This Explains Why Malaysian Car Prices Will Stay High...

For those scratching their heads and wondering why the government refuses to lower taxes on imported cars sold in Malaysia—even for brands and models not in direct competition with national makes Proton and Perodua—know that the import duty, excise duty and sales tax collected from imported cars range between RM 3 billion to RM 5 billion a year, which implies that there is little chance of the taxes ever going down and prices of imported cars reduced.

This information comes from Deputy Finance Minister Datuk Dr Awang Adek Hussein, who also revealed that taxes on imported cars amounted to RM 1.7 billion in the first half of 2010, and that the total amount for the year could exceed RM 3 billion. By comparison, the first half of 2009 saw a larger sum of RM 2.5 billion collected.

As we previously discussed, the substantial tax revenue is reason enough to keep the high taxes in place. Contrary to what some might think, local assembly can only reduce but not circumvent the bulk of the taxes. Whether a car is CBU (completely-built-up) or CKD (completely-knocked-down) makes no difference to the excise duty and sales tax imposed. Deciding for local assembly (i.e. from CBU to CKD) allows the automaker to save on import duty, which is zero if the cars are imported in from another ASEAN country such as Thailand or Indonesia, but the main portion of the taxes, the excise duty, remains unchanged, needing to be paid.

If we have lost you in the jargon above, just take one thing away from this article: Car prices in Malaysia are going to stay high whether you like it or not; owning that car you have always loved will only materialise with a promotion or a lottery...