VEP and RC expand Thailand border: Where does the Thai-Malaysian cross-border automobile trade go?

On May 28, Anthony Loke, the Malaysian Minister of Transport, stated that the current Road Charge (RC) and Vehicle Entry Permit (VEP) regulations implemented at the Malaysia-Singapore land border will soon be extended to the Malaysia-Thailand land border. To facilitate this expansion, the Ministry of Transport is inviting representatives from the road transport department (RTD) to submit proposals for the development and operation of the system.

Anthony Loke stated that any party proposing competitive proposals will be appointed and authorized by the department to manage the VEP registration and RC fee collection within the specified time limit, but the Ministry of Transport will not allocate any government funds for the development and operation costs of the system. All funds will be fully borne by the relevant parties. Proposals can be submitted starting July 1, with a deadline of September 1. Currently, the Ministry of Transport has invested approximately RM 150 million in the VEP on the Malaysia-Singapore border.

On June 24, the Ministry of Transport will hold a briefing for the relevant parties, focusing on the development and operation of the RC and VEP management system at the eight border entry points between Malaysia and Thailand.

The Vehicle Entry Permit (VEP) is a management measure enforced by the Malaysian government for imported vehicles. According to this policy, all vehicles imported into Malaysia must obtain a VEP to enter. This means that the cost of importing Thai vehicles into Malaysia will increase, as Thai-imported vehicles need to apply for a VEP to enter Malaysia, which includes permit fees, handling fees, inspection fees, and other fees. Thailan, as an automotive manufacturing hub in Asia, many international automakers choose to produce cars in here as a key to unlocking the Southeast Asian market. So with the implementation of the VEP policy, the ability of Thai-produced cars to penetrate the Malaysian market may be affected.

According to the latest data, Malaysia has surpassed Thailand to become the second largest car market in Southeast Asia, second only to Indonesia. This shows that the Malaysian market is a treasure land that cannot be ignored when considering the Southeast Asian market.

The development of things in itself is neutral, but there are different interpretations and feelings due to different standpoints. This policy may be beneficial for the local car market in Malaysia. The VEP policy will limit the number of imported vehicles and models from Thailand, and the car brands and models that Malaysian consumers can choose will be reduced. Therefore, when choosing a car, they will prefer Malaysian made cars. For the Malaysian government, the implementation of VEP permits and RC will also become a growth point for its fiscal revenue.