Malaysia: Electric Dreams: An Introductory Overview Of The Legal, Policy And Regulatory Landscape Of Electric Vehicles In Malaysia

Electric vehicles (EVs) are rapidly transforming the global automotive landscape, offering a sustainable and environmentally friendly alternative to traditional fossil fuel-powered vehicles. Here in Malaysia, the use of EVs appears to be gaining popularity, with the entry of American EV giant Tesla and other competing EV manufacturers such as BYD entering the market. These developments are very much in line with the policy goals set in the government's National Energy Transition Roadmap ("NETR"), moving into renewable and sustainable energy sources and in line with a growing emphasis on ESG.

This article provides a high-level introduction to some pertinent legal/regulatory/policy aspects of the electric vehicle landscape in Malaysia. This article will focus on 3 main aspects – incentivisation, import opportunities and regulation, and charging infrastructure.

Preliminary

A preliminary point to note is that there is currently no singular legislation governing EVs in Malaysia, nor is there any primary legislation specifically addressing or governing EVs.

Incentivisation

In recent years, the Malaysian government has been seen to be committed to supporting and encouraging the use of EVs in Malaysia, which in turn aims to boost and support the growth of the EV industry in Malaysia and is also part of its efforts to attract foreign investments in this sector.

Below are some pertinent incentives announced by the Malaysian government in this regard: –

• Completely built-up ("CBU") (assembled outside of Malaysia and imported as a whole) and completely knocked down ("CKD") (assembled in Malaysia with imported parts) EVs that are imported into Malaysia are exempt from the usual import duties and taxes.
• All CBU EVs imported into Malaysia are currently exempt from import and excise duties, and this exemption will subsist until 31^st December 2025¹. CKD EVs are also exempt from excise duty and sales tax, until 31^st December 2027².
• EVs in Malaysia (battery and fuel cell EVs only) are currently exempt from road tax payments, until 31^st December 2025³, as announced by the Ministry of Finance in 2022. It was further announced by the Transport Minister on 6^th November 2023, that a new road tax structure for EVs (to come into effect after the current exemption period lapses) will be announced before the end of the year. This new road tax structure is intended to lessen the financial burden of owning an EV so as to encourage a higher rate of EV usage in Malaysia.
• For manufacturers of EV charging equipment, the government has suggested tax incentives including 100% income tax exemption on statutory income from years of assessment 2023 until 2032.⁴

Import Opportunities and Regulation with RTD

For companies seeking to carry out EV importation activities into Malaysia, this section sets out some pertinent licensing/regulatory issues to look out for: –

• Generally, it is important to note that an Approved Permit ("AP") is required to be obtained. This AP is an import licence issued is issued by the Ministry of Investment, Trade and Industry ("MITI"), pursuant to Customs Act).
• Do also note that all vehicles, including EVs, will need to be registered with the Road Transport Department or Jabatan Pengangkutan Jalan ("JPJ") – among these registration procedures is an application for vehicle type approval ("VTA"). VTA is a procedure conducted on all vehicle models before registration is awarded, and this specific approval is intended to regulate (among others) dimensions, specifications and build characteristics of vehicles used in Malaysia, and to ensure that these compliant with the requirements of the Road Transport Act 1987 and its subsidiary legislation (such as the Road Transport Rules).

Charging Infrastructure

With the rising popularity of EVs and various government incentives pushing for the use of EVs, comes a growing market for EV charging infrastructure in Malaysia. In fact, the Malaysian government has recently announced its aim to install a minimum of 10,000 electric vehicle charging bays ("EVCB(s)") nationwide by 2025.

Below is an overview of two major guidelines issued governing EV charging infrastructure in Malaysia.

Energy Commission ("EC") Regulation and Licensing, and Guide on Electric Vehicle Charging Systems ("EVCS")

a) The EC, being the national regulator for the energy sector, has published a Guide on Electric Vehicle Charging Systems ("EC Guide on EVCS")⁵.

b) The EC Guide on EVCS sets out important requirements and specifications to be adhered to in terms of installation, operation, maintenance, safety, power quality and licensing for EVCS and applies to any person who provides or utilises any EVCS in Peninsular Malaysia, Sabah and the Federal Territory of Labuan.

c) The EC Guide on EVCS sets out, among others, specifications for installation of different modes of charging, appointments of a competent person to oversee the same, safety guidelines and measures to be taken for EV charging facilities, general operation, maintenance and protection measures, as well as setting out a safety audit requirement.

