KL to slash import duties on Southeast Asian cars

KL to slash import duties on Southeast Asian cars

Associated Press, Kuala Lumpur

The Malaysian government will cut tariffs on imported cars from Southeast Asian countries beginning in 2003, the trade minister was quoting as saying Monday.

Rafidah Aziz told reporters that automobile import duties would eventually fall to 20 percent by 2005 from current levels between 42 percent and 300 percent, the national news agency Bernama reported.

The tariffs were supposed to be slashed by 2003 under a free- trade pact among members of the Association of Southeast Asian Nations, but Malaysia negotiated a two-year extension to let local automakers prepare for stiffer competition.

However, the government will impose excise duties on both imported and Malaysian vehicles starting next year, the minister said. Fully assembled imported cars are currently exempted from duties, which are generally imposed on locally manufactured goods.

Malaysia's government presently collects an estimated 1 billion ringgit (US$262 million) annually from import duties on cars. They range from 42 percent to 80 percent for kits and up to 300 percent for fully assembled vehicles.

ASEAN also includes Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Malaysia's two national car manufacturers, Perusahaan Otomobil Nasional, or Proton, and Perusahaan Otomobil Kedua, currently have a combined market share of around 75 percent in Malaysia. The government is a controlling shareholder in both companies.

The two car makers will likely face stern competition from neighboring countries such as Thailand, a major car assembler and exporter, when import tariffs are dismantled.