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Thread: Economics: Reduce car prices

  1. #1
    Join Date
    Oct 2008

    Economics: Reduce car prices

    Reduce car prices: That's more like it and doable.

    Forget about reducing petrol price. We have no control over oil prices.

    Tuesday, 24 July 2012 14:45

    Pakatan to phase out car taxes, allow prices to be COMPETITIVE - Rafizi reiterates

    PETALING JAYA - Pakatan Rakyat (PR) will offer a complete revamp of the National Automotive Policy (NAP), including slashing the hefty excise duties and reducing the triple-tax burden imposed on cars here, should it come to power in the next general election.

    The offer to voters will effectively boost the disposable incomes of Malaysians and reduce household debts, PKR strategy director Rafizi Ramli said today.

    The PKR leader told a press conference here that the plan, to be slotted into PR’s election manifesto for the coming 13th general election, will be used as a major campaign issue for the federal opposition as it fights for federal power.

    “Malaysians know that the prices of cars in Malaysia are extremely high as a result of the Umno-Barisan Nasional (BN) automotive policy, which was designed to protect the interests of their cronies at the expense of the people,” Rafizi said.

    “We want a complete revamp of the NAP... phase out taxes, let prices be competitive and reflect the actual cost of the car... this will have a significant impact on our disposable incomes,” he added.

    50% of monthly income spent on car alone

    Citing statistics from the Household Income and Basic Amenities Survey Report 2009, Rafizi noted a worrying trend showing that an individual earning about RM3,000 a month could spend up to 50 per cent of his income to maintain a car.

    He noted that the study had shown that 53 per cent of Malaysians record household incomes of RM3,000 and below while 71.9 per cent own or use cars.

    “And hire purchase debts contribute the second highest to the total household debt... a total of RM134.2 billion as at the end of May 2012,” he said.

    This was a RM16 billion or 14 per cent increase in just 18 months compared to the RM118 billion as at November 2010.

    Malaysian Insider


  2. #2
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    Oct 2008
    Wednesday, 25 July 2012 08:24

    Pakatan CAR PRICE plan: BN can be expected cry 'bankruptcy' again

    PAS is predicting strong reactions from Barisan Nasional leaders following an announcement today that Pakatan Rakyat would abolish excise duties on new cars, thus drastically slashing car prices in the country.

    "Don't be surprised. BN leaders will again cry out that the country would be bankrupt if excise duty is abolished," said party information chief Tuan Ibrahim Tuan Man.

    After its promise to abolish higher education study loans riled up BN leaders, PR today striked right at the heart of what is likely the most popular debate among Malaysia's working adults: car prices.

    PKR strategic director Rafizi Ramli revealed that serious discussions have been on-going among coalition partners to agree to do away with excise duties on new cars.

    Rafizi said the move would not only see a drastic decrease in prices of new vehicles but also could reduce household debt in the form of cheaper car loans and higher disposable income.

    "Personal car loans is the second biggest debt after home loans, exceeding RM134.2 billion at the end of May 2012. This is the heaviest burden for the people, as many in our country earn less than RM3,000 a month," he said.

    Citing spiralling household debts based on the 'Household Income and Basic Amenities Survey Report 2009', Rafizi said the move would ease financial burden of some 72 percent of households.

    Currently, Rafizi said one who is buying a RM40,000 car, the lowest priced in the market, pays RM16,000 in excise duties and sales tax. Popular cars priced near this figure include the Proton Saga BLM and Perodua MyVi.

    He pointed out that the existing National Automotive Policy introduced in 2006 to counter the Asean Free Trade Agreement (AFTA) was the root cause of the increase in household debts by 14 percent or RM16 billion from RM118 billion in 2010.

    Tuan Ibrahim reiterated that the plan has PAS's full support.

    “All along, people have been forced to buy cars at a premium. AFTA agreement which is supposed to be enjoyed by the people, where among others vehicles should cost lower, has lost its meaning with the introduction of these excise duties,” he added.


  3. #3
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    Oct 2008

    PKR: Approved Permit to be revamped for cheaper cars

    • Nigel Aw

    • 1:57PM Jul 27, 2012

    The revamp of the controversial Approved Permit (AP) system will be among steps taken to bring about Pakatan Rakyat's plan for cheaper cars through the abolition of excise duty, says PKR strategy director Rafizi Ramli.

    "We are looking into how the APs are managed. We all know that the AP is a source of wealth for cronies.

