APs were introduced to control the import of some goods and materials, especially those which may compete with products from local manufacturers. These include cars and steel amongst others.
The idea was essentially protectionist – to ensure that imports of some of these items did not threaten local producers. Thus, when there were shortages of steel, the government permitted their import.
But in the case of cars, they were used as a tool to promote the participation of bumiputras in the motor retail trade from as far back as the 70s. As with other such measures, they eventually morphed into something else altogether.
The mere issue of APs, up to 50,000 per year of them which could be worth as much as RM30,000 each or a cool RM1.5bil a year, became the path to quick riches and a handful of businessmen became immensely wealthy this way by being favoured year after year.
This in fact became a major point of argument between former Prime Minister Tun Dr Mahathir Mohamad and then Minister of International Trade and Industry Datuk Seri Rafidah Aziz in 2005 when the former said the issue of too many APs were affecting the profits of national car manufacturer Proton.
APs have become, in addition to a tool of protectionism, a way to distribute patronage because those who obtained them could find ways and means to effectively sell them to a dealer who wants to import a car from overseas. Every imported car must have an AP. The dealer has to not only pay the cost of the AP but the import tax and other duties as well, sometimes as high as 300% and often well over a 100%, which simply adds another layer of cost to the car buyer and another layer of profit to essentially a middleman.
The simplest way to overcome the problem is to simply scrap APs. According to newly anointed Deputy Minister of International Trade and Industry, Datuk Mukhriz Mahathir, Mahathir’s son, that’s what the Government is considering.
If anyone wants to bring a car into the country, simply pay the applicable taxes – that’s all. And it would help greatly if Customs just kept a reputable list of international prices of cars, abided by it and made it available to everyone.
If you have the documentation and the money to pay the tax, bring the car in.
Auctioning APs off to the highest bidder is NOT a solution. It has too many administrative problems and it would still create a group of people who are given exclusive rights to import cars when it should be everyone’s right to do so.
And it would be the right first step to take to undertake a badly needed reform of the motor sector in the country.
l Managing editor P. Gunasegaram thinks that Malaysians continue to pay too high a price for the luxury of a domestic motor industry.
Approved Permits – Umno’s tool for patronage