PKR's proposed automotive policy will also be beneficial existing car owners who are still servicing their vehicle loans, as they can upgrade to a better car while paying the same amount in installments.

However, PKR strategy director Rafizi Ramli said existing car owners can only benefit from the proposed policy if they upgrade to a new car.

NONEThis is because the proposed automotive policy would cause a depression in the second hand car market once excise duties are removed.

To illustrate how the scheme may be beneficial, Rafizi uses the example of a person paying RM600 in installments and still owes a bank RM40,000 for a car.

Once excise duties are removed, the hypothetical car value would be reduced to RM25,000 and thus, by selling it in the second hand market, the owner will suffer a loss of RM15,000.

However, if the owner trades in his vehicle and upgrades to a better vehicle, lower market prices would mean that he can purchase a much better car for RM40,000 at the same monthly installment of RM600.

azlan"So rather than paying RM600 a month for a Proton Saga, I'd rather pay RM600 for a Honda," he told Malaysiakini after a press conference to detail the nuts and bolts of the proposed automotive policy.

Speaking at a press conference earlier, PKR de facto leader Anwar Ibrahim said that the upgrading of cars could spur a new second hand car export policy.

"The export of second hand cars to new markets is expected to create new income for the government," he said.

To encourage a second-hand export industry, Anwar said that incentives will be given to those who set up reconditioning and upgrading facilities for used cars for the purpose of export.

Plugging RM8 bil revenue loss

 Besides the second hand export market, he said loss of RM8 bil a year in revenue from the scrapping of the excise tax can be recouped through:
  • Implementing a three tier bidding system for approved permits to import cars, expected to return RM2 to 3 billion a year until the 2015 deadline;
  • A rise in sales and income tax of about RM1 to RM1.5 billion a year, as consumers now have RM8 bil more in their pockets through cheaper car prices; and,
  • Reduction in ad hoc expenditure and allocation for the Prime Minister's Department.
Anwar also gave the assurance that the proposed policy will not render automotive sector workers jobless. 

“The policy does not guarantee advantage for any quarter. This is important to ensure that the job opportunities for the sector grow through the entrance of more international automotive firms,” he said. 

He added that local car manufacturers will ,however, be offered a special incentive to upgrade the quality of the cars in order to compete with the international carmakers locally and abroad.  

police parliament blockade traffic jams in city area 140708 02He added that the policy also considers the need for a comprehensive public transport, with the focus on making Malaysia the most public transport friendly nation in south east asia in 10 years. 

This includes restructuring Keretapi Tanah Melayu Bhd and the rail systems in the long run, while upgrading the bus systems in the short run. 

He said that Pakatan does not intend to review all existing agreements on transport, including the MRT and LRT, unless found to not be in the public interest.

Incentives will also be accorded  companies which manufacture environmentally friendly vehicles in Malaysia.

Anwar also explained that this is PKR's policy to be presented to its Pakatan partners.