Carmakers' dream becomes Asia's traffic nightmare

By Sharon Singleton

HONG KONG (Reuter): Asia's booming economies are a carmakers' dream, but with gridlocked traffic and chronic air pollution that dream has collided head-on with an environmental nightmare.

Asia's major cities are reaching crisis point as traffic congestion becomes the number one priority for governments grappling with the dilemma of rapidly developing economies outpacing infrastructure development.

But for car manufacturers, whose domestic economies are only now struggling out of recession, the new-found spending power in a region with more than half the world's population is too good an opportunity to miss.

General Motors, Mercedes Benz, Toyota and Honda are some of the big names looking to take advantage of cheap labor and low production costs by setting up manufacturing bases in Asia.

While governments are eager for the investment, the legendary traffic snarls and pollution -- so bad that Malaysia, Singapore and Indonesia spent much of the summer enveloped in thick smog -- have forced an urgent rethink.

In Bangkok, where the traffic and pollution problems are the region's worst, new car and motor bike sales are growing at 13 percent annually compared with just one percent growth in new roads.

The sales are booming despite a 257 percent tax on imported vehicles with engines bigger than 3,000 cc.

In a belated effort to tackle the problem, the government is introducing 210 vehicle testing centers to eliminate defective vehicles, but any strict enforcement of emission levels is thought to be unlikely.

Work has also begun on an elevated rail system for the Thai capital after years of wrangling, and a new motorway to the airport is scheduled to open in December.

But most observers agree the problem is likely to continue for the near future.

Indonesia, where traffic problems are rapidly approaching the scale of Bangkok, is enjoying an unprecedented car sales boom and is wooing active investment in the sector.

Car sales are expected to hit 300,000 this year against 215,000 in 1993, with September sales hitting a two-year high. Jakarta's traffic congestion was highlighted in November, when it hosted the summit of the Asia Pacific Economic Cooperation (APEC) forum. Indonesians were given a two-day holiday to help clear the capital's streets and allow the motorcades of world leaders to pass unobstructed.

Nonetheless, General Motors of the United States has set up a joint venture to assemble Opel cars. It hopes to sell 5,500 next year. Mercedes-Benz began making its first Asian-built small truck in Jakarta in June.

The story is the same in India, where an economic reform program has opened up the closed car sector to foreign investment, triggering a rush to capture a share of one of the world's largest potential markets.

Carmakers such as General Motors, Suzuki, Peugeot, Rover and Mercedes Benz have recently signed joint venture agreements in India but will be churning cars onto chaotic, hopelessly overcrowded roads.

India has 25 million vehicles, which will grow to 32 million in 1996 and 49 million in 2001. But this does not take into account the bicycles, bullock carts and other conveyances that clutter the streets.

The first concrete effort to reduce pollution will be the introduction of unleaded petrol by April 1, 1996. A recent attempt to ensure all cars had "pollution under control" stickers glued to their windshields fell by the wayside after a few months because there was no one to enforce the rule.

The Hong Kong government is eying an electronic road toll system similar to one used in the Norwegian capital Oslo to combat a growing traffic problem that has slowed cars heading for the harbor tunnels linking Hong Kong island to Kowloon peninsula to just 10 kph (six mph) -- slower than a bicycle.

The government has also proposed a stiff increase in the tax on new cars to 70 percent of its total value, from a current 40- 60 percent. Annual license fees would rise 40 percent.

Just 13 percent of households own a car in Hong Kong, but there is one vehicle for each 3.7 meters (12 ft) of road space.

Private vehicles are growing at a rate of 10 percent a year. In the Philippines, where cars sales have grown an average 30 percent over the last two years, Manila officials are planning to enforce travel restrictions on a main thoroughfare in peak hours.

The officials are also considering a pooling system that would ban cars from the main highways unless they are carrying four passengers.

Only Singapore has managed to escape the Asian traffic nightmare, introducing draconian measures to combat pollution and congestion.

To help traffic flow smoothly, the government has spent Singapore $1.5 billion ($1 billion) to build and upgrade roads in the last five years. It plans another S$1.5 billion for roads over the next five years, according to the Registry of Vehicles.

Singapore also has a car quota system that makes it one of the most expensive and difficult places to buy a car.