TYPE OF APPROVE PERMIT

Approve permit is a license issued to a vendor to sell foreign car with no local content.There are
two types of APs issued by the ministry of International Trade and Industry (MITI). The
categories namely,Open APs and Franchise APs.An Open APs allows the holder to import a car
of any brand and Open APs also are sold to parallel importers at RM10 000 per piece to import
cars of any brand to sell in Malaysian market.Then, Franchise APs ties the holder to a particular
brand.Franchise APs that are given out for free to franchise holders of car brand registered with
MITI.
Open APs are usually use by paralel importers to import re-conditioned luxury car to sell them
at slighty lower prices that the locally-assembled ones.For example, an internet check revealed
that a new Mercedes-Benz E200 sold from 35,000 (about RM179,000) in United Kingdom
compared with RM366,000 for the same locally-assembled model in Malaysia.A second-hand
Mercedes-Benz E200 in United Kingdom would be even cheaper by about 10,000 or about
RM51,000,depending on the year of manufacture and mileage covered.Open APs holder will
take this advantage of the higher price differential in Malaysia to sell the re-conditioned E200
from between RM270,000 until RM290,000 each,even after paying for taxes.
Nasimuddin is founder as well as former chairman and CEO of the Naza Group,Naza is wellknown for its automobile business and hold the Malaysian franchies for South Koreas Kia.Its
other franchies include Ferrari,Maserati,Koenigsegg and Citroen.

BENEFIT AND COST OF APPROVE PERMIT

APs was the first introduced in 1970 with the purpose of assisting Malays in the automotive
industry.It is a part of the New Economic Policy (NEP) initiatives. Aprove permit (APs) for
automobiles preferentially allow bumiputra to import vehicles.Automobile companies wishing to
bring in cars need to have an APs to do so.APs were originally created to allow bumiputra
participation in the automotive industry,since they were issued to companies with at least 70%
bumiputra ownership.APs is supposed to help bumiputra automobile businessman to acquire
technology tranfer and the execution of how automobile business is operated.Next,an APs is a
mechanism to control imported cars and they were also meant to protect the national carPerusahaan Otomobil Nasional Bhd (Proton).From the APs Malaysian car buyer

APs is a good policy for automotive industry but its also has their weakness.An APs will affect
the price of the import car.The price of these non-national car (such as Honda and Toyota), of
course are also substantially higher in Malaysia than the rest of the world,reflecting the adverse
impact of our high duties on these cars in the Malaysia market.Next,Malaysian car buyer prefer
to pay more to buy the NNC brands because of the advance safety features not avaiable in NC
brands.Thus,under the regime of prolonged high domestic protection,our national car
manufacturers have neither the incentives nor the urgency to innovate and be front-runner of the
automobile industry.For example,NC brands such as Proton is still manufacturing convertional
car based largely on replications of other manufacturers models.Proton was quite slow in the
innovation in their product an still at the same level for the long time if to compare with NNC
brands.APs also hinders the Malaysia automobile industry from being connected with the global
trend towards the development and utilization of greean cars.APs became huge burden for the
particularly for the youth with their first jobs and seeking to buy their first cars.