Singapore firms voice concerns over Johor’s levy on foreign vehicles

SINGAPORE — The Malaysian government’s decision to impose a levy on all foreign-registered vehicles entering Johor Baru has alarmed the business community in Singapore, with trade associations here saying they expect the move to increase costs for companies with interests across the border.

“Many of our members have business connections or factories based in Malaysia. We have also launched the Business Expansion Programme to specifically help companies to expand their businesses in Iskandar Malaysia and Riau Islands Indonesia,” said Mr Lam Joon Khoi, secretary-general of Singapore Manufacturing Federation (SMF). “As such, the introduction of an entrance fee for foreign vehicles will have an adverse impact on a company’s logistics and supply chain,” he stressed.

Mr Lam’s comment came a day after Malaysian Prime Minister Najib Razak confirmed plans to impose a Vehicle Entery Permit (VEP) fee on vehicles entering Johor Baru from Singapore. Malaysia’s decision follows Singapore’s announcement earlier this month that it would raise its VEP fee for foreign-registered cars to S$35 from S$20 from August.

Details on the exact fee and implementation timeline are still being discussed, but Johor Chief Minister Mohamed Khaled Nordin has previously proposed a levy of RM20 (S$7.80).

While that amount isn’t too expensive, it raises further questions on the escalating costs of operating in Malaysia, said Mr Kurt Wee, president of the Association of Small and Medium Enterprises (ASME).

“RM20 is not too significant when you add it onto a truckload of goods, for instance, nor will it deter businessmen from going into Johor for necessary meetings. But it’s certainly an added cost that will have at least a psychological impact on our members,” Mr Wee said.

“More importantly, it further diminishes Malaysia’s advantages for us. The place is already becoming not as cheap as we’d hoped, not to mention the tightening labour market there.”

The Singapore government has often urged local small and medium enterprises (SMEs) seeking expansion overseas to consider Iskandar Malaysia as an option, highlighting the various benefits the special economic zone in Johor Baru can offer, including lower costs, a greater supply of land and proximity to Singapore.

Singapore is the largest foreign investor in Iskandar, having committed investments of RM11 billion as of April this year.

Instead of straining the business synergy between companies on both sides of the border, Malaysia’s VEP plan will improve the efficiency of transportation in the region, Mr Ismail Ibrahim, chief executive of the Iskandar Regional Development Authority (IRDA), told TODAY.

IRDA is not worried that the VEP fees will scare away Singapore businesses, Mr Ismail said. “As a matter of fact, IRDA is more worried that a lack of traffic flow management would be a bigger factor that could curb cross-border business activities,” he said.

“We look at the big picture. If we were to make the aspirations of the ASEAN Economic Community a reality, then we need to establish good inter-city and inter-regional transportation links that would enable productive movement of talents, goods and services,” said Mr Ismail. “We take cognizance that at the current capacity, there must be a mechanism to efficiently and effectively manage the flow of land traffic, especially private vehicles and heavy goods vehicles coming into Johor from Singapore. The VEP fees could be such a mechanism.”

The levy also corresponds with bilateral efforts to establish better cross-border transportation infrastructure, Mr Ismail said, referring to the proposed rapid transit system and high-speed rail link projects.

“We are also keen to develop water-based passenger transportation across the Strait. We have developed the infrastructure, such as Puteri Harbour Terminal in Nusajaya, that could serve the purpose,” he added.

Source: Today

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Singapore firms voice concerns over Johor’s levy on foreign vehicles

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