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Tears were visibly shed. Jeers were loudly heard. Even the Holy Qur'an was not spared. The minister in charge had much explaining to do. The media had a field day.
Despite the hype and the hubris, the Approved Permit (AP) controversy is far from over. Many have remained unconvinced, not to mention the fiery backlash from the former prime minister.
Needless to say, there is much more to it than meets the eye. Nothing has changed. Nothing probably will. All this may well be unsurprising to the Malaysians who are used to what may be termed "business as usual".
The AP saga has been going on for years without fanfare shrouded in secrecy. It surfaced in full public view only when none other than the former prime minister chose to expose it recently.
The nation was told that, out of the 67,000 APs issued since January this year, 54,000 APs or 80.6 per cent had gone to just 20 companies, the remaining 12,600 APs going to another 82 companies.
When the government decided to release the list of AP holders, the so-called "AP Kings" hit the headlines. Subsequently, further revelations by MITI , due to pressure from upstairs, suggested the numbers were higher: 68,330 in 2005 and 66,277 in 2004.
Perhaps, it is unfair to read too much into its timing. Be that as it may, the government's decision to reveal the list was well received by the public. It was seen as a mark of good governance, very much in sync with the new administration's emphasis on transparency and accountability.
What is really disconcerting is that, at the end of the day, the questions raised on the AP issue were largely trivial, if not petty.
The demand on the minister for an apology to the ex-premier was peripheral, not central, to the controversy. It now appears that the Ministry of International Trade and Industry (MITI) has been simply continuing a practice that began in the mid-1980s, although the number of permits had exploded in recent times, apparently undermining the protection given to the national car makers.
Others seemed more perturbed by the highly skewed distribution of the APs, with the benefits being captured by a previleged few having "back-door" access to the facility.
There were even suggestions that the APs should be distributed to all UMNO branches instead.
Bluntly put, at the risk of exaggeration, many seemed angry that they did not get a piece of the pie. For, according to estimates, one could make RM20,000 by just parting with an AP or RM 40,000 by making an effort to transform an AP into actual import and sale of the vehicle.
Certainly, these are no paltry sums, especially when multiplied by the number of APs, which run into thousands in some instances.
It was indeed unfortunate that the most pertinent questions about the APs were neither raised nor answered.
Is there a rationale for the APs? If there is one, does the current practice do justice to the principle? Is this simply a question of equitable distribution with no concern for efficiency?
Are the APs an integral part of the automotive policy or simply an aberration?
Upon close scrutiny, the APs can have a meaningful and legitimate role to play in the national agenda for economic restructuring, if the scheme is well designed and implemented.
The APs can fit neatly into the New Economic Policy (NEP) strategy to create bumiputra entrepreneurs, especially in the automotive sector which has long been dominated by non-bumiputra players.
The AP system can break this monopoly and introduce competition that would benefit all consumers. Seen in these terms, the AP system is not about equitable distribution only. It has much to do with the question of efficiency as well. This would indeed be the case if the APs are distributed based on a well-conceived set of criteria.
While all this may sound re-assuring, the practice on the ground suggests otherwise.
All indications are that the APs, in practice, are dished out in a haphazard manner. The whole affair seems ad hoc with no evidence of any system or principle.
For starters, it is unclear how the AP quotas are fixed for any given year. Why 68,330 for this year? Why not more? Why not less? Is this number arbitrarily arrived at?
It is also unclear on what basis the APs are distributed among the various recipients. How can one explain why some could get a lot more APs than some others? Is the distribution purely discretionary? The danger is that, in the absence of a credible system, the proclivity for abuse tends to assume alarming proportions.
How can one ensure that the issuance of APs will not undermine the national car policy through unfair competition? Are the APs totally incompatible with the policy on national cars?
To be sure, it is not difficult to craft a tenable case for the APs.
As alluded to above, the APs can serve the NEP goals and national interests by striking a balance between equity and efficiency concerns. Much would, of course, depend on how they are administered. There is a certainly a need for a formula to determine the AP quota for a given year.
According to one estimate, imported cars represent roughly one-tenth of the total car sales in the country. Going by this measure, and given the domestic market size of 450,000 passenger cars, the number of APs should be in region of 45,000, not 68,000, for this year.
The formula should be flexible enough to allow for an incremental growth of APs from year to year. Once the number is fixed for a year, the allocation may be done on the basis of an "open tender" in a transparent manner, subject to a set of clear criteria which may include core competency, experience, performance and the like.
Admittedly, even this approach is not entirely fool-proof.
A better option would be to let the price mechanism do the trick by simply auctioning the AP quotas to the "eligible" bumiputra companies. It does not matter if the permits are subsequently traded among bumiputra entities.
This market-based instrument can ensure that the APs are distributed most efficiently. This would mean that only the more efficient companies can afford to buy the permits and profit from it. What is more, this would generate substantial revenue for the government.
The concern that the APs would threaten the national cars is misplaced. The so-called threat can be avoided if the APs are confined to the range of makes and models that do not overlap with that of the national cars, in which case the competition is only indirect.
According MITI, only 3 per cent of imported cars directly compete with national cars in terms of engine capacity. The national car makers would have a valid case against the APs, if the competition resulting from the latter turns out to be "direct" or "unfair". But, this need not be so.
Care can be taken to avoid direct competition between imported cars and national cars. Indirect competition from the APs is desirable, as it would force the national cars to be innovative. It is unfair competition arising from such alleged malpractices as false declarations by the AP holders that the national car makers need to worry about.
The national car makers cannot blame the APs for their own shortcomings. They are not safe even if the APs are abolished. Competition resulting from regional and bilateral free trade agreements will cause the national cars to lose their domestic market share, which can be compensated by increased exports only if they are internationally competitive.
The argument by some that Malaysia is too liberal with imported cars than South Korea and Japan is fundamentally flawed. That non-national cars account for less than 3 per cent of the total in South Korea and around 5 per cent in Japan, while the corresponding ratio is 27 per cent in Malaysia, does not necessarily mean that national cars in these countries receive are currently protected more.
The truth of the matter is that the South Korean and Japanese cars are so competitive on their own that foreign cars find it extremely difficult to penetrate into their markets.
The story in Malaysia is sadly the opposite. The Malaysian national car makers have only themselves to blame.
This line of reasoning clearly suggests that the APs have been criticized for the wrong reason. This does not mean all is well with the APs. It is now readily obvious that the scheme is full of holes with plenty of room for abuse.
Although the recent AP debate may have failed to raise the right questions, it was certainly a step in the right direction.
The solution is not to scrap the APs but to place them on an even keel with proper checks and balances.
Emeritus Professor Dr Mohamed Ariff, Executive Director, Malaysian Institute of Economic Research (MIER)
The interest of Proton must be protected at all cost as a national interest. To eradicate the malpractice of issuance of AP, I strongly suggest the award of APs be carried out vide tender process - similar to the award of COE by the Singapore government. This, apart from being fair, would also generate much revenue to the Government for development. Desmond Lim
For better and for worse, PROTON is now both a national symbol and a national business venture. It has made healthy profits in the business sphere and carved a huge space in the Malaysian psyche. It has survived much longer than the average political life of a Malay politician. It is here to stay.
Therefore, no Malay politician, at whatever position, would survive if she or he is proven, simultaneously, to have undermined this profitable business venture and belittled the nation symbol, in whatever way.
Professor Shamsul A.B.,
Director,
Institute of the Malay World & Civilization (ATMA)
Universiti Kebangsaan Malaysia
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