A blueprint to regulate Malaysia's protected auto industry that is expected to be announced in mid-2005 should encourage investment and ensure car prices remain steady, a minister said on Monday, according to Reuters.

The news agency said Malaysia is opening its auto sector to comply with regional trade rules, and the new policy is expected to address the future of protective barriers that have helped domestic car makers Proton and Perodua capture three quarters of the passenger car market.

"The government is in final consultations with industry to ensure price stability, and to promote investment for long-term viability of the automotive industry," trade minister Rafidah Aziz reportedly said at a dialogue with manufacturers without elaborating.

Reuters noted that the government has sheltered local car manufacturers for nearly 20 years by slapping steep tariffs on imported cars and having a vehicle import-licensing system that analysts say inflates the prices of imported vehicles. Under the system, licensees are given permits, which every car manufactured or assembled outside the country must secure before it can be imported and sold locally.

The cost of a permit is passed on by auto dealers to car buyers, the report added.

The news agency said foreign car makers are eager to see protective barriers come down and give them better access to Malaysia's passenger car market, one of Southeast Asia's largest.

Malaysia reportedly has been lowering tariffs to comply with rules under a regional trade pact, cutting the import duty to 20% from January 1 from as much as 190% for cars imported from fellow members of the Association of Southeast Asia Nations (ASEAN) - this will be further cut to between zero and 5% in 2008.

But the government has also raised excise duties on vehicles to rates ranging from 90% to 250%, resulting in few price changes for cars assembled in Malaysia, Reuters added.