Is Malaysia’s used car industry on the threshold of reform?

Liberalising the vehicle inspection process can help restore public confidence in a system used by almost two million Malaysians annually.

By the middle of next month, Carro Technology will have officially launched eight licensed motor vehicle inspection centres (PPKM) nationwide, marking a significant milestone in the transport ministry’s efforts to liberalise vehicle inspection services and loosen Puspakom’s long-standing dominance in the sector.

Transport minister Loke Siew Fook, during a visit to Carro Technology’s Kajang Centre earlier this week, said more licensed players are expected to enter the market within the year.

For 32 years, Puspakom has been virtually synonymous with mandatory vehicle inspections in Malaysia.

While the company has played a vital role in standardising inspections and ensuring roadworthiness, the reality in recent years is that its processes have become increasingly challenging for motorists and especially for used car dealers.

The opening up of the sector to multiple operators, although currently restricted to private passenger vehicles, is therefore both timely and necessary.

Among the new entrants are Carsome through its Carsome Academy facility in Sungai Buloh, Car Medic in Kajang and Serdang, and Beriman Gold, which is expected to establish centres in Kuching, Miri, Sibu and Bintulu in Sarawak.

The transport ministry deserves credit for taking what is clearly a politically and administratively difficult step. Liberalising entrenched sectors is never easy, particularly when public safety and compliance standards are involved.

Still, industry players believe the reforms should not stop there.

Khoo Kah Jin, honorary secretary of the Federation of Motor and Credit Companies Association of Malaysia, welcomed the new inspection centres but noted that the ministry should have been more sensitive to cost concerns.

He says the B5 certificate for used-car transfers ought to be valid for one year, as is the case in Singapore and China.

“In this current situation of high fuel prices, it takes about six months to sell a used car. It used to be about two months. Now the B5 certificate is valid for only two months before the dealer has to renew it,” he said.

Another concern involves the B7 inspection certificate required for hire-purchase documentation.

At present, new operators are unable to provide B7 certification, as the inspection process demands substantially higher capital investment in specialised equipment and larger facilities. So for now, B7 compliance inspections will continue to be carried out at Puspakom centres.

Beyond this, Khoo said it was time for the ministry to extend inspections to cover completely built-up, or CBU, cars before they are released from port zones. This, he argued, is where liberalisation can be taken further.

By gradually removing price controls and allowing market-based returns, the government could encourage new operators to invest in the sophisticated infrastructure necessary for B7 compliance inspections.

Without sufficient commercial incentive, operators may focus only on simpler B5 inspections while avoiding the more expensive and technically demanding services that the industry also urgently needs.

The additional equipment required for B7 certification is designed for combustion vehicles, where engine numbers are generally accessible. But electric vehicles, which rely on motors and traction battery packs, present a new challenge – verifying serial numbers would be impossible without dismantling the car.

Ultimately, the success of these reforms will not be measured merely by the number of new inspection centres launched.

The real test is whether it will allow ownership transfers to be completed within days rather than weeks, and whether used car dealers no longer feel the pressure to pay “dark incentives” that dwarf the RM33 official inspection fee simply to accelerate routine processes.

If that happens, the transport ministry will not only have liberalised the sector, it will have gone a long way towards restoring public confidence in a system used by almost two million Malaysians every year.

Yamin Vong is on Facebook at yamin.com.my, and can be contacted at [email protected].

The views expressed are those of the writer and do not necessarily reflect those of FMT.