KL scorns damage claims for car tariff delay

KL scorns damage claims for car tariff delay

KUALA LUMPUR (Reuters): Malaysia on Thursday dismissed regional neighbors' complaints about its plans to delay import tariff cuts on cars, adding critics had scant cause for compensation.

Without referring by name to Thailand, with whom Malaysia is in dispute on the car tariffs issue, Malaysian Trade Minister Rafidah Aziz said countries seeking redress for the planned two- year delay sold very few vehicles in the country.

"Really, they do not have ground to stand on, they do not have significant supply," Rafidah said in a speech to Malaysian business executives.

"They should not be aggrieved really if we delay by two years. They are not really principal automobile suppliers to Malaysia," she said, adding Japan and South Korea held far bigger shares.

Malaysia, Thailand, Brunei, Indonesia, the Philippines and Singapore have an Association of South East Asian Nations Free Trade Area (AFTA) agreement to slash tariffs on cars and car parts to a maximum five percent by the end of 2002.

But Malaysia persuaded its neighbors to grant it a two-year reprieve on cutting car tariffs, which can be as high as 300 percent on imported vehicles and about 42 percent on average, to protect its national car Proton.

"The reason is because of the recession, that's affected very badly the automotive industry. We want to ensure our automotive industry gets back on its feet," Rafidah said.

Last month, Thailand gave Malaysia until August 10 to come up with a list of trade concessions to compensate for its decision to retain the tariffs.

Boontipa Simaskul, head of Thailand's Department of Business Economics, said the government would announce a retaliation plan after October 16 if it was unsatisfied with Malaysia's proposals.

The Association of South East Asian Nations groups the countries of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.