KUALA LUMPUR: Prior to the entry of Tesla into Malaysia, Approved Permit (AP) holders were raking up to RM100,000 in tax-free profit for the sale of an electric vehicle (EV), claims an automotive industry insider.
During an interview on a business radio station today, Daniel Fernandez said the growing demand for EVs in Malaysia allowed for AP holders the opportunity to earn immensely high tax-free profit margin without directly helping the country's economy.
Further auditing of the AP system and the eligibility of the EV approved permits is required to regulate trade of EVs to ensure errant businesses do not take advantage of prospective consumers, he said.
However, he said a stronger call-to-action to cut off the AP system entirely should be taken by the government.
"AP holders do not invest back into the country, they merely act as traders. They buy a product, put a margin on it and just sell," he said.
Although the mechanics have been made transparent after a change in the past administration with frequent auditing being done towards AP awards, Fernandez said abuse especially in the transferring of right still occurred covertly.
He added that when Tesla recently introduced its module buy of their cars from RM199,000, it stirred the AP market.
"Why? Because the year before AP holders have this special EV approved permits which allows them to bring in new vehicles.
"Conventionally, the AP system allows holders to only bring in cars above one-year-old so there was no way to bring in new cars. However, with this special AP they are now able to.
As a result, Fernandez said it allowed dealers to sell Teslas more than double the actual cost between RM288,000 to RM350,000.
"If you just look at the calculations, AP holders make more than RM100,000 per car.
"That is an insane kind of profit margin because there is no tax being imposed for AP holders, just shipping and insurance," he added.
In addition, Fernandez said customers do not even get the privilege of getting an after sale service or factory backup for maintenance.
Tesla's official entry into the Malaysian market caused a scramble by many grey market importers to get rid of their stock by throwing prices in the last few weeks.
On July 17, it was reported that the government has no intention to phase out the approved permit (AP) system for car imports.
Investment, Trade and Industry (MITI) Minister Tengku Datuk Seri Zafrul Abdul Aziz said the system was still in effect even though the government is allowing Tesla Inc, a global electric vehicle (EV) maker, to sell cars in the country without the usual AP rules.
Fernandez said the government needed to consider removing the AP system.
"If you just look at our neighbouring counterparts or anywhere in the world for that matter, there is no such thing as the AP system.
"You simply need to be a legitimate businessman and apply for relevant documents to bring in a car and if there is no competition, you can bring in the vehicle and the brand.