Malaysia slashed vehicle import duties on Wednesday with

Malaysia slashed vehicle import duties on Wednesday with effect from Jan. 1, a move one auto expert said would remove uncertainties about tariff adjustments and help to arrest falling demand.

Prime Minister Abdullah Ahmad Badawi, who is also finance minister, said the import duty on unassembled -- or completely- knocked-down (CKD) -- passenger cars from ASEAN countries would be cut to 25 percent for all engine capacities.

The duty for CKD passenger cars from countries that are not part of the 10-member Association of Southeast Asian Nations (ASEAN) would be cut to 35 percent, Abdullah said in a statement.

Import duties from CKD cars had stood at 42-80 percent.

At the same time, an excise duty of 60-100 percent will be imposed on both ASEAN and non-ASEAN CKD cars, compared to the current 55 percent, he said.

The import duty on assembled -- or completely-built-up (CBU) -- passenger cars from ASEAN will be reduced to 70-190 percent and that for non-ASEAN CBU cars would be cut to 80-200 percent.

These duties had been fixed at 140-300 percent.

Meanwhile the excise duty for ASEAN and non-ASEAN CBU cars was increased to 60-100 percent, Abdullah said. It had been at zero under the old structure.

The tariff structure on multi-purpose vans, four-wheel drives and motorcycles has also been revised.

Malaysian Automotive Association (MAA) president Aishah Ahmad said the announcement would remove consumer uncertainties about vehicle prices which had dampened buying sentiment.

"I think next year car sales will pick up. Many people had previously put off buying new cars," she told AFP.

MAA had said demand continued to suffer because consumers were still waiting for details of the tariff adjustment from January ahead of the market's liberalisation under the ASEAN Free Trade Area (AFTA).

Under AFTA, tariffs on most products in the region will fell below five percent in January but Malaysia has obtained a reprieve for its auto industry until 2005.