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The Star

For the very rich, a dream car like a Ferrari, Lamborghini or Porsche used to cost 2.5 million ringgit (US$617,240) in Langkawi, a duty-free island in Malaysia’s Kedah state. They will now cost about 5 million ringgit.
Industry players say the federal government’s move to abolish tax exemptions for luxury vehicles priced above 300,000 ringgit in Langkawi is expected to hurt the automotive sector and reduce long-term government revenue.
Industry veteran Mohamad Azhar Mohd Jamil said the decision would affect dealers and weaken tax collection over time.
“About 90 per cent of Ferrari cars and several other luxury brands in Malaysia were registered in Langkawi because of its tax-free status,” he said.
If luxury vehicles could no longer be sold, he said, the government would lose corporate tax and customs-related revenue.
“Even after three or four years, vehicle owners are still required to pay customs-related charges and corporate tax every year. With this move, the government would suffer losses from the start,” he said.
Mohamad Azhar also said there are still no clear guidelines on how the policy would be implemented.
He said the uncertainty was already being felt, with dealers reporting cancellations.
“I have many friends who are dealers and they were complaining that a large number of vehicle bookings had been cancelled this month because of the decision,” he added.

Another industry veteran, Ong Seng Aun, urged the government to review the move, warning it could have wider economic consequences.
He said the tax-free incentive had made Langkawi an attractive venue for luxury car brands to hold global product launches, drawing customers and enthusiasts from around the world.
“These events stimulated tourism and benefited hotels and local businesses. The spillover effect created multiple economic benefits for Langkawi,” he said.
Ong said the presence of luxury vehicles on the island generated steady spillover revenue as owners required the cars to be properly maintained, securely stored when they were away and customised locally, creating ongoing business for specialised workshops, logistics operators and service providers.
“High-net-worth individuals often bought luxury vehicles in Langkawi for leisure use on the island,” he said.
“Those intending to bring vehicles out of the island were required to provide a bank guarantee to customs, which safeguarded government interests while allowing flexibility for owners.”
Ong also said the existing mechanism had been effective in regulating the movement of tax-free vehicles.
“Removing the incentive could weaken Langkawi’s appeal as a luxury automotive hub,” he said, urging the authorities to engage industry players before finalising the policy.
A Ferrari previously cost between 800,000 ringgit and 1.5 million ringgit, depending on the model and specifications, while brands such as Lamborghini and Porsche could reach 2.5 million ringgit.
Without tax exemptions, buyers are now expected to pay about 100 per cent more.
Kedah Chamber of Commerce and Industry committee member Edison Ooi said the move could have wide-ranging effects on Langkawi’s economy, affecting logistics, hotels and the broader tourism ecosystem.
“Many people could lose their jobs as the industry generated significant employment opportunities across the island,” he said.
Ooi said residents were not opposed to change but any new measures must bring clear benefits to the community.
“We are ready to support and collaborate with the government. What we need is a well-thought-out plan that supports the island’s economy,” he said.
He suggested that maintaining tax exemptions for supercars, which continued to attract high-value tourists and investors, would help sustain jobs and encourage investment in luxury services and hospitality.
During the tabling of budget 2026, Prime Minister Anwar Ibrahim said luxury vehicles valued above 300,000 ringgit in Langkawi and Labuan would no longer enjoy vehicle tax exemptions from this year.
This story was first published by The Star


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Supercar dealers report cancellations as the tax exemption removal threatens the local economy, tourism and jobs


Supercar dealers report cancellations as the tax exemption removal threatens the local economy, tourism and jobs.


Anwar Ibrahim

Ong Beng Seng

Malaysia’s super-rich get cold feet as Langkawi luxury car tax perks vanish

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Supercar dealers report cancellations as the tax exemption removal threatens the local economy, tourism and jobs

Supercar dealers report cancellations as the tax exemption removal threatens the local economy, tourism and jobs