In December 2015, the government of Malaysia announced changed rules for foreign investors.



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Malaysian Investment Development Authority: Business Opportunities; Malaysia's Automotive Industry, December 2014, page 2-3
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Malaysian Investment Development Authority: MITI unveils New Automotive Policy, 22 January 2015
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World Trade Organization document WT/TPR/M/292/Add.1m; trade policy review, Malaysia, minutes of the meeting, pages 193-194
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Secondary sources:
United States Department of State, 2014 Investment Climate Statement, page 3
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Malaysia Automotive Association: National Automotive Policy (NAP) 2014
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Inception date: 01 Jan 2014 | Removal date: open ended

FDI: Entry and ownership rule

In January 2014 the government of Malaysia introduced the National Automotive Policy (NAP) 2014. NAP was originally introduced in 2006 and hereafter revised in 2009, see related measure. The revision introduces a financial package of around RM 2 billion (ca. USD 458 million) until 2019 in various areas of the value chain. The package will promote the automotive industry with a special focus on the area of energy-efficient vehicles (EEV) and the infrastructure related to the manufacturing and distribution of these. It will mainly consist of soft loans of around RM 1.89 billion (ca. USD 432 million) and to a lesser degree of grants amounting around RM 175 million (ca. USD 40 million).
The 2014 revision introduced the following measures:

  • A new manufacturing license for EEVs
  • Incentives for foreign and local companies investing in the EEV area. Such incentives include pioneer status (preferential taxation including partial or total income tax exemption for a certain number of years), incentives for research and development as well as training grants.
  • Foreign carmakers investing in EEVs with a engine capacity of maximum 1.8 liters are exempt from equity restrictions
  • Incentives to develop the "domestic automotive ecosystem" including power train, transmissions and other control-systems, aluminium and other non-ferrous casting as well as dies set and mould base
  • Temporary import- and excise tax exemption for a two year period until 31 December 2015 on Completely Knock Down hybrid vehicles locally produced and for a four year period until 31 December 2017 on locally produced Completely Knock Down electric vehicles.

Whilst this policy replaces the NAP from 2006 and revision introduced in 2009 (see related measure) the following measures are maintained:

  • Issuance of manufacturing license for commercial vehicles
  • Issuance of the new manufacturing licenses on specific classified luxury passenger vehicles; hybrid and electric vehicles; pickup trucks; commercial vehicles; and specific motorcycles
  • 100% investment tax allowance or 10 year Pioneer Status for the manufacturing of hybrid and electric vehicles
  • 100% Pioneer Status for a 10 year period or investment tax allowance for a 5 year period for the manufacturing of specific value added components