It’s Time For The Old To Expire

No, we're not talking about senicide. Well, not of humans, anyway. Just vehicles. There are several issues that Malaysia...

No, we're not talking about senicide. Well, not of humans, anyway. Just vehicles.

There are several issues that Malaysians are eagerly anticipating in the upcoming revision of the National Automotive Policy, due to be announced by the end of the year: the first is regarding tax exemption for hybrid, electric and any other energy efficient vehicles; the second is whether there will be lowering of excise duties imposed on foreign car brands (highly unlikely, but Malaysians can always hope) and, lastly, the issue that has been circulating on news and social media recently, the reintroduction of the end-of-life vehicle (ELV) policy.

Malaysia’s Ministry of International Trade and Industry (MITI) had tried to introduce the ELV back in 2009, but the idea was scrapped amidst fervent protests. It seems like the government might give it another go this year. The earlier ELV proposal mandated that cars that have been in service for 10 to 15 years would need to undergo regular mandatory checks for road worthiness. For vehicles older than 15 years, well, overnight they transform into nothing more than salvage material. Then, in February this year, the Malaysia Automotive Institute (MAI) suggested that the lifespan should be a mere 10 years (we can imagine Malaysians gasping in horror).

Recently, on 15 November, the Director General of the Malaysian Institute of Road Safety Research (MIROS), Professor Dr Wong Shaw Voon, made the statement that cars are designed to have a lifespan of up to 12 years maximum. “There is a higher risk of death in an accident because such cars could be faulty without the driver being aware of it,” he said. So, at the moment, 12 is the popular number that is being ardently debated. Of course, he never said that cars aged 12 and above had to be immediately scrapped, only that such vehicles involved in accidents are more likely to be fatal. A simple solution would be that if your car is old, just drive carefully, wouldn’t it? Angry tweets and Facebook updates from netizens seem to agree, as they pointed out that traffic accidents are due to bad driving, not bad cars.

So, let’s assume that 12 years is the limit to continue our exploration of the subject. There are presently 22 million vehicles on the roads of Malaysia, of which 5 million (23%) have been in service for 10 years or more and will be affected should (or when?) the policy takes affect in the next few years.

In October 2013, The Star daily reported that Malaysia’s household debt to GDP ratio has reached an alarming high of 83% as of March 2013 (for comparison to its neighbours: Indonesia, 15.8%; Singapore, 67%). Passenger car loans took the second largest chunk of the debt pie, after home loans, amounting to MYR145 billion. We have already written about the hefty prices of cars in Malaysia that necessitates citizens taking lengthy car loans of up to 9 years. So, 3 years after paying off their car loans, the thing that Malaysians have spent a sizeable portion of their incomes on are suddenly forcibly decommissioned, and they would have to enter into another 9-year debt all over again to buy a new car. We’re not bankers, economists nor mathematicians, but we assume that the country's household debt will be augmented even more.
The Acting Transport Minister, Datuk Seri Hishammuddin Hussein, had initially confirmed, albeit vaguely, that some sort of ELV policy will be implemented in the near future although he did not furnish any further details, except that more studies needed to be conducted and steps will be put in place to address any financial predicaments that  citizens would face. On 19 November, the Malaysian Insider reported him as saying, "I have to find a mechanism so that the people won't be unduly affected or burdened by the cost of living…We may have to go ahead with what has been proposed but there might be mechanisms that won't create unnecessary burden.”

Just a few days later, however, his deputy minister, Datuk Abdul Aziz Kaprawi, dismissed the idea in Parliament, saying, “We have no plans to impose a lifespan on cars for disposal purposes and we do not want to burden the public.” Perhaps these 2 ministers should start speaking to each other before making anymore public statements.

Okay, so let’s see this in a positive light. Just across the causeway in Singapore, the CoE spans only 10 years, after which the car has to be scrapped or the owner has to pay for the CoE all over again for a 5 to 10-year extension. Knowing this, Malaysians should feel better about the ELV, simply because misery loves company.

Also, scrapping old vehicles will, besides allegedly reduce traffic fatalities, will certainly reduce greenhouse gasses emissions, car ownerships and traffic congestions. This leads to the question of alternative mobility options for Malaysians. The Mass Rapid Transit project connecting the Greater Kuala Lumpur is due to be completed in 2016. Surveys indicate that public satisfaction towards the bus service provided by RapidKL (a government owned company formed to manage the country’s public transportation system) has improved, including one set of statistics showing a passenger satisfaction rate of 75.4% in May 2013 compared to 65.5% in 2011. Even taxi bookings can now be conducted and monitored via mobile apps.

Are these enough and what else can be done so that the situation is conducive for reduction of personal vehicles on the road? Maybe the transport ministers should consider this question first and not put the maybe yes, maybe no cart before the horse.

image: Wikipedia


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