Just a day after Putrajaya announced 11 measures to reduce government expenditure, the Penang government is being caught in an uncomfortable position of having to explain why it bought a luxury car for its chief minister.

Penang Chief Minister Lim Guan Eng is one who is known for his frugality - who famously favours flying on budget carrier AirAsia over business class flights - but will now travel in a Mercedes Benz S300L which retails at RM657,218.

His party officials steered clear of the firing line, instead leaving Penang government financial officer  Mokhtar Mohd Jait to justify the purchase. 

In a press release today, Mokhtar said that the state received a heft discount and tax exemptions on the purchase, bringing the total bill for Penang ratepayers down to RM298,263.75.

"The Mercedes supplier had on Nov 20, 2013, offered a S300L at a price of RM298,263.75, exempted from tax and with a special discount of RM100,000.

"It is considered to be worth it as Mercedes vehicles are long-lasting and similar to the Mercedes Benz S320L used by former Penang chief minister Koh Tsu Koon, which was purchased on Sept 4, 1995," he said.

When the state purchased Koh's Mercedes Benz S320L in 1995, Mokhtar said, it was priced at RM271,331.22.

"The price 18 years ago is not much different from the new price (for Lim's vehicle)," he said.

Prior to this, Mokthar said, the chief minister and his exco members had refused to purchase Mercedes Benz cars for official use as the tax far surpassed the vehicle's cost.

Why they opted for Toyota Camry

He added that the vehicle supplier had also refused to provide a guarantee that they will take back the vehicle if the state failed to obtain a tax exemption.

"Therefore, the chief minister and exco had chosen to purchase 15 Toyota Camry 2.5, which came without tax. The vehicles were handed to the state government on Oct 31, 2013," he said.

However, following the latest proposal by the Mercedes supplier, Mokthar said, the state government took up the offer but only for one vehicle, for the chief minister.

He added that Lim's old Toyota Camry 2.5 would be handed over to house deputy speaker Maktar Shapee.

"The Penang chief minister's privileges allow him to own two vehicles, namely Mercedes Benz S400 and Mercedes Benz S300.

"The Penang chief minister is currently using only one vehicle," Mokhtar said.

Green light from Karpal

Met at a function in Penang today, Lim was asked if the purchase of the new car was badly timed, to which he replied: "This is the decision made by exco… We accept the opinion and perception by the public."
 
He added that the deal was "value for money" and it will beneficial in the long term.

Meanwhile, in a separate statement today, DAP national chairperson Karpal Singh defended the Penang government for purchasing the new car.
 
"This is befitting the chief minister's dignity and status. No one should begrudge the chief minister this privilege.
 
"He has earned it having regard to Penang having grown by leaps and bounds under his stewardship since 2008,' he said.