    "We will see how this source of income can balance out the revenue lost from the excise duty," Rafizi told a press conference at the PKR headquarters in Petaling Jaya this afternoon.

    The entire mechanism of the plan, he said, would be announced next week by PKR supremo Anwar Ibrahim.

    "In the following weeks, we will conduct sessions to explain how we will manage the AP to support the restructuring of the (car) tax system," Rafizi said, adding that this was on top of putting controls on the national budget.

    He added the mechanism will also outline several issues, including how to manage the collateral with banks for existing car loans and controlling second hand car prices.

    Umno Youth chief Khairy Jamaluddin had criticised the plan, stating that such a move would cost the government RM4.6 billion per annum.

    However, Rafizi said the actual amount was in fact RM8 billion but stressed that this was doable as Prime Minister Najib Abdul Razak spent more than that in a single year.

    'PM's various unplanned expenditure'

    Rafizi pointed out the various unplanned expenditure by the premier for the first six months of this year, particularly on goodies such as Bantuan Rakyat 1Malaysia, Bantuan Buku 1Malaysia, various 1Malaysia products and the Janji Ditepati campaign had amounted to a staggering RM 5.8 billion.

    This was on top of the spending on operational and development expenditure by the Prime Minister’s Department - calculated on average from 2009 to this year - which spiked by RM6 billion compared to in the era of Najib’s predecessor, bringing the total to RM11.8 billion.

    “All it takes is for the prime minister not to spend RM12 billion a year. If we return to the era of Abdullah Ahmad Badawi’s spending which is RM3 billion for operational and development expenditure respectively, we can easily raise RM8 billion.

    Rafizi (right) added that instead of the premier showering goodies on the rakyat for votes, the money used to finance those goodies should have remained in the rakyat’s pockets to begin with.

    “But now Umno imposes high taxes on us, and then when they spend the money back on us, they tell us to be grateful and boast that ‘Janji Ditepati’ (Promises Fulfilled),” he said.

    He gave an assurance that no new taxes will be introduced to finance the plan.

    Rafizi added that the mechanism will also outline several issues, including how to manage the collateral with banks for existing car loans and controlling second hand car prices.


  4. #4
    Join Date
    Oct 2008
    Friday, 27 July 2012 12:40

    Economists thumbs-up for Pakatan car tax cuts: GOOD for the public!

    KUALA LUMPUR, — A cut in car duties — which currently run as high as 105 per cent — could help stimulate the economy by boosting disposable income and reducing household debt burden, analysts say.

    Their comments come after Pakatan Rakyat’s (PR) made an electoral pledge to slash the hefty excise duties and taxes on cars that have caused Malaysians to bear some of the highest sticker prices in the world.

    This has resulted in about 20 per cent of the RM581 billion total household debt in the country last year being held in cars, an asset that depreciates over time.

    Economist Datuk Mohd Ariff Abdul Kareem said that consumers will be “very happy” with the tax cuts as cars, which are currently priced far above what consumers in many other countries pay, will become more affordable.

    “Car prices are high and very distorted,” said the former chief of the Malaysian Institute of Economic Research (MIER). “Cutting taxes would mean better allocation of resources and consumers could spend more on other things which would have some stimulating effect on the economy.”

    Now with the Global University of Islamic Finance, Ariff said the move to put more disposable income in people’s pockets would help the economy as it becomes more dependent on domestic consumption to drive growth.

    He noted however that the issue should be seen in totality and reforms should also address any abuses in the AP (approved permit) system as well as other mitigating measures to control the current high rate of congestion on Malaysian roads.

    The senior economist suggested one way was to shift the tax to the petrol pump so that consumers are taxed by how much they drive rather than on the car itself.

    Such a move could also help boost the usage of public transport.

    Ariff also said he doubted that former national carmaker Proton, which was recently taken over by DRB Hicom, would “collapse” as a result of a cut in duties.

    “It will be forced to do better,” he said.

    Wan Saiful Wan Jan, chief executive of the Institute for Democracy and Economic Affairs (IDEAS), said the proposal to cut high auto duties was overall beneficial to the public.

    He noted that objections to such a proposal appeared to put the welfare of companies above that of the wider public.

    “The problem we have is that Malaysia practises state capitalism,” he noted.

    “The typical thinking is that it is not about the rakyat but about how it will affect the local car companies.”

    Malaysians are currently paying eye-watering excise duties of between 65 and 105 per cent on cars they buy on top of 10 per cent in sales tax, which means that if a Malaysian consumer pays RM100,000 for a car, as much as RM55,000 goes to the government.

