Tax exemption for new vehicles boosted Dec 2020 manufacturing
08 Feb 2021
KUALA LUMPUR: The sales tax exemption on purchase of new vehicles boosted manufacturing sales in December 2020 by 4.5 per cent to RM124.6 billion compared to the same period in 2019, an economist said.
Bank Islam Malaysia Bhd economist Adam Mohamed Rahim said the increase in transport equipment was underpinned by the total industry volume of Malaysia’s automotive sector which rose by 25.5 per cent in December 2020.
“Consumers rushed to purchase vehicles before the end of December 2020 when the sales tax exemption was supposed to end but was then extended to June this year,” he told Bernama.
The Department of Statistics Malaysia (DOSM) today revealed that manufacturing sales recorded the highest growth since March 2020, driven by transport equipment and other manufactured products (20.5 per cent), food, beverages and tobacco products (7.9 per cent), and electrical and electronics (E&E) products (4.2 per cent).
Adam said other manufactured products that experienced growth were E&E as demand had surged as a result of higher usage of electronic gadgets such as smartphone and tablets in light of the ‘work from home’ flexibility.
Sunway University economics professor Dr Yeah Kim Leng said the 4.5 per cent rise in manufacturing sales was consistent with the gain of manufacturing index by 4.1 per cent in the Industrial Production Index (IPI) reported by the department today.
“It is an encouraging sign pointing to the supply-side recovery of the economy led by manufacturing where all factories have been allowed to operate since May last year.
“The steady pickup in domestic and overseas demand anticipated this year as the pandemic subsides is expected to sustain a high single digit growth in manufacturing output and sales this year,” he said.
Meanwhile, Bumiputera Manufacturers and Services Industry Association of Malaysia president Datuk Azman Yusoff noted that manufacturers were certainly enjoying smoother operations amidst the pandemic in December last year compared to the Movement Control Order (MCO) period in March 2020.
“In terms of adhering to the standard operating procedure (SOP), it is easier now then it was in the first MCO.
“The letter of authorisation from Ministry of International Trade and Industry is processed quicker; supply chain was not interrupted as support industries were given blanket approval; equipments such as temperature scanners, face masks and sanitisers are much cheaper and readily available now than before,” he added.
As for their outlook, Adam and Azman opined that the national vaccination rollout plan this year will brighten business sentiment.
“Perhaps with the expected vaccine rollout at the end of February 2021, the business sentiment may turn brighter and give a boost to manufacturing sales in 2021,” Adam said.