It is wrong to say that the Approved Permits system for car imports has driven car prices up, says Persatuan Pengimport dan Peniaga Kenderaan Melayu Malaysia (Pekema).

Pekema president Zainuddin Abdul Rahman said AP holders only controlled less than six percent of the car market.

Instead, Zainuddin (left) said, it was actually high excise duties and import taxes that contributed to the higher prices of cars.

“Without APs, our members cannot compete. We only have six percent of the market and in some years, it only comes up to four to 4.5 percent.

“An open AP costs RM10,000, and even without the RM10,000, one would have to pay the excise duty, which is very high,” Zainuddin said when contacted.

For example, he said, a Toyota Wish costs about RM60,000 before import but retails at more than RM100,000 after the taxes are imposed.

If the issue is abuse, then the government should more strictly enforce on the re-selling of APs, not victimise genuine sellers.

'The government knows this'

“Take action on those who do not use their APs for genuine trade. The government knows this.

“When you get your AP, you have to sign a concrete aku janji document (a letter of undertaking) which says we cannot resell the permits. So, if action is taken, the errant holders cannot contest it,” he said.

He said rolling back the AP would be especially detrimental to Sabah and Sarawak bumiputera dealers who were still far behind in the market.

Zainuddin said this in reference to the announcement on Monday that the government would be commissioning a study on the impact of doing away with the AP system.

Saying this at the National Automotive Policy 2014 launch, International Trade and Industry minister Mustapa Mohamed said that this was because discussions with AP holders and other stakeholders showed the issue was “more complicated” than earlier envisioned.

Pending the study, the deadline for the discontinuation of the AP system stands at December 2015.

Mustapa said among the terms of references for the study, which would be commissioned after Chinese New Year, is the contribution of AP holders to the economy and bumiputera participation in the industry.

The AP system has also been cited as the cause of rising car prices and encouraging rent-seeking by politically-favoured individuals who are granted Aps, but re-sell them to genuine traders at an exorbitant fee. This fee is later passed down to consumers by the dealers.

AP holders contribute to national coffers

Meanwhile, Zainuddin said AP holders also contributed to the national coffers, with more than RM300 million a year in AP fees and about RM4 billion in duties an taxes.

“That is a lot,” he said.

He also contended that not all AP holders were politically-connected and that he could easily show a list of AP holders who are not Umno members.

Zainuddin said the AP system has also helped control prices set by franchisers.

“Cycle and Carriage gave a discount of RM100,000 in Penang. How much is their profit margin? If there were no AP holders bringing in cars and selling them at lower prices, then the franchisers would charge more,” he said.

He conceded that prices of cars could come down if APs were open to everybody and the process of importing cars was made more transparent – but this would hurt Pekema members.

However, this may not even be the mechanism taking place if APs are abolished.

“Will the government open APs to everybody, or will it completely stop used car imports? We don't know, for there had not been any consultation.

“We will continue to meet with the ministry on the matter as it greatly concerns our members,” Zainuddin added.