ASEAN should stick to AFTA plans: U.S. caremaker

ASEAN should stick to AFTA plans: U.S. caremaker

Eileen Ng, Agence France-Presse, Kuala Lumpur

Southeast Asia must stick to plans to open up its auto
industry by 2003 under regional a free trade plan and not resort
to protectionist barriers to cope with a global slowdown, United
States carmakers said Monday.

Officials from General Motors Corp. and Ford Motor Co. told a
two-day auto conference here the region must also speed up
integration under the ASEAN Free Trade Area (AFTA) to compete
with emerging giant China.

Under AFTA, tariffs on automotive and other products will fall
to between zero and five percent at the start of 2003. Malaysia
has obtained a reprieve for its auto industry until 2005.

Ford's ASEAN (Association of South East Asian Nations)
operations president Gerald Kania said there was talk Malaysia
may further delay lowering car duties under AFTA, which would
"wreak havoc" on the region's manufacturing integration plans.

"We believe, although this is not confirmed, that the five
percent duty level will not be when they enter but three years
later in 2008," he said.

"ASEAN can only be competitive if it is viewed as one
region... but Malaysia's delay closes the largest passenger car
market in ASEAN to regional integration," he said.

Kania said ASEAN's auto sales estimated at just over a million
vehicles this year in five key markets -- Thailand, Malaysia,
Indonesia, Philippines and Vietnam -- still lag China's 2.4
million.

He said "forced local content rules and parasitic taxes" in
ASEAN had kept vehicle prices artificially high and suppressed
production volume.

He urged Malaysian national carmaker Proton and other regional
producers not to "protect themselves with nationalism" but seek
out strategic alliances to boost their competitiveness.

"Without AFTA, it is going to be very, very, very difficult to
encourage more foreign direct investment," he added.

General Motors group vice president Rudy Schlais Jr. said
ASEAN's auto sector had been set back by three to four years by
the 1997 regional economic crisis, and last month's terror
attacks on the U.S. worsened its prospects.

He noted there was a "growing resistance to globalization"
with luxury taxes replacing lower duties for cars.

"Resistance to globalization is an easy way out, a quick-fix
of sorts, but it's going to be most disastrous over the long-term
-- disastrous to the consumer and disastrous to the economy of
the country," Schlais warned.