Driving corruption

Importing cars is a business shrouded in secrecy, involving government officials handing out choice permits to a few private firms. It’s got to the stage where even former PM, Dr Mahathir Mohamad, is asking whether corruption is occurring in the awarding of approved permits for importing cars.

It’s an area where high taxes ensure huge profits for those who can skirt the law. The Approved Permit (AP) system was designed to help Bumiputeras enter the autmobile marketing industry. Every car manufactured and assembled outside ASEAN has to have an AP to be sold in Malaysia. Only 116 companies were issued APs last year, and they imported over 46,000 cars.

Of these license-holders, 40 hold permits for one make of car, according to an AFP report in January this year, while the rest are unrestricted. Overall, foreign cars from outside ASEAN are restricted to 10 per cent of the market.

It’s a system that has come under attack from both inside and outside the country. Car manufacturers overseas cry foul, that this is a violation of trading agreements under the World Trade Organisation (WTO). Consumers complain that it raises car prices, and that the quality of locally-produced cars suffers from the lack of competition. And politicians complain that the secrecy surrounding the system could cloak corruption, or at the very least breed suspicion that corruption exists.

Former Prime Minister Dr Mahathir Mohamad has asked for the records surrounding the AP licenses to be made public – who holds the permits, what cars they’ve been importing and how much those cars are worth. Unfortunately, the Minister in charge, Rafidah Aziz, has declined on the grounds that these records have never been made public, neither in her time nor beforehand. It seems like a singularly poor excuse.

First, the policy benefits 116 companies. If tax evasion is happening, it happens to the detriment of 23 million Malaysians. Tax money is spent on amenities for all. Profit that ends up in the pockets of the 116 companies isn’t.

Second, if nobody is doing anything wrong, there is no reason not to open up the files. Ministers, companies and consumers alike will be satisfied. The Ministers and companies will have the suspicion currently surrounding them dispelled. Consumers will have the satisfaction of knowing that the Government is efficient and trustworthy.

The only people who benefit from the secrecy surrounding the AP system are those who are using it to hide corruption and tax evasion – corrupt customs officials, corrupt car importers and all those associated with them. The rest of us lose out.