Government Surprises Nobody By Pulling A U-Turn And Extending The SST Exemption For New Cars

The Malaysian government must be huge fans of the now defunct game show Roda Impian. How else would you explain their love for continuous turns in decision making? Well, once again; probably to the hollers of that iconic line from the show of “Kita putar lagi Halim” (We’ll spin again Halim), the government has made a U-turn on its earlier decision and will now extend the sales tax (SST) exemption period for new cars to 30 June 2021.

Superseding its earlier decision to maintain the earlier deadline of 31 December 2020, the Ministry of Finance (MoF) has agreed to the Malaysian Automotive Association’s (MAA) appeal of an extension on the SST exemption for new cars under the economic recovery plan or Pelan Jana Semula Ekonomi Negara (Penjana) to 30 June 2021.

Under the SST exemption, all locally-assembled (CKD) passenger cars, MPV and SUVs will continue their exemption of the 10 per cent SST until 30 June 2021. Accordingly, imported (CBU) new cars will also continue to pay just half the SST rates (5.0 per cent) until 30 June 2021.

Understandably, the extension will come across as a double-edged sword for consumers and carmakers alike. The former will rejoice as those that unable to receive their cars by 31 December 2020 may now be eligible for it once again. Furthermore, buyers that are still debating and missed out on the earlier proposed deadline will now have more time to reconsider and make a purchase at the lower price.

However, carmakers will be caught off-guard by the decision and may need to ramp up production to match the increased demand that's expected with the SST exemption extended. Additionally, they'll need to burn the midnight oil as they realign marketing campaigns and promotions with the new (or old) prices.

Furthermore, 2021 prices may indeed be readjusted anyways regardless of the SST exemption. Hence, carmakers may need to recalculate prices altogether for 2021.

As always, speak to your sales advisor if you’ve already purchased a car in the second half of this year or are planning to in the first half of 2021.