Published on June 12th, 2018 | by Subhash Nair


Shouldn’t the AP System Be Restructured to Fill Tabung Harapan?

Let me just state that I am not an expert with regards to the whole AP system. I have heard and read a lot about how it works and how it is abused. Given things are drastically changing under the new government, I see an opportunity for change, and here are some of my thoughts.

Malaysian Finance Minister, Lim Guan Eng today revealed that the government’s debts stand at 1087.3 billion Ringgit. Given the situation, the government is understandably cutting down on expenditure. Doubtless, they’ll also want to find new and easy ways to make money. Well, here’s an idea: restructuring the Approved Permit system for importing ‘grey market’ cars.

The current Open AP system has the following requirements for holders:

  • A private limited (SDN BHD) company with 100% company shares owned by Bumiputeras. All company board members and key posts need to be occupied by Bumiputeras too.
  • Company to have a minimum of two years’ experience in the field of sales and distribution of automobiles (cars, bikes or commercial vehicles), which is still operational.
  • Have access to a suitable office space or showroom.
  • Have the capability of handling the financial requirements of an automobile import, distribution and sales business, and a minimum capital of RM1 million.

These rules don’t exactly stop large AP kings from staying on in power. We still have mega importers owned and run by non-Bumiputeras. Not that there’s anything wrong with that – it just shows how ineffective the rules are.

And with 0% GST, none of the proceeds are going to the government’s coffers. At least CKD operators pay the salaries of thousands of Malaysians in the workforce, from factory workers to top executives.

Now imagine this – instead of having the above rules, the government makes it so that APs are sold through a bidding system like the COE model used by Singapore. It would allow the Malaysian government to more tightly regulate how many grey market cars come into the market (something CKD operators will be grateful for). Additional measures can also be taken to limit the amount of APs individual entities have access to, which would break up existing monopolies in the grey market. If one of the objectives of the Open AP system is to give buyers more options, then competition would indeed be healthier without monopolies.

As it stands, applications for APs have to go through an ‘independent audit firm’. To us, this sounds like too many steps and too little transparency. Why can’t we have clear and straightforward rules that don’t require additional scrutiny after legal requirements are met?

By opening APs to a wider audience and an open bid, the funds raised could be channelled directly into Tabung Harapan. We can take the criticisms levelled against the COE system our current Open AP system and create something better that works towards clearing our national debt. Otherwise, we’re just going to continue making a few already rich people even richer.

What do you think?

About the Author

Written work on @subhashtag on instagram. Autophiles Malaysia on Youtube.

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