ALOR STAR: Abolishing or reducing taxes will not necessarily lower car prices, says International Trade and Industry Deputy Minister Datuk Mukhriz Tun Dr Mahathir.
Citing an example, he said hybrid cars were not taxed but they were not cheap either as the manufacturer have to make a profit.
He said hybrid cars in the United States were taxed but they were much cheaper as the market for such cars were vast there than in Malaysia.
"Car prices can be lowered without reducing tax. So, the government is negotiating with manufacturers as they have the capacity to reduce prices.
"And, this is a positive development as there are some companies which have reduced prices up to RM17,000," he told reporters after opening a gathering organised by Tekun.
He was commenting on the government's move to gradually reduce taxes on cars beginning this year.
Mukhriz said the government took several factors into account such as the economic impact on the country, manufacturer, industry operator and consumer.
"We have to strike a balance between all these. If we reduce car prices, companies would not make profits and investors will not set up plants in Malaysia. It's impact will be felt on the economy.
"What we are emphasising on is to reduce taxes without affecting revenue. What the opposition is suggesting in its manifesto can cost the government millions of ringgit in tax collection and a sharp increase in the number of cars on the road," he added.
Mukhriz said not all cars in Malaysia are expensive as there are cheaper cars if compared with car prices in Indonesia, Philippines and Thailand.
"The country's interest must be safeguarded. If people want cheaper cars than they should import them from China. We don't have to produce cars in the country but what will happen to our domestic car industry?" he said.
On Tekun, he said the agency was extending loans, irrespective of an entrepreneurs background.
Between 1998 and January this year, the agency disbursed RM2.46 billion in loans to 241,350 people.