d) While the EC Guide on EVCS currently does not set out consequences of non-compliance nor its effect (ie. whether compliance is mandatory or if the same is merely guidance), do note that ultimately, the provisions of the Electricity Supply Act 1990 and all its subsidiary legislation (such as the Electricity Regulations 1994) will apply as a matter of law to EVCS.

e) It is pertinent to note that charge point operators and distributors will require an EVCS public distribution licence issued by the EC prior to commencing operations (pursuant to Section 9 (1) of the Electricity Supply Act 1990). In fact, the EC has previously issued a statement dated 16th December 2022, urging charge point operators involved in developing EV charging infrastructure to obtain such a licence prior to commencing operations, failing which, such charge point operators would be committing an offence pursuant to Section 37 (5) of the Electricity Supply Act 1990 and would be liable upon conviction, to a fine not exceeding RM100,000 and further fine not exceeding RM1,000 for a continuing offence after conviction.

f) It is worth noting that the EC has on its website ⁶, published a guide specifically on the EVCS public distribution licence application process. Pursuant to this guide, all applications are to be made online, together with submission of supporting documentation as required by the online application form. The EC is empowered by Section 9 (7) of the Electricity Supply Act 1990 to impose or amend any terms and conditions on these licences from time to time. Additionally, licensees may be required by the EC to submit business plans and proper annual accounts (pursuant to Sections 9A and 9D of the Electricity Supply Act 1990), among others.

2. EVCB Planning Guidelines

a) The Local Government Development Ministry through the Town and Country Planning Department ("PLANMalaysia") has also recently published its EVCB Planning Guidelines (dated 27th September 2023) ⁷ ("EVCB Planning Guidelines").

b) The EVCB Planning Guidelines aims to provide guidance to all parties involved in the planning, designing and development process of implementing or deploying EVCBs (including operators and state and local authorities).

c) The EVCB Planning Guidelines are extensive and cover two main scopes – guidelines on the planning and design of EVCBs, which must comply with the Fire Safety Guidelines for On-Premises EVCBs issued by the Malaysian Fire and Rescue Department, and the Manual OSC 3.0 Plus construction and approval guidelines issued by the Local Government Development Ministry.

d) Among others, the EVCB Planning Guidelines stipulate requirements and considerations for location and placement (indoor/outdoor/unenclosed) of EVCBs, size of EVCBs, as well as other safety and precautionary measures to be taken.

Future Developments

To conclude, it is clear that apart from growing market and business opportunities in Malaysia for EV manufacturers and distributors, the same can be said for the EV charge point operation and construction industry.

With a growing emphasis and awareness of ESG factors, particularly sustainability and climate consciousness, and the Malaysian government's efforts to bolster EV market growth in Malaysia, it is likely that Malaysia will witness further legal developments in this area. Stakeholders in these sectors should look out for such developments as well as to bear in mind existing guidelines and requirements.

Footnotes

1. Malaysian Ministry of Finance, 'National Budget Speech 2023' (February 2023). < https://belanjawan.mof.gov.my//pdf/belanjawan2023/ucapan/ub23-BI.pdf > accessed 24^th November 2023.

2. ibid.

3. Malaysian Ministry of Finance, 'National Budget Speech 2022' (October 2021). < https://belanjawan.mof.gov.my/pdf/2022/ucapan/bs22.pdf > accessed 24^th November 2023.

4. Malaysian Ministry of Finance, 'National Budget Speech 2024' (October 2023). < https://belanjawan.mof.gov.my/pdf/belanjawan2024/ucapan/ub24-BI.pdf > accessed 24^th November 2023.

5. Malaysian Energy Commission, 'Guide on Electric Vehicle Charging System (EVCS)' (August 2022). < https://www.st.gov.my/en/contents/files/download/142/GUIDE_ON_ELECTRIC_VEHICLE_CHARGING_SYSTEM_(EVCS)1.pdf > accessed 24^th November 2023.

6. Malaysian Energy Commission, 'Panduan Permohonan Lesen Awam (Pengagihan) Electric Vehicle Charging System (EVCS)'. < https://oas.st.gov.my/documents/22711/133e6493-250a-411a-b23d-1b1b43c87d4b > accessed 24th November 2023.

7. PLANMalaysia, 'Garis Panduan Perancangan Petak Pengecasan Kenderaan Elektrik (EVCB)' (September 2023).
< https://mytownnet.planmalaysia.gov.my/index.php/books/garis-panduan-perancangan-petak-pengecasan-kenderaan-elektrik-evcb/> accessed 24th November 2023.