New rules could hit car dealers

KUALA LUMPUR, Jan 24 — The controversial import-licensing system for luxury cars is undergoing a major shake-out that threatens to put several dozen car dealers out of business.

The turmoil in the sector, which is worth several hundred million ringgit annually, is a result of new rules the government imposed this month to plug loopholes in the licensing system called Approved Permits, or APs.

The rules came about after a yet-to-be published government audit exposed serious irregularities.

The audit looked into the business practices of a small clique of well-connected Malay businessmen who received their AP allocations each year.

The audit revealed that a large number of the businessmen were hawking their import permits to mainly ethnic Chinese car dealers who dominate the country's luxury vehicle dealerships, documents reviewed by The Straits Times show.

The government audit also revealed that many of the companies involved in the AP business were poorly managed, lacked adequate funding and in some extreme cases even forged government documents when importing luxury cars.

It was not clear whether action will be taken against them.

To stem the abuses, the government has temporarily ceased the issue of new APs, ordered the AP companies to beef-up their financial position and banned the trading of these permits to car dealers.

The last measure, industry executives say, could force many Chinese car dealerships out of business.

Several Chinese-owned car dealers, who spoke on condition of anonymity, said that the new rules have disrupted imports and their purchases of APs from Malay businessmen are being questioned by the authorities.

“Car sales are already down because of the economic crisis and the new rules only make doing this business tougher,” said one owner of a luxury car dealership in Petaling Jaya.

“We bear the financial risk in this business by importing the cars. But if we are also going to be investigated for using APs then there is no point staying in the trade,” griped another car dealer in KL.

All cars not assembled in Malaysia must have an AP, which are issued for free by the government to a small band of Malay licensees.

The models include limited editions of Mazdas and Toyotas, along with the Porsches and Ferraris.

Typically, the APs are then sold to car distributors for prices ranging from RM10,000 to as much as RM40,000 each.

These costs, including taxes imposed by the government, are then passed on to consumers who generally pay some of the highest prices for cars in the region.

The AP system for imported vehicles began in the mid-1970s to encourage ethnic Malay businessmen to venture into car distribution, which was dominated by foreigners and ethnic Chinese.

When the government began national car production through Proton, the AP scheme was adapted to protect the domestic car market.

The system later morphed into a symbiotic relationship between the Malay AP beneficiaries and Chinese motor dealers.

Despite the glaring abuses to the scheme, the government is reluctant to scrap the policy which foreign car companies have long maintained is a trade barrier that violates the spirit of the Asean Free Trade Area.

International Trade and Industry Tan Sri Minister Muhyiddin Yassin told reporters recently that the government, which had originally promised to scrap the AP system by next year, had decided to extend the licensing arrangement.

He did not detail reasons for the extension, but industry executives say that it is because of the strong lobby from the policy's beneficiaries, who count among them powerful interests from Umno. — Straits Times

Politicians may head councils in Selangor too

New Straits Times, 6 January 2009

SHAH ALAM: The Selangor government is also considering appointing politicians to head local councils.

Local Government, Research and Development Committee chairman Ronnie Liu said the state was discussing whether to follow Penang and Perak's lead on this.

"We are not in a hurry to replace people (local council chairmen) but if necessary, we may change them.

"In May last year, we took all local council heads to Singapore to learn their strengths and told them to change their attitude.

"If by next year, there is no improvement, then it is still not too late for us to appoint party people," Liu said.
Asked if appointing politicians would give rise to corruption and abuse of power, Liu said it would not happen if the right person was appointed.

Currently, the state government does not allow a state assemblyman or member of parliament to be a local councillor to prevent conflict of interest.

Bukit Rawang Jaya Residents' Association president M. Ramuseren said he would support politicians to head local councils only if they were elected.

"The state government has to hold an election for local council chairmen and local councillors.

"If they are appointed, they would be useless," he said.

Klang Consumers Association president A. Devadass agreed: "If they are appointed, they couldn't care less about the people's plight as they are not answerable to the public and only answerable to the government."

On another matter, Liu said the Parti Keadilan Rakyat assemblyman who was reportedly "missing in action" must explain his absence.

"There are many programmes where his services are needed and if people can't see him it would be difficult for them to receive the aid."

It was reported yesterday that Liu went to the assemblyman's house in Klang but he was not at home.

Surcharge put off to March 1

STAR, 6 January 2009

MALACCA: Some 8,000 members with the Federation of Malaysian Schoolbus Operators Association have put off a 30% surcharge yesterday to March 1.

This is to relieve the financial burden of parents due to the start of the new school term and with Chinese New Year just around the corner.

Federation chairman Chee Ah Tey said members expected a firm answer from the Commercial Vehicle Licensing Board (CVLB) on its memorandum submitted last September.

