Automotive sector

The automotive sector on the road to recovery

PETALING JAYA: Vehicle sales tax suspension will not be extended beyond June 30, but buyers who booked their cars during the tax holiday period have until March 31 next year to register their vehicles with the Road Transport Department (JPJ).

Finance Minister Tengku Datuk Seri Zafrul Aziz Tengku Abdul Aziz said this was to ensure buyers could still benefit from the tax exemption despite declining vehicle production amid a shortage of semi-automatic chips. drivers and global supply chain disruptions, which also delay the delivery of new Vehicles.

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He said 264,000 vehicle units reserved during the sales tax exemption period have not been fully assembled and cannot be supplied to buyers due to the global shortage of microchips.

“The extension of this vehicle registration period is an interim solution to balance the interest of consumers and national tax revenues which must be strengthened after the pandemic to ensure that the well-being of the population and the well-being economy of the country continue to be preserved,” Tengku Zafrul said in a statement yesterday.

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He said the government introduced the sales tax exemption for passenger vehicles, including minivans and SUVs, from June 15, 2020 to help the automotive sector.

Full tax exemption was granted for locally assembled cars and 50% for imported cars.

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To date, a total of 868,422 units of vehicles have been sold and citizens have enjoyed sales tax exemption totaling RM4.7 billion, he said.

“With the opening of the economic sector, the automotive sector has started to function again.

“However, there are a number of demands that cannot be met as a result of global supply chain disruptions,” he said.

Tengku Zafrul said the whole world is facing a shortage of semiconductor chips which are widely used in several industries including the automotive industry.

Proton deputy general manager Roslan Abdullah said ending the SST incentives by June 30 will encourage more reservations as customers who want to buy the car will want to take advantage of lower prices thanks to the exemption.

Nonetheless, the government’s decision to extend the registration period to March 2023 will allow Proton to manage delivery to customers, he said.

He added that the delivery time of Proton cars will vary depending on the model, variant and color.

At this point, Roslan said the average delivery time would be two to four months, while for the X50 – being the most popular model – it’s six months.

He also said not extending the SST incentive beyond June 30 is a positive development, as the incentives are intended for short-term effects.

“In the case of the OHS exemption for the automotive industry, the intention was to boost sales in a market heavily affected by Covid-19 restrictions.

“It worked, but the government had to give up tax revenue. With the economy now fully reopened to pre-pandemic levels, the removal of the subsidy is fair and will help the government generate revenue to be used in other areas requiring assistance,” Roslan said.