KUALA LUMPUR – The sales tax exemption, which has been extended for the automotive sector until end-December 2021, is a strong catalyst to combat disruptions to production and sales during the movement control order (MCO) and amid global chip shortage.
Maybank IB Research said the decision has a positive impact on the local automotive sector, though it was not entirely surprised by move to extend the sales tax incentives.
“The sales tax on passenger cars will remain as 0% for completely knocked-down (CKD) models and secondly 5% for completely built-up (CBU) models and/or imported cars.
“Timeline-wise, this is the second extension mooted (first extension in December 2020) and represents 18 months of a sales and services tax (SST) holiday since June 2020,” it said in a note today.
In presenting the Pemerkasa+ aid package yesterday, Prime Minister Tan Sri Muhyiddin Yassin announced sales tax exemption for CKD and CBU passenger vehicles is extended until December 31, 2021 from June 30, 2021.
The research house said the move would help absorb much of the sales and production disruptions, especially in June 2021, which would likely mirror the poor performance in April 2020 due to the multiple lockdowns/MCOs and global chips shortage during this period.
The research firm said for 2021, it expects the total industry volume (TIV) of 600,000 to remain unchanged, with January-April 2021 vehicle sales of 199,600 units having met its expectation.
“We expect stronger May 2021 figures (April 2021: 57,900 units) but June will be admittedly much weaker due to the lockdown.
“Otherwise, we still await the government to roll out the much anticipated but much delayed electric vehicle (EV) policy, which is expected to be announced in June/July 2021, according to Malaysia Automotive, Robotic and IoT Institute’s chief executive officer Datuk Madani Sahari,” it added. – Bernama, June 1, 2021
