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)