The National Automotive Policy (NAP) provides Customized Incentives (CI) to attract strategic investments into Malaysia, specifically in Energy Efficient Vehicle (EEV) and Next Generation Vehicle (NxGV) sectors, to further develop the local automotive ecosystem. The Government’s decision on the incentives provided depends on the level of strategic activities, such as Completely Knocked Down (CKD) investments, production volume, technology transfer, research and development activities, supply chain development, employment, export programs, and other factors.

The amount of the incentive given is subject to a Cost-Benefit Analysis (CBA) and the recommendation of the Automotive Business Development Committee (ABDC), a strategic committee chaired by the Ministry of Investment, Trade, and Industry (MITI), with representatives from:

i) Ministry of Finance (MOF)
ii) Royal Malaysian Customs Department (RMCD)
iii) Malaysia Automotive Robotics and IoT Institute (MARii)
iv) Malaysian Investment Development Authority (MIDA)

The CI refers to incentives that enable a higher multiplier than the standard Industrial Linkage Program (ILP) ratio (greater than 1:1), resulting in greater reductions in import, excise duties, and sales taxes. These reductions consider potential benefits to the country, such as new investments, employment, and technology transfer. The CI may also consider the percentage of duty reductions on vehicles, depending on the respective companies’ strategic business plans and discussions with the ABDC.