Kuala lumpur: The full implementation of the open market value (OMV) tax structure for locally assembled Completely Knocked Down (CKD) vehicles will not burden the B40 and M40 income groups, Deputy Investment, Trade and Industry Minister Sim Tze Tzin stated today. He reassured that the Excise (Determination of Value of Locally Manufactured Goods for the Purpose of Levying Excise Duty) Regulations 2019 apply to all locally manufactured goods and are not exclusive to vehicles.

According to BERNAMA News Agency, Sim emphasized that the impact on vehicle prices will be minimal, confirming the government's commitment to ensuring affordable vehicles for the B40 and M40 groups through approved tax incentives. This statement came in response to a supplementary question from Khairil Nizam Khirudin (PN-Jerantut) in the Dewan Rakyat.

Khairil Nizam had inquired about the concrete indicators used by the Investment, Trade and Industry Ministry to assess whether changes in vehicle prices would affect the B40 and lower M40 income groups. He also questioned whether the impact assessment of the revised OMV excise tax regulation, which has been deferred since 2019, could be presented in the Dewan Rakyat and communicated to the public prior to its implementation.

Sim explained that the government had previously offered a five-year exemption, valid until June 30, 2026, allowing excise values for locally manufactured vehicles to be calculated based on manufacturing costs. This exemption period was intended as a transition phase for manufacturers to adjust their business models and cost structures accordingly.

He further stated the government's responsibility to ensure the industry's tax structure remains fair and equitable, without favoritism. Additionally, Sim introduced the New Customised Incentive Mechanism (NCM), designed for companies that demonstrate significant investment commitments, increase local content, and contribute to vendor development and exports, qualifying them for higher excise duty exemptions.

The approach aims to minimize the regulation's implementation impact, especially for new vehicle models, while ensuring that over 90 percent of existing models will not experience price hikes.