Budget 2024: Key takeaways for the automotive industry

Budget 2024 has been announced with the theme "Economic Reforms, Empowering the Rakyat," focusing on increasing government tax revenues, encouraging new investments, and enhancing the well-being of Malaysians. Regarding our industry, there were more than a handful of points, including incentives for EV users, subsidies on diesel, and an increase in car servicing labour costs. Let's check out the key highlights of Budget 2024 for the automotive industry - 

Incentives for electric vehicles 

The Budget 2024 focuses on the growth of the electric vehicle market in Malaysia. To facilitate convenient charging infrastructure and promote EV use, prominent companies such as TNB, Gentari, and Tesla Malaysia will collectively invest over RM 170 million to establish 180 EV charging stations. 

As for personal income tax relief for EV charging equipment and services, the government has extended the RM 2,500 rebate till 2027. The budget also extends tax exemptions for the cost of EV rental for two years. This extension aims to encourage businesses and individuals to explore the benefits of electric vehicle rentals. 

For the adoption of electric motorcycles, a scheme has been introduced, that targets individuals with an annual income below RM 120,000. The scheme offers an RM 2,400 rebate on the purchase of electric two-wheelers.

Adoption of electric vehicles by the government

When it comes to green public mobility, Prasarana Malaysia will purchase 150 electric buses and construct three bus depots for the LRT3 project, at an estimated cost of RM 600 million.

Furthermore, EVs will be employed as official vehicles for federal administration, representing the government's dedication to green mobility. The budget also outlines plans to transform Putrajaya into a low-carbon model city by installing solar panels on the roofs of government buildings in collaboration with entities like TNB and Gentari.

Increase in service tax

There will be an increase in the service tax rate from 6% to 8% next year. As a result, car servicing labour charges are expected to rise. It's important to note that the service tax only applies to labour charges and does not impact the costs of the parts used during servicing. 

Subsidy for diesel

The budget also proposes the introduction of diesel subsidies in phases. While the subsidised diesel prices will be available for the selected set of customers like goods transport and logistics companies, others will pay more for it. 

This initiative is driven by the government's dual objectives. First, it seeks to address subsidy leakage; second, it aims to mitigate the impact on the prices of essential goods for the public. In other words, the government seeks to strike a balance between offering support to specific sectors or groups in need while minimising any adverse impact on the cost of living for the people.

Support for the Rakyat

The Budget 2024 also proposes that the revenue generated from the sale of special number plates will be channelled to assist the rakyat, particularly those in need. Also, the government will continue to bear the driving test fees for B2 motorcycle licence, e-hailing drivers, and taxi drivers, which will benefit around 40,000 young individuals. A total of 100,000 helmets will also be distributed for free to promote road safety. 

Construction and maintenance of roads 

The budget aims to improve road infrastructure and safety with the government's commitment to respond within 24 hours upon receiving complaints about damaged federal roads. The state governments are empowered with a budget of RM 5.4 billion from MARRIS to maintain state roads. Furthermore, an amount of RM 2.8 billion will be allocated for the maintenance of federal roads and bridges. 

The government has also allocated RM 100 million for the replacement of street lamps with LEDs, which will lead to electricity savings of up to 60%. For the same purpose, local councils will also get RM 50 million. Additionally, RM 50 million will be used for enhancing safety at high-accident-rate locations and the installation of smart traffic lights to promote smoother traffic flow. A total of RM 1.63 billion is also earmarked for the construction and upgrade of rural and kampung roads.

And with that, we've covered the key takeaways for the auto and transport sector in Budget 2024.

Also read: 7 Upcoming electric cars in Malaysia 2023-2024