Malaysia urged to delay auto tariff cuts to 2008

Malaysia urged to delay auto tariff cuts to 2008

Reuters Kuala Lumpur

Malaysia should delay cutting auto import tariffs for three years beyond 2005 because local car and car component makers are unlikely to be ready to compete until then, a leading industry executive said on Wednesday.

"It would be more ideal if we open our market only in 2008," Koo Sian Chu, executive director of APM Automotive Holdings, told an economic conference in Kuala Lumpur.

Koo's company is one of the country's largest auto parts makers, with annual revenues of over US$150 million.

His comments came just hours after Prime Minister Mahathir Mohamad, fresh from a meeting of ASEAN leaders in Brunei, said foreign companies could be out to use free trade as an excuse to "hijack" domestic markets in the region.

"Seeing the potential of the much-enlarged markets, foreign corporations would bid to monopolize it by setting up so-called 'national industries' which are owned by them while the locals will only work for them with little ownership and technology transfer," Mahathir said at a regional oil and gas conference.

Under ASEAN Free Trade Area (AFTA) agreements, southeast Asian nations are scheduled to slash tariffs on imported vehicles to between zero and five percent by end-2002.

Malaysia has already broken away from the pact, saying it will cut import tariffs only in 2005 to give local players including national carmaker Proton more time to prepare for foreign competition.

Even that extra time may not be enough, Koo said.

"Malaysia is opening her market too soon because in AFTA we are not competing against Thailand or Indonesian automakers, but with global giants who are using these ASEAN nations as a base," he told an economic conference in the capital.

However, Koo said his own company APM was ready for 2005 and expected to gain more market share in the region.