“The CVLB must give us an answer before March 1 on whether to allow us to impose the surcharge or increase diesel subsidy for schoolbus operators,” he told a press conference here yesterday.

In September, the federation’s request for higher subsidised diesel was turned down by the board.

There are some 15,000 schoolbus operators nationwide with an estimated 8,000 registered with the federation.

Two days ago, Chee was quoted as saying that schoolbus operators nationwide would impose a surcharge at the start of the new school term.

On Sunday, CVLB director-general Datuk Markiman Kobiran warned that the board would carry out joint operations with the Road Transport Department and take stern action against errant schoolbus operators who impose the surcharge unilaterally.

More questions over toll deals

STAR, 6 January 2009

KUALA LUMPUR: Confusion reigned at the library in the Works Ministry on the second day after toll agreements in the country were declassified.

Politicians and reporters, who had turned up as early as 7.30am to get access to the documents although the library opened at 9am, were dismayed to find that much of the contents were either too technical, incomplete or that they just had no time to digest the information.

With public viewing in the morning restricted to only five people at one time for a maximum of two hours and one document each, reporters had to rely on information supplied by politicians, who were given priority to read the agreements.

As at lunchtime, only one reporter had managed to read an agreement relating to the New Pantai Express­way but complained that she could not fully understand the content or compensation formula.

In the evening, however, 15 people were allowed in at one time after Works Minister Datuk Mohd Zin Mohamed gave the directive to the library to expand the facility.

Busy reading: Visitors to the library going through the toll agreements at the Works Ministry in Kuala Lumpur Monday.

There was also grumbling after some of the reporters, who had turned up early for their turns to look at the documents, got bumped down in the queue after politicians made an earlier booking with the library,

Among the “incomplete” documents were the deals for the SMART Tunnel, which only came with the first 118 pages without any appendix or schedules, and the Shapadu toll agreement, which was only 16 pages long. None of the agreements also carried with any subsequent exemption or additional clauses.

Petaling Jaya Utara MP Tony Pua, who led a DAP delegation, said the Damansara-Puchong Highway was making excessive profits and called for the Government to stop compensating the operator.

The highway operator had initially set its toll rate at RM2.10 but reduced it to RM1.60 in the last adjustment in 2007.

“Under the agreement, the toll charge will rise to RM3.10 in 2016. In its financial prospectus, the highway operator has stated that the construction cost was RM1.327bil and that the 30-year projected profit was RM18.865bil.

“Between 1997 and 2006, it was supposed to have made a profit of RM1.22bil, nearly the construction cost. So, their collection to date has more than paid for the highway and what they are collecting for the next 20 years, is excess profits,” he said, adding that to allow Kesas to raise toll charges by more than 10% every two years until 2022 was also excessive.

Pua called on the Government to nationalise the highways to lighten the financial burden of the people and keep toll charges minimum.

Serdang MP Teo Nie Ching said the agreement with Penang Bridge almost guaranteed profit for its highway operator, adding that this was unfair because the bridge had been opened since 1985 whereas the agreement only started from 1993.

Future agreements will be made public, says ministry

STAR, 6 January 2009

KUALA LUMPUR: All future toll concession agreements signed between the Government and highway operators will be made public.

Works Minister Datuk Mohd Zin Mohamed said this as the Govern­ment decided to declassify 22 out of the 23 toll concession agreements beginning last Friday.

However, as at 4pm on the second day of public viewing yesterday, only 17 toll agreements were available at the Works Ministry’s library.

The agreements were for the Damansara-Puchong Highway (LDP), Guthrie, Sprint, Besraya, Ampang-Kuala Lumpur Elevated Highway, SMART Tunnel, NNKSB, Metramac, Kesas, Grand Saga, Lebuhraya Pintas Selat Klang Baru, NPE, MTD, Penang Bridge, SILK, BORR and Shapadu.

Only Maju Expressway, which operates the Kuala Lumpur-Putrajaya highway, has not given its consent for its toll agreement to be declassified.

Zin said PLUS, the New Klang Valley Expressway and other toll agreements would be made available to the public from noon yesterday.

“If it’s not (ready) in time for today, the public can view it tomorrow,” he assured.

Asked if any future toll agreement would be made public, Zin said the Government had taken the first step in declassifying the documents.

“That is the way in future,” he said.

Asked about suggestions that the expressways should be nationalised, Zin said the Government “was not looking at the option at the moment”.

On certain highway operators already making profits due to high traffic volume, Zin said it was time such companies looked into “giving something back in return.”

“That’s why we are seeking an understanding on this concession agreement so that the ones who have really shown good returns on their investments reflect their corporate responsibility and give discounts and rebates like what PLUS has done.

“This is the moment for any concessionaire that feels it can give back to the stakeholders, to look into it,” he pointed out.