General Motors says Asia still protective
MANILA (UPI): U.S. automotive giant General Motors Corp. Saturday criticized persisting protectionism in some Asian countries, blocking Western car manufacturers from tapping the region's potential markets.
GM chief economist G. Mustafa Mohatarem said most of Asia's booming car markets remains untapped, except for Japan and South Korea, frustrating American car manufacturers' aim to cash in on the region's rapid growth.
"The problem in Asia Pacific is that each country has a large level of protection," said Mohatarem, one of some 550 top corporate officials attending the Asia Pacific Economic Cooperation Business Forum in Manila.
"It is very difficult for us (western carmakers) to achieve economies of scale," he told journalists.
Mohatarem cited China as a possible "explosive market," with the number of affluent Chinese amassing wealth and property increasing as rapidly as the economy grows.
He urged Asian countries to adopt policies in line with regional trade blocs' goals to liberalize trade and investments, including APEC and the ASEAN Free Trade Area.
"If they go in the direction of AFTA goals, there will be a substantial decline in car prices," he said. "But if they choose to remain to serve country-based market, this will hold back growth (in the industry.)"
AFTA aims to reduce tariffs by the year 2003 among the seven members of the Association of Southeast Asian Nations, which are the Philippines, Vietnam, Indonesia, Thailand, Malaysia, Brunei and Singapore.
Mohatarem also criticized an Indonesian car policy giving preferential tariff exemption to Kia Motors Corp., which has a joint venture with President Soeharto's son.
GM hopes the dispute would not reach the World Trade Organization, which implements the General Agreement on Tariffs and Trade.
"I'd rather have it settled now because this is when the markets are growing and this is when we have to make investment decisions," he said.
The United States, European Union and Japan threatened last month to file a complaint against the Indonesian national car policy favoring vehicles produced by Kia Motors.
The duty-free status of Kia Motors already has forced GM to stop one of two production lines as manufacturing became too costly, making Indonesia a tough market for Detroit's largest carmaker.
Mohatarem expressed hope U.S. Trade Representative Charlene Barshefsky could convince Indonesia its car industry will not benefit from a policy of protectionism amid a booming global market.
"We certainly hope that Amb. Barshefsky will be able to persuade the government of Indonesia that (the policy) is not in their long-term interest," he told journalists.