It actually stands for National Automotive Policy. It was enforced by the Malaysian Government in the interests of national cars. Under the NAP, imported vehicles are subjected to varying degrees of import duties depending on the vehicle's origin of manufacture and engine displacement hence why they cost a bomb here in Malaysia. There are import duty, excise duties and sales tax being imposed on cars.
These taxes are also one of the highest in the world. This makes most foreign cars extremely expensive for the local buyers. These explain why a Honda Civic here cost RM120,000 meanwhile only US$17,000 in USA. See the table below (From MAA org):
And just today the revised National Automotive Policy (NAP) version 2014 was unveiled by the International Trade and Industry Minister Datuk Seri Mustapa Mohamed. The highlight splashing every news portal now is "Prices of cars in Malaysia are expected to be between 20% and 30% cheaper by 2018, as part of an automotive policy announced by Putrajaya today." Betul ke? How is this going to be achieved?
CKD = Completely Knocked Down a.k.a locally made and assembled.
CBU = Completely Built Up a.k.a fully imported
"This is expected to be brought about by offering more incentives to encourage the assembling of completely knocked-down (CKD) vehicles locally. That will mean higher local component content, which in turn will help to reduce the selling price. CKD mesti hilang banyak function for sure. CKD also means quality wise, things are going to suffer."
----When quality suffers, safety is compromised. It is just a big merry go round, prices are reduced 20% to 30%, at the same time you are just paying for inferior goods. Best example currently: CKD Honda Jazz Hybrid, Hilang ESP, Hilang airbag, Hilang other parts, reduce few hundreds only, then say price reduced. Koreans are heading for globalisation, we are doing localisation.
"NAP hopes to create 150,000 jobs by 2020 and it also hopes to sees production of 1.25 million cars from 570,000 by 2020".
----To give the government credit, the only plus side is of encouraging CKD is the fact that it reduces unemployment as it creates more jobs. However this also indirectly impact CBUs (fully imported cars) because it discourages tax rebates or discounts for CBU cars. Because when CBU cars are too cheap, car makers will just shutdown the CKDs, causing folks to go jobless which is the opposite of setting up shop in the first place.
"By 2016 there will be 0% import duties of CBU from Japan due to the Malaysia Japan Economic Partnership Agreement."
----0% from what? From 10% only. Not much actually. A RM120,000 Honda Civic is still going cost you a whopping RM110,000. The hefty excise taxes ranging from 60% to 105% are going remain still until 2020 where the new NAP gets revised again. Also full import/excise exemption for CBU hybrids and EVs has been discontinued. It affects popular hybrid models with engine capacity below 2.0 litres such as the Toyota Prius and Prius c, Honda Civic Hybrid, Honda Insight, Honda CR-Z, Lexus CT200h and Audi A6 Hybrid. On the electric vehicle side, two models are affected, the Mitsubishi i-MiEV and just-launched (at KLIMS13) Nissan Leaf. The government's stance is clear here. Cheaper cars are going to be from CKDs only.
"The government is open to possibilities to reduce excise duties gradually when the fiscal situation permits."
----Look at the table below. Do you really think the gohmen is gonna let go ~RM7 billion tax revenue? May our dreams come true laaa. Potong import tax from Japanese imported cars...kasi u sikit sikit la. Meanwhile AFTA has been delayed three times Automakers Urge Malaysia not to Delay AFTA. 2002 -> 2005 -> 2008 -> 2013 -> keep rolling barrels. AFTA means a common preferential import duty rate of no more than 5% for goods exchanged between ASEAN countries and cover a wide range of products, including automobiles.
"The controversial vehicle import Approved Permits (APs) will remain for now. NAP 2009 had
earlier specified for termination of open AP by 31 Dec 2015 and franchise AP by 31 Dec 2020. The govt has decided that an in-depth study will be undertaken to assess impact of this termination on Bumiputera participation in the auto industry."
----Dah 28 tahun, kaji lagi? Crony makan abalone, Rakyat makan kangkung.
"Meanwhile, the government announces various measures and incentives to attract foreign direct investment (FDI), especially in the Energy Efficient Vehicles (EEV) productions segment. The move is seen as having a significant economic multiplier effect in increasing competitiveness, providing business opportunities to automotive companies and vendors, technology transfer and innovation and create more high-skilled jobs. The license will only be given to car installations with an engine capacity of not less than 1800cc and the price should be more than RM150, 000 per unit, according to sources. Such a move would not have a negative impact for the national carmaker Proton Holdings Bhd as it is a different car segment which involves high-tech engine system with a more expensive price category."
----Kantoi la...RM150k for CKD Hybrid car? Saya ulang sekali lagi-> Also full import/excise exemption for CBU hybrids and EVs has been discontinued. The government's stance is clear here. Cheaper cars are going to be from CKDs only. Aiyo actually only cheaper for specless, interiorless, internal combustion engine. Other folks have started hybrids and shifting to hydrogen fuel cells.
And when one thinks it has all the stuffs, more bits are delayed again. Key things missing:
- AP policy as explained above
- Euro 4 fuel (to be announced in two months)
- Proposed end of life for vehicles
The feared ELV. Vehicles' inspection policy that are extended to private vehicles compared to commercial vehicles. If implemented, the government had to pay RM5, 000 cash coupon to consumers who dispose the vehicle. Based on the current governments's fiscal position, I do not think the policy will be implemented anytime soon.
Conclusion
Nothing exciting. See you again in 2020. For the moment to reduce commitments continue to buy second hand foreign CBU cars (cost 40% less after 4-5 years) or go for more worthy local Perodua cars. The NAP is about reducing all the specs in exchange for cheaper prices. We used to see a certain pariah brand name, now we are going to see even more assorted pariahs.
The full text of NAP 2014 is available here: http://paultan.org/2014/01/20/nap-2014-full-text/
P.S.
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