Indonesia regrets KL's proposal to delay cut in tariffs
Indonesia regrets KL's proposal to delay cut in tariffs
JAKARTA (JP): Minister of Industry and Trade Rahardi Ramelan
said on Monday that Indonesia regretted Malaysia's proposal to
delay the cut in tariffs on automotive products by the year 2000
as agreed to in the Association of Southeast Nations (ASEAN) Free
Trade Area (AFTA).
Rahardi said Malaysia wanted to include automotive products as
well as several others on the list of products exempted from the
liberalization of tariffs in the year 2000.
"The Malaysian government is now seeking support to delay the
implementation of tariffs cut by the year 2000. Their appeal will
be taken to the AFTA council meeting in September," he told
reporters following his visit to Malaysia last week.
Rahardi said automotive products were now put on the list of
products "temporarily excluded" from liberalization of tariff
cuts in AFTA, meaning that they would be exempted from a tariff
cut until the year 2000.
Under AFTA, tariffs of automotive products will be cut to a
maximum 20 percent by the year 2000, and will be cut further to
between zero and five percent by 2003.
AFTA aims to create a more liberalized trade area within the
region by cutting various tariffs to between zero and 5 percent
by 2003.
Rahardi said Indonesia regretted Malaysia's appeal to delay
the tariff cut even though the delay would basically benefit
Indonesia.
"If Malaysia's appeal is accepted, we will have more time to
improve and develop our small sedan industry. But we regret the
Malaysian government's appeal because it does not support the
free trade program," the minister said. He added that if the
tariff was cut, producers of small sedans would be hard hit by an
inflow of Malaysian sedan products, such as the popular model
Proton.
Rahardi said Malaysia was afraid that its automotive industry
would be hurt by the inflow of small sedans from Thailand and
commercial vehicles from Indonesia if the tariff cut was
implemented next year.
"I think Malaysia should not be afraid of competition from
Thailand and Indonesia because they are already a noted producer
of automotive products, especially sedans," he said.
Rahardi said the Indonesian automotive industry was ready to
face the liberalization despite tougher competition.
"We have set up a broad-based automotive industry supported by
a broad-based automotive policy. There is no need to be afraid of
competition," he said.
AFTA was formed in 1967 by ASEAN groups Brunei, Indonesia,
Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and
Vietnam.
ASEAN has pledged to bring down tariff levels to zero for
about 1,500 product lines by the year 2000. (gis)