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Export door widens as Malaysia cuts duty

Opportunity knocks: Revised tariffs may help Mitsubishi.

380 export prospects strengthen after Malaysia lowers import tariffs

12 Apr 2006

MALAYSIA has slashed tariffs on cars made by fellow members of the Association of South East Asian Nations (ASEAN) to five per cent from 15 per cent, a move seen as positive by prospective importer Mitsubishi Australia.

The Malaysian government said last week that excise duties for completely built-up cars from ASEAN countries – which do not include Australia – would also be cut to between 75 and 125 per cent, depending on engine capacity, from the current tariffs of between 80 and 200 per cent.

Mitsubishi Australia said the tariff changes could benefit the company’s push to 380s to Proton in Malaysia.

"A lowering of tariffs will help," said Mitsubishi Australia spokesman Kevin Taylor. "However, it’s not the only issue."Currently the import duty for completely built-up vehicles from non-ASEAN countries like Australia remains at 30 per cent. But this could change as Australia and New Zealand are both working on a free-trade agreement with ASEAN, which would include Malaysia.

Mr Taylor said work was progressing on the proposed export deal for 380s to be sent to Malaysia, but he said there "were still a lot of questions to be answered".

"But any reduction in tariffs is good," he said.

Proton is known to be on the hunt for a large six-cylinder car to replace its ageing Perdana. If the Mitsubishi deal goes ahead, 380s could start being exported by the end of the year.

The lower duties are part of the Malaysian Government’s new automotive policy, and are in line with an agreement to phase out import duty on ASEAN-made cars by 2008 under a free-trade pact signed by the 10-member grouping.

In addition to Malaysia, ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Myanmar (Burma), the Philippines, Singapore, Thailand and Vietnam. Currently the 10 members provide a market for more than $17 billion of Australian exports of