Are You Paying Attention, Ong Tee Keat?

Today's piece by The Star has something interesting about car sales drop and hire interest rate hike in Malaysia. This is indeed predictable but the BN government is doing nothing so far to alleviate this problem.

PETALING JAYA: Car buyers will have to pay more in monthly instalments now that hire purchare interest rates have gone up.

Just a few months ago, banks offered interest rates at around 2.5%. Now, the rates are between 3.4% and 4.7% for new cars.

Maybank hire purchase senior manager Nor Siah Othman said the bank had experienced a drop of about 40% in car loan applications in the past two months due to higher rates.

She also advised car owners to restructure their loans to stretch the monthly payments longer after a few years of repayments if they find it a burden to service their loans.

A freelance car salesman identified only as Teo said a buyer taking a RM42,000 loan would have to pay about RM54,000 over seven years - about RM4,000 more compared to the RM50,000 paid when the interest rate was 2.7%.

AmBank group public relations manager Norlidah Abd Rahman said not all banks charged as high as 4.3%.

“If the car bought now did not carry extended warranty under comprehensive insurance, the interest rate could be as low as 3.6% - 3.9% too,” she said.

A hire-purchase executive from a major bank here said the rates were not expected to fall any time soon as banks were anticipating Bank Negara to raise the interbank rate that would affect the interest rates for housing and car loans.

She added that the Hire Purchase Act did provide for a variable rate option for car loan holders based on the base lending rate used by banks mostly for housing loans.

“But most customers do not choose the variable rate; most people prefer the fixed interest rate because they are lower,” she said.

Kuala Lumpur and Selangor Car Dealers and Credit Companies Association president Khoo Kah Jin said interest rates for new cars were not that high at between 3.5% and 3.7%.

He said there was no reason for used car interest rates to be as high as 4.5% - 7.5%.

Khoo said the association had always pushed for the interest rates for used cars to be only 1% higher that of new cars.

The current economic status in Malaysia is at the low point meaning as the result above, car sales are dropping. Chances are at the long run, the shops that sells second hand cars could had their businesses affected badly by this scenario.

One part of the reason why sales dropped is the high amount of import duty and taxes that forms part of the cost. If the government wishes to have every working citizen to own at least a vehicle, that's where the import duties and the taxes will have to drop. To offset the high amount of interest rates. People want to have good cars but could not do so because of the high import duty cost bundled together at the original cost.

So, right now, being the Transport Minister, you Mr. Ong Tee Keat will have to do something drastic to address that. Are you paying attention to this, Mr. Ong? MCA presidency is second to this matter right now. I'm helping you to priortize the order of events. You better do something drastic, frankly. This is my second time of me reminding you what you have to do.

Cut off that Mickey Mouse taxes.

If you are not paying attention, then there's something wrong with you and you should quit.