    The duties are a lucrative form of revenue for the federal government but have also helped push up household debt levels in Malaysia which, as a percentage of GDP, are the second highest in Asia.

    Apart from the duties, a system of APs is given to a select number of companies and car importers, allowing them to bring in cars and charge up to RM40,000 for the permit to the customer.
    --The Malaysian Insider


  5. #5
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    Oct 2008
    Nor Mohamed Yakcop's Economic Logic; No Wonder We are Not far From Bankruptcy

    By Khoo Kay Peng, Jul 29, 2012

    Nor Mohamed Yakcop said, getting rid of taxes for cars would reduce national revenue by RM7 billion which could affect infrastructural development, especially in Sabah and Sarawak, and in the interior of the peninsula. The nation will experience economic instability and many will go bankrupt if the price and excise duty of vehicles are reduced.

    I hope Nor Mohamed Yakcop is reading the right economics manuscript. As an economic advisor to the government, Nor should acknowledge the burden of private vehicle price and excise duty on consumers.

    Years of supporting the national car policy has been futile so far. Apart from creating unnecessary burden to the people and crippling the public transport system through deliberate neglect, there's little benefit to the local automotive industry.

    Proton was given the opportunity to become a respectable regional player but it is finding itself increasing difficult to even survive locally.

    We have to ask the government when it intends to review the national car policy or scrap it entirely? Like the NEP, should the government continue to subsidize and protect the local producer? It is long overdue that the national car producer should be asked to stand on its own feet. Being competitive and innovative is the only way for Proton to survive and thrive, not through continuous protection.

    It is time for the government to stop being penny wise but pound foolish. Half of our petrol subsidy goes to private vehicles.

    According to a report, Malaysia's huge fuel subsidy bill, estimated at RM20 billion last year, is overdue for an overhaul. While reforms are imminent, few expect any of it can happen until the general election (GE) is over.

    Recent reports indicated that Malaysia's fuel prices are the second cheapest in Asia, and the 10th cheapest globally.

    The low fuel price, which also keeps down the price of everyday needs like electricity and transportation, helped keep inflation rate at subdued levels.

    While this might show that Malaysia's strategy to shield its citizens from the harsh reality of expensive fuel had worked, economists warn that running a huge subsidy bill is not sustainable over the long run.

    Reckless grants, subsidies and expenses are going to bankrupt us. Reducing taxes for cars and reducing petrol subsidy at the same is going to help us to correct the economic imbalances. It is pertinent for the government to stop protecting crony companies and businesses.

    It should focus on providing a better public transport system so that we can use our energy sources on more productive means.

    Nor Mohamed Yakcop's economic remedy is a recipe for disaster. It does not make sense to suggest that reducing taxes for cars is going to bankrupt the country. If this is true, the 12.5 billion ringgit PKFZ would have brought us down. What about the Auditor General's report on leakage and poor governance? What about the RM26 billion lost to corruption yearly?

    We need better economic advisors and possible better leaders to lead the country. The quality of top executives are appalling at the moment.

  6. #6
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    Oct 2008
    Economists favour slashing car prices

    Posted on 29 July 2012 - 09:21pmMichelle Chun

    PETALING JAYA (July 29, 2012): The government cannot continue protecting the local automotive industry through excise duties at the risk of jeopardising the national economy, say economists.

    Prominent economist Tan Sri Ramon Navaratnam said while there were reasons to help the local car industry in its infancy, it must be asked why car excise duties are still in effect.

    "Local carmakers should become self-reliant and competitive, but because of this prolonged protection, they have become weak and dependent on this to be successful," he told theSun today.

    Navaratnam was commenting on the statement by Minister in the Prime Minister's Department Tan Sri Nor Mohamad Yakcop on Saturday that the reduction of car excise duties and prices would result in economic instability and increase in bankruptcy cases.

    "This is a delicate matter that calls not for ad-hoc solutions or quick fixes, but rather comprehensive studies and professionalism.

    "If not handled properly, it will have long-term implications on the global innovative and competitive position of the local car industry, and on the economy as a whole," Navaratnam said.

    Nor Mohamad, who heads the Economic Planning Unit, made the statement following PKR strategist Rafizi Ramli's promise that car excise duty would be reduced if the opposition won the 13th general election.

    Malaysians currently pay between 75% and 105% in excise duties for motor vehicles manufactured in the country, excluding import duties (for imported cars) and sales taxes. Nor Mohamad said the government collects around RM7 billion annually from these excise duties.

