Maybank IB: Policy uncertainty clouds Malaysia’s automotive shift to electrification

KUCHING (Jan 15): Malaysia’s automotive supply chain is expected to move from a demand-led recovery into a more structurally driven phase centred on electrification and localisation, according to Maybank Investment Bank (Maybank IB).

However, the research house in a note on Tuesday said the transition is happening amid lingering policy uncertainty, with several key regulatory frameworks still awaiting finalisation.

One major overhang, it said, is the revised open market value (OMV) excise duty framework. The proposed changes would alter the excise tax base for locally assembled (CKD) vehicles by including non-manufacturing costs such as sales, administrative expenses and profit.

The revision was initially scheduled for January 2026 but has been deferred multiple times. The government has extended the waiver on certain excise inclusions until mid-2026 while the final OMV calculation methodology remains under review.

Maybank IB said the absence of definitive guidance complicates vehicle pricing strategies and could affect the competitiveness of CKD models, depending on the eventual methodology adopted.

“That said, according to the Malaysian Automotive Association (MAA), the authorities are striving to ensure that the revision has minimal to no impact on CKD vehicle pricing,” it said.

In addition, policy clarity around electric vehicles (EVs) also remains limited beyond the near term as the import and excise duty exemptions for completely built-up (CBU) EV has expired at end of 2025.

It said that the incentive framework is still unclear, along side the continuation of CKD EV incentives until end-2027.

“Authorities have indicated that discussions are ongoing on alternative support mechanisms to sustain EV adoption, however, details on the form, scale, and duration of any replacement incentives have yet to be announced.

“We believe this lack of clarity introduces uncertainty around the medium-term sustainability of EV demand once headline tax exemptions lapse,” it noted.

Furthermore, Maybank IB said that supporting policy instruments remain incomplete over the long-term electrification targets including achieving 20 per cent electrified vehicle sales by 2030.

The house stressed that beyond tax incentives, greater clarity is needed on supporting measures such as charging infrastructure mandates, financing schemes,
manufacturer incentives, and consumer subsidies.

Overall, the house has a ‘neutral’ stance on the sector with 2026 total vehicle sales projected at 790,000 units, same as its forecast for 2025.

“In 2026, the sector would need to balance structural shifts, intensifying competition, and policy changes, which could weigh on sentiment.

“We believe the lack of clarity around these policies could constrain planning visibility for original equipment manufacturers (OEMs), suppliers, and investors, particularly as cost structures, pricing strategies, and investment decisions increasingly hinge on the post-incentive and post-transition operating environment,” it said.