Budget 2023, the first one presented by Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, seems to have contained nothing on auto industry matters this time round. Unlike the last one which sparked off a rush to introduce EVs (electric vehicles) with full tax exemption for a few years, this Budget did not offer anything new.
Nor was there confirmation of what had been mentioned in the Budget last October (which was not tabled in Parliament) – the extension of the tax-exemption for CBU (completely built-up) vehicles beyond December 31, 2023. While the exemption is until the end of 2025 for locally-assembled EVs, the car companies are hopeful that there can be a longer period CBU models to encourage more widespread adoption in the country.
While the PM said that there are leakages in subsidies for diesel amounting to as much as RM10 billion in 2022, there was also nothing about the policy on fuel subsidies. Many had expected to hear about how the government would target the subsidies to groups which really need them. The subsidy bill for 2023 is expected to reach RM64 billion, covering not just fuel subsidies but also price controls and financial aid.
For those who own EVs or plug-in hybrid vehicles (PHEVs), the good news is that electricity charges for homes will not be increased. There will be changes for other sectors but tariffs for domestic use will continue to be at the present levels. So whatever you are spending on recharging the battery pack instead of buying liquid fuel will be the same.
The government plans to introduce a Luxury Goods Tax but it is unlikely to include high-end luxury cars (which has sometimes been applied in some countries). The PM said the proposal covers a certain value limit according to the type of luxury goods, with examples like luxury watches and fashion items being mentioned. So that Porsche Design watch you were thinking of might cost more soon.
Car-buyers will also be relieved to know that the government won’t be introducing the Goods & Services Tax (GST) for now so there won’t be a revision of prices. This deferment is in view of food inflation being more than 5% and also wages being still at low levels.
Besides the usual allocations for maintaining and upgrading highways and rural roads, as well as expediting the construction of Sabah Pan-Borneo Highway and Sarawak-Sabah Link Road, RM100,000 is allocated to various districts for pothole repairs. Additionally, RM50 million is allotted for immediate installation of street lights, especially in areas identified as having many accidents. For East Malaysia alone, RM2.5 billion will be provided for public infrastructure development which include road projects and street lights.
The Malaysian Road Record Information System (MARRIS) grant is increased to RM5.2 billion. In use since 2008, MARRIS is used for the purpose of recording road data all states. It maintains information on roads maintained by the JKR and local authorities and is also reference source for the Finance Ministry.
It is not unusual for the Budget presentation to omit references to the auto industry. Unlike the years before the 2000s, when car company executives would anxiously wait for news of tax or policy changes, the government has been announcing new policies during the year as a separate matter. So there may still be some announcements coming from MITI or the Finance ministry at a later date.