    Nevertheless, the chief executive of the Institute for Democracy and Economic Affairs, Wan Saiful Wan Jan, said removing excise duties would not negatively affect the nation's economy as a whole, but rather reduce the government's income.

    "I doubt such a move would jeopardise the national economy, and removing or reducing car excise duties is a good idea, both politically and economically.

    "These excise duties seem to portray that the government is more willing to protect the interests of a company, such as Proton and Perodua, at the expense of the consumer," he said when contacted today.

    Wan Saiful added this showed it was dangerous for a government to be involved in the setting up of businesses, as it would then be obliged to protect the businesses' interests.

    "This would stunt economic growth as the economic environment would not be a competitive one," he said.

    However, Wan Saiful said excise duties should not be removed overnight, but over time, or there may be repercussions, especially on the second-hand car market.


  7. #7
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    Oct 2008
    Abolish Car Excise Taxes – First Step Towards Dismantling Mahathirlogy


    Slightly more than three months ago, I wrote an article about the reasons why you shouldn’t buy a car, at least for now. You can read it here. Basically consumers (yes, that’s you, dude) have been taken for a long ride since the introduction of former premier Mahathir’s pet project, Proton, not that it was a complete fault on the part of the dictator but rather on the stupidity of the consumers. Right, it was your parents’ stupidity for voting the monster and his UMNO regime for the last 50-years so you shouldn’t get the blame. But if the same regime is returned to power again in the next general election, then you’re equally idiot, if you choose to cross the “X” next to the “dacing” symbol representing Barisan Nasional.

    One of the reasons given in my article for holding on any new car purchases was the political reason. Today, opposition Pakatan Rakyat launches a new initiative in its bid to lure the young voters – abolishing excise duties on cars.It seems they do read blogs for new ideas (*including FinanceTwitter, tongue-in-cheek*) on how to swing fence-sitters. This latest carrot will definitely send Najib administration into defensive mode and you can bet some money that the publicity-crazy prime minister will counter-offer in order to make himself looks good. To those who read our article and halted their intended purchase -congrats. To those who did not, we reserve this for another day - “We Told You Already What !!” (*grin*).

    The whole local automotive policy was a genius mechanism to suck people’s hard-earned money. Whether you’re buying a poor man’s Proton or a luxury BMW, you’re contributing to the government’s (read: UMNO) coffer to the tune of an estimated RM6 billion every year, thanks to the generous excise taxes. If there’s one project you should write for your PhD thesis, this is one of it –“Instilling National Pride while Milking Peoples’ Grapes to Dry”. You may not know this but besides the mind-boggling excise taxes, the local automobile industry was also brilliantly designed so that the cronies are laid on top of the pyramid-like supply chain of spare parts. If you’ve been into MLM before, you’ll understand what I mean.

    Now, there’re many ways to skin a cat. While Mahathirism has been very successful in skinning ignorant peoples’ wallet through privatization (to the cronies), it seems the grand plan has reaches its tipping point. Don’t make a mistake about it. The present government has not stopped skinning your hard-earned money. On the contrary, the fear of losing the federal government only hastens their greediness. Putting the controversial Selangor water issue aside, the automotive industry saw prices of new model such as Toyota Camry and Honda Civic skyrocket without good justification. Heck, greediness knows no boundary – even an existing model was affected when Volkswagen Malaysia suddenly raised the price of both the 3-door and 5-door Polo GTI 1.4-TSI by a whopping RM34,000 a piece this month.

    It was so bad that Volkswagen has to clarify on its Facebook that the price hike (or rather rip-off) was due to “authorities”. If the opposition is smart enough, it should re-strategize and propose more offerings on the table instead of screaming till foam at mouth about corruption. If you were to document every UMNO’s corruption, you can stack the files so high that it can make rounds of trips to the moon and back to planet earth. This latest sexy offering of slashing excise duties may not be as juicy as our proposal of giving away an AP (approved permit) to every citizen but it is good enough to raise millions of young voters eyebrows (and hopefully votes). This is one of the many ways to skin UMNO’s arrogance.

    Sure, opposition via PKR strategy director Rafizi Ramli may be testing water and toying with youngsters’ appetite with these latest goodies. They may not be serious after all about slashing the excise taxes in totality but even if they can reduce the present tax bracket of between 85% – 135% by half, that is good enough to cheers. After all, what could you possibly lose with such proposition? This is hilarious but just when PM Najib thought he could buy your votes again with another round of BRIM RM500 cash in the pipeline before the coming general election, the opposition is dishing tens of thousands in saving for an affordable car.

