In January 2014, the government of Malaysia announced a targeted tax change.



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Inception date: 21 Jan 2014 | Removal date: 20 Dec 2017

Tax or social insurance relief

On 20 January 2014 Malaysia announced its National Automotive Policy 2014 which aims to 'promote a competitive and sustainable domestic automotive industry '...'; make Malaysia the regional automotive hub in energy efficient vehicles; promote increase in exports of vehicles and automotive components'...'' Promoting exports is also a stated goal of this policy as is doubling the production of cars in Malaysia by 2020. The press statement accompanying the Policy's announcement also states "With this policy, it is expected that 150,000 more employment opportunities will be created by 2020; while local skilled and semi-skilled workers will replace 80% of foreign workers in the automotive manufacturing sector by 2020."
Amongst other measures, the new Policy introduces an exemption from excise duties for locally-assembled hybrids and electric vehicles. A prior exemption of imported energy-efficient vehicles has been withrdawn. This asymmetric treatment is significant as excise duties on cars in Malaysia are said to vary from 60% to 105% depdending on vehicle type.
This state measure will remain in force until 31 December 2015 for hybrids and until 31 December 2017 for electric vehicles.
Several Japanese firms--some with investments in Malaysia and others supplying Malaysia from abroad--are likely to be materially affected by these changes in policy, as may be other car manufacturers selling in the Malaysian market.