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.