`Malaysia aims to become a SE Asian auto hub'

`Malaysia aims to become a SE Asian auto hub'

Agence France-Presse, Kuala Lumpur

Malaysia aims to become a regional hub for the auto industry in Southeast Asia, a senior minister said Tuesday.

"After all, with rapid advancement in technology, automotive production is no longer about cheap labor assembly and manufacturing," Trade minister Rafidah Aziz said in a statement.

"Malaysia is well placed to be an efficient and cost effective regional production and distribution base," she said.

Rafidah was speaking at the launch of the Inokom ATOS vehicle, which is jointly produced by Malaysia's Inokom Corp. and Hyundai Motor Co. of South Korea. The one liter engined vehicle is produced in the northern Kedah state.

Inokom said it hopes to manufacture 10,000 to 15,000 of the vehicles annually and was eying the regional market for exports.

Rafidah said companies such as Inokom and Hyundai should work together to make Malaysia a regional hub.

Malaysia is among the top four auto markets in ASEAN, along with Thailand, the Philippines and Indonesia.

But analysts have said Malaysia is losing out to Thailand, which has emerged as the regional manufacturing base in Southeast Asia due to its lower costs and liberal investment rules.

Thailand allows foreign manufacturers to hold 100 percent ownership, compared to Malaysia which has set a 51 percent ceiling and stipulates the involvement of a local partner, one industry observer said.

Thailand is expected to lead other regional producers by assembling 940,000 vehicles -- or 48 percent of regional production -- in 2006.

Malaysia said Monday it will cut tariffs on imported cars from Southeast Asian countries from next year but will offset the reductions with higher excise duties.