight Proton.”
“In other words, Thailand has little to fear from Malaysia as an automotive hub, and Malaysians will continue paying too much for their cars,” it concluded.
On Monday, the Ministry of International Trade and Industry finally unveiled the NAP 2014 but confirmed that there will be no cuts to excise duties that make local car prices among the highest in the world, despite insisting that car prices will be slashed by 30 per cent within five years.
It also suggested that the previous time-line to discontinue the AP system beginning 2015 was under review, saying the issue was more complex than previously thought.
The AP system is often criticised for adding to vehicle prices and benefiting only the small handful of Malay businessmen that receive them.