Many things have been said about the mandatory inspection for 15 year old cars and older. Most emotionally charged, some in defence by cybertroopers.
The government is attempting to generate demand for locally produced cars by bending market forces. This will be a disaster.
But I think in conclusion, whatever the government does will have a cascading effect to the mind set of consumers, in this case negatively.
Increase the cost of ownership of one good (shorten the lifespan of one, increase the ave cost of ownership), there will be a corresponding drop in demand for other goods, all things being equal. When demand drops in one industry, revenue and demand in other industries drops in its wake. One can’t even begin to calculate what the cost to the country will be even with a simple change in transporation legislation.
If you subscribe to Friedmans’ Permanent Income Hypothesis in Economics, any increase in income (in this case, the increased cost) will affect the consumers’ propensity to spend, Somehow, this increase in cost has not been balanced by an “expected” increase in income (with inflation and economic slowdown, everyone expects reduction in net income), leading to lower overall demand and lower ultimate GDP.
I wont buy that big screen TV, renovate my house, buy that new computer and go out to eat less knowing that in a year or two I will have to buy a new car to have the previlage not have to deal with Puspakom. This is how bad it can be.
Mandatory inspections are a good thing, so is mandatory scrapping. Unfortunately, the TIMING of this and it’s INTENTIONS are mis-placed.
Malaysia is not ready for this.