    If the Church of Scientology makes money primarily by auditing which could run to tens or hundreds of thousands of dollars, the Doctrine of Mahathirlogymakes money by selling (obsolete) national car which run to tens of thousands of ringgit. And this is only Proton pet project, mind you. The former prime minister may think his Mahathirlogy still works with his laughable threats of communists, terrorists, 13-May racial riots, police brutality and whatnot but if the opposition can pull more similar rabbit from its hat to help ease the burden of the people, the old dictator may decide to take the earliest flight out of the country before the next general election results is announced.

    Actually there’re many other proposals which are dear to the average-Joes that can be used to send Najib administration to its kennel with tail between his legs but we’ll reserve that for another article. It’s time consumers dictate the prices of the basic necessity – an affordable safe car without costing an arm and a leg. The fact that a Malaysian has to pay 5-year salary compares to their Facebook American friends’ 1-year salary to own the same car is simply outrages and insulting. And you can start doing that by not buying any car at all. That’s right, it’s all about basic supply and demand economy. When the cronies can’t make money in the automobile industry, they’ll panic and have no other choice but to lower their prices.

    If a simple boycott of Mahathir crony’s Gardenia bread could send them screaming in pain, imagine the impact if everyone stop buying new car and make use of whatever left from their existing car. Moving forward, you should know how to vote if you wish to be able to purchase Prevé 1.6 Premium CVT at RM44,000, Honda Civic at RM67,000 or F30 BMW 3-Series 320d at RM149,000. The choice is no brainer.
    Other Articles That May Interest You …


  8. #8
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    Oct 2008
    PKR takes cheap cars promise to the roads

    By Ida Lim
    August 15, 2012
    The stickers and flyers will be given out during the weekend at tollbooths across the country. —File pic

    PETALING JAYA, Aug 15 ― PKR launched today a nationwide campaign promoting its promise of lower car prices, and will distribute stickers and flyers this weekend at toll booths in a bid to pressure the ruling Barisan Nasional (BN) government on an issue the party hopes will gain traction among voters ahead of elections.

    The party has promised to make cars cheaper by slashing the triple tax burden imposed on cars if the Pakatan Rakyat (PR) opposition pact takes power at the 13th general election that must be called by next April.

    “The ‘Turunkan Harga Kereta’ campaign will take advantage of the ‘balik kampung’ holidays in conjunction with Hari Raya Aidilfitri so information about Keadilan’s proposal to reduce car prices by gradual abolishment of excise duties will reach the whole country,” said Nik Nazmi Nik Ahmad, PKR’s communications director, at a press conference today.

    Muslim Malaysians celebrating Aidilfitri this weekend, to mark the end of their month-long fast, traditionally spend the holidays in their hometowns ― turning Kuala Lumpur and other major cities nationwide into ghost towns.

    He told reporters that 50,000 “Turunkan Harga Kereta (Lower Car Prices)” vehicle stickers have been printed and will be distributed at toll booths throughout the country.

    The car stickers and flyers explaining PKR’s proposal will also be given out during a nationwide tour dubbed “Jelajah Turunkan Harga Kereta” starting from August 24, Nik Nazmi said.

    “We want the rakyat to take ownership of it and spread it,” said Sim Tze Tzin, the party’s deputy information chief who was also present.

    “We want to learn from a few successful campaigns,” he said, pointing to yesterday’s Internet Blackout Day movement, which Sim said had “forced the government to review (Section) 114A” of Evidence Act that came into force just two weeks ago on July 31.

    The car price campaign will also have its own Facebook page.

    The page will contain information on a series of public forums that will be held in several states to discuss the issue, starting September 2.

    Nik Nazmi said PKR will ensure the logo for the campaign would not “represent any political element so all Malaysians regardless of political belief and background can unite and agree” to lower car prices.

    Malaysians pay inordinately high prices for cars mainly because of the protection afforded to national carmaker Proton since 1984, and Perodua since the 1990s.

    The public pays import and excise duties as well as sales taxes that translate into some of the highest car prices in the region and the world.

    A recent wage survey found that a household earning RM3,000 a month could spend up to 50 per cent of its income on maintaining a car.

    A cut in car duties — which currently run as high as 105 per cent — could help stimulate the economy by boosting disposable income and reducing household debt burden, analysts have also told The Malaysian Insider.

    The high taxes now have resulted in about 20 per cent of the RM581 billion total household debt in the country last year being held in cars, an asset that depreciates over time.


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