Malaysia's Car Industry Needs The Fair Competition Act Too

The government announced yesterday that the Fair Competition Act is expected to be gazetted by end 2010 or early 2011. So what does the Act impose? In the words of Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob: “The Fair Competition Act is anti-monopoly and anti-cartel. Presently, traders can fix prices via a cartel, thus burdening the people. The Act will prevent traders from monopolising the price”.

In other words, the Act aims to prevent monopoly, promote fair competition and ultimately lessen the burden of Malaysians. Which brings us to: Why then is Malaysia's car industry anti-competition? Granted, Malaysians do get to choose from a variety of car brands, so a monopoly hardly exists. But fair competition there is none.

Cars imported into Malaysia are subject to high taxation that drastically increases the final selling price. Even if foreign brands decide to opt for local assembly, their cars are still subject to high excise duty which makes up the bulk of the tax in the first place. Local home-grown brands sell the cheapest cars in the market because they pay a lower excise duty. And let's not get started on the archaic AP system that promotes little more than inefficiency.

The lower quality of local cars aside, the fact is that even local cars are too expensive. Malaysians are burdened by the high car prices, and the combination of monthly car and housing installments leaves many Malaysians with little disposable incomes to spend on other economic activities.

Without fair competition and proving to be a burden on Malaysians, Malaysia's car industry very much needs the Fair Competition Act too.