Commentary: Malaysia PM Anwar signals serious economic reform with Tesla coup – can he pull it off?

Under the system, so-called licensees are granted APs, which every car manufactured or assembled outside the country must secure before it can be imported or sold locally. No open bidding is involved in the award of APs, which are issued by the Ministry of International Trade and Industry to ethnic Malay investors and the recipients are automatically endorsed as qualified importers.

Before long, the AP system was viewed as a political tool to enrich businessmen linked to the ruling United Malays National Organisation (UMNO), with reports of some selling their import APs to other auto distributors for between RM10,000 (US$2,180) and RM50,000 per vehicle. 

The licensing system later went on to cover foreign-built trucks and motorcycles before covering other food items. While the government has removed some food items from the AP list to deal with the shortages of vegetables, such as the round cabbage, import permits are still required to bring these items into the country.

Advisors to Mr Anwar insist that a radical revamp of the AP system will help deal with the cost-of-living issues that is a top priority for the government. This comes as Malaysia grapples with intense competition from countries such as Indonesia, Thailand and Vietnam to attract foreign capital from the region.

There is little argument that the AP system represents a serious impediment to the economy.

Previous UMNO-led governments had set deadlines in 2010 and then in 2014 to begin phasing out the import-licensing system. But the pushback from the Association of Malay Vehicle Importers and Traders of Malaysia, or Pekema as it is known in its Malay language acronym, forced the government to back down because the grouping forms a strong lobby in UMNO.