Govt to study Open AP termination

by **Cals** Tue 21 Jan 2014, 10:39

Business & Markets 2014

Written by Charles Yong of theedgemalaysia.com

Tuesday, 21 January 2014 09:45

KUALA LUMPUR: The original timeline for the termination of the open approved permit (Open AP) system by the end of 2015 is to be maintained, for now. However, whether the system will be discontinued come 2015 will depend on the outcome of a study to assess the impact of its discontinuation on bumiputera car traders.

“After the Chinese New Year, we are going to appoint a body to assess the impact of the termination of Open APs on bumiputera participation in the automotive industry,” International Trade and Industry Minister Datuk Seri Mustapa Mohamed told the NAP press conference yesterday. “For the moment, our policy on Open APs remains, which is termination in 2015.”

Under the 2009 NAP review, the government said it would stop issuing Open APs from Dec 31, 2015 and Franchise APs from Dec 31, 2020.

Open APs, which are allocated to a specific group of bumiputera motor traders, have been used to import various brands of reconditioned cars. Franchise APs, which are issued to authorised car distributors, can only be used to import specific brands of new cars.

Authorised car distributors have long been lobbying for the termination of Open APs because holders have been importing reconditioned models, in almost new condition with new number plates, and selling them at sharply lower prices that undercut the prices of new models brought in by authorised distributors.

“After going through engagement, we found [the termination of Open APs] to be a bit more complicated than we thought at the beginning. When we talked to Open AP holders, they told us they create employment and promote bumiputera participation in the automotive industry. But when we talked to other players [who don’t have Open APs), they wanted a level playing field,” said Mustapa.

He said the government is not “backtracking”, and that it is doing a “thorough study to ensure that whatever decision is in the interests of the country”.

When asked what value Open AP holders add to the economy, Mustapa replied: “In terms of investments, they put up buildings, but besides that, of course, by definition, there is no manufacturing facility ... [What value they add] is going to be a subject of the study.”

Mustapa said the study would involve extensive consultation with manufacturers, politicians, AP holders, and vendors, among others.

This article first appeared in The Edge Financial Daily, on January 21, 2014.