KUALA LUMPUR, March 14 – After a week of silence following a report by an automotive portal, the Ministry of International Trade and Industry (MITI) released a statement last night that it had given the go-ahead for 36 new companies appointed by the previous administration to be Approved Permit (AP) holders for car imports.
The pressure had been put on Miti Deputy Minister Ong Kian Ming by Malaysiakini last week, upon the publication of the report by DS&F (Drive Safe and Fast).
Not being aware of the latest update on the AP holder issue, he told the news portal last Friday that he would verify the information with his ministry’s AP division.
He followed up with a statement on Monday that the ministry will be releasing an official statement this week, and that was complied with yesterday.
BN’s Open AP policy implemented in January
According to the ministry’s Export and Import Control Section, the approval of 128 existing AP holders and 36 new AP holders was carried out under the new Open AP policy, which commenced in January.
“Open AP is an import permit facility given by the ministry to qualified bumiputera companies to import reconditioned vehicles for sales in the domestic market.
“The companies are subjected to the conditions and rules imposed by the ministry.
“The objectives of this new policy are to promote the development of the new bumiputera entrepreneurs in the automotive industry, to ensure the policy continues to contribute to the country’s socioeconomic goals, and to create market competitiveness that will benefit consumers, especially in terms of the prices and services,” the statement said.
The ministry added that almost 300 companies submitted applications under the policy from May 23 to June 21, 2016.
“After an evaluation process, including an audit by a qualified independent auditor, the number of companies that qualified were 164, of which 128 are existing companies and 36 are new.
The ministry also asked the public to go to the website www.miti.gov.my to check on the details on qualification to be an Open AP company and the latest list of Open AP companies.
The dates on the relevant reports in the ministry website shows that it was published on February 15, 2019.
Lack of transparency in Miti
This timeline reveals Ong was likely kept out of the loop in the ministry on this development.
More importantly, there seems to be a lack of transparency on the part of the ministry to reveal it had not really done a review or clean-up of the AP policy and just maintained what the previous BN government had carried out.
This is despite comments made by Ong in an interview with BFM radio last November.
Ong had said the government does not plan to abolish the AP system but would review it to ensure there is no abuse.
“There are no plans right now to abolish the AP system, I think what we are trying to do is to review the system so that you don’t have a situation where ‘Ali Babas’ are being used in the AP process, whereby people just apply for these APs, sit on it and sell it to somebody else at an inflated prices.
“We are trying to review the process so that the players involved are legit, that is for the AP process of selling cars which cannot be assembled on a CKD basis,” he had said.
New AP holders not in car business, says portal
This makes the report by DSF even more explosive, as it had quoted a long-established AP holder as alleging that “the new government has granted the 36 new car importers the ‘right’ to make ‘easy’ money”.
“From what we have found out, most of the new AP holders have already started talking to established AP holders to ‘buy’ their APs as they are not in the car business and instead just want a fee of RM18,000 to RM22,000 for one (each) AP,” DSF had reported.
According to DS&F, the regular yearly AP quotas for the established long-term AP holders have been reduced to accommodate the new players.
“This means the total number of APs circulating remain the same and it is just that the AP wealth is now spread evenly with the new players who are mostly just selling their APs and not doing the import business,” DSF said in its report.
Open AP policy by BN
According to the Miti statement, the Open AP is an import permit facility given by Miti to qualified Bumiputera companies to import reconditioned vehicles for sales in the domestic market.
The companies are subjected to the conditions and rules imposed by MITI. The objectives of this new policy are:
i) to promote the development of the new Bumiputera entrepreneurs in the automotive industry;
ii) to ensure the policy continues to contribute to the country’s socio-economic goals; and
iii) to create market competitiveness that will benefit the consumers especially in terms of the prices and services.
According to Miti, the conditions that need to be fulfilled, among others are, the company must be 100% owned by Bumiputera including the key management posts, has at least two years of experience in selling and distributing the motor vehicles, and a strong financial position.
“Under the new policy, there is no limit to the overall number of AP to be released throughout the year and companies may apply for additional AP based on their sales performance.
“At the moment, most of the new companies are still not fully in operation as they need to fulfil some technical requirements and be prepared for business operational matters,” Miti said.
The ministry added that it will continuously monitor and audit these Open AP companies.
“Under the new policy, if there is a breach of any of the conditions, Miti will take decisive measures,” Miti said.
i) withdrawing or suspending the allocated and approved AP;
ii) blacklisting the companies (including every shareholder and board member of the company) from submitting any future application on Open AP; and
iii) taking a legal action against the company. In 2018, MITI blacklisted 9 existing companies for offenses – not complying with the conditions.