Malaysia, Southeast Asia’s biggest passenger car market, aims to map out a revised plan for cutting tariffs on imported cars in September after some local car assemblers complained of an uneven playing field, Reuters reported.
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Malaysia’s trade minister reportedly revealed the September target date on Monday in remarks that appeared to confirm talk that the government had been prodded into a rethink of auto-tariff and auto-tax plans it had announced barely six months ago.
“I do believe it’s going to be in September,” Trade Minister Rafidah Aziz told Reuters. She declined to give details on plans for auto tariffs, which must be cut to 0-5% by 2008 for all Southeast Asian auto imports under a free trade pact.
Reuters noted that Malaysia’s current auto policy, which has sought for decades to shelter its main domestic carmakers from the full force of competition, is running out of road, with Malaysia under constant pressure to open its auto market under free trade agreements.
Last December, it said it would cut duties on cars imported from Southeast Asia to 20% this year, from rates as high as 190%, but a senior government source told Reuters that this was put on hold after locally based car assemblers objected.
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By GlobalDataAssemblers from outside Southeast Asia, which make cars from imported kits and include major marques like Toyota and Honda , have complained that the December plan put them at a steep disadvantage to Southeast Asian competitors, Reuters said.
For example, car kits imported from outside Southeast Asia attract import duty while those brought from within the region are duty free. This was a big issue in free trade talks recently concluded with Japan, one of Malaysia’s biggest investors.
“New tariff rates that have been promised, these will be announced by the Treasury,” Rafidah told Reuters after an OIC trade forum in Malaysia’s administrative capital.
The news agency noted that Malaysia is also working on a proposal to turn itself into a regional hub for automotive production to rival neighbouring Thailand, Southeast Asia’s biggest overall auto market, but the government will not release this blueprint publicly.
Reuters added that Honda and a Malaysian Nissan distributor have shelved expansion plans worth 100-150 million ringgit ($US26-40 million) each because of uncertainty over Malaysia’s auto policy, according to a recent local newspaper report.
