ASEAN gives KL more time to cut car tariffs<\/p>\n
SINGAPORE (Reuters): Southeast Asian governments on Thursday
\ngave Malaysia a two-year reprieve before it has to cut tariffs on
\nits struggling car industry as part of a free-trade drive to
\nsharpen the region's global competitiveness.<\/p>\n
Economy ministers of the Association of Southeast Asian
\nNations (ASEAN) signed a protocol granting temporary exclusions
\nfrom its timetable to slash tariffs on 85 percent of goods
\ncategories to between zero and 5 percent by the end of 2002.<\/p>\n
Ministers, anxious not to miss out on the global boom in trade
\nand investment, insisted that the exemption would not derail
\ntheir drive for open markets.<\/p>\n
\"We have agreed that ASEAN will have to make ourselves more
\nattractive,\" Supachai Panitchpakdi, Thailand's deputy prime
\nminister and commerce minister, told reporters.<\/p>\n
\"We have to be more persistent with our own free trade
\narrangement and with our own domestic macroeconomic policies,\"
\nSupachai, already picked as the next head of the World Trade
\nOrganization (WTO), added.<\/p>\n
Ministers were meeting to clear the way for an ASEAN summit
\nthat starts with a working dinner on Thursday.<\/p>\n
The 10 leaders of the bloc, many of them mired in political
\ntrouble at home, will be joined on Friday by their opposite
\nnumbers from Japan, China and South Korea.<\/p>\n
Malaysia will now have until 2005 to slash tariffs, which can
\nreach 300 percent on imported cars. Tariffs on imported auto
\ncomponents range from 42 percent to 70 percent except for the
\nnational carmaker, Perusahaan Otomobil Nasional Bhd., or Proton,
\nwhich pays just 13 percent.<\/p>\n
Malaysia's move has angered Thailand, where multinational car
\nmakers have invested heavily and are banking on increased exports
\nto countries such as Malaysia. The two governments will meet next
\nmonth to discuss compensation.<\/p>\n
Officials fear other countries, still not fully recovered from
\na financial crisis in 1997 that plunged wide swathes of Asia deep
\ninto recession, will also take advantage of the exemption clause
\nto delay opening up sensitive sectors.<\/p>\n
As well as Malaysia, ASEAN groups Singapore, the Philippines,
\nThailand, Brunei and Indonesia plus four poorer countries that
\njoined more recently -- Myanmar, Laos, Cambodia and Vietnam.<\/p>\n
Although any ASEAN country can apply for a time-out, the
\nprotocol was drafted after Malaysia asked for more time to
\nprepare Proton for the onslaught of foreign competition.<\/p>\n
Tengku Mahaleel Ariff, Proton's chief executive officer, said
\nlast week that the auto maker, which has about 65 percent of its
\nhome market, would find it hard to compete if the high tariff
\nwalls were torn down right away.<\/p>\n
Malaysia distrusts the accelerating trend toward integrated
\nglobal markets and swam against the tide following the Asian
\ncrisis by imposing capital controls to deter foreign speculators.<\/p>\n
But Malaysian officials, while wary of the rush to free
\nmarkets, insist they are four-square behind ASEAN's drive for
\nfree trade and investment.<\/p>\n
In last month's budget the government said it would permit
\nforeign equity ownership in Proton and Malaysian Airline System,
\nanother national status symbol.<\/p>\n
By and large, Malaysia's neighbors are sympathetic to its plea
\nfor more time.<\/p>",
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