THE government is identifying the best methods to mitigate the effects of higher local vehicle prices following the upcoming enforcement of excise tax regulation P.U.(A) 402/2019, set to take effect in 2026, Deputy Finance Minister Lim Hui Ying said today.
Speaking during a parliamentary session, Lim explained that the impact of the regulation on vehicle prices remains uncertain due to differences in business models among local vehicle assemblers, which could lead to inconsistencies in excise tax imposition.
“Regarding the impact of this regulation on price increases, it is still unclear as the business models of local vehicle assemblers differ, leading to uneven application of excise taxes on manufactured vehicles,” she said.
“The government has already gathered data and conducted engagement sessions with the industry to obtain feedback and potential solutions to the issues at hand. Consequently, the government is now identifying the best methods to reduce the implications of higher local vehicle prices in line with the enforcement of P.U.(A) 402/2019,” she added in response to a question by Datuk Shamshulkahar Mohd Deli (BN-Jempol) regarding whether the regulation would be implemented or deferred.
Lim also noted that, for the time being, exemptions from the regulation are granted exclusively to local vehicle assemblers (CKD), following concerns from the automotive industry about sudden price increases.
“This exemption was decided in view of concerns from the local automotive sector regarding sharp increases in vehicle prices. It is a consequence of the enforcement of the regulation and allows the industry to prepare for the implementation of P.U.(A) 402/2019,” she said.
The regulation is expected to result in a rise in vehicle prices when enforced. The Malaysian Automotive Association (MAA) President, Mohd Shamsor Mohd Zain, said the industry is awaiting further clarification on the revised tax imposition from the Ministry of Finance. - November 6, 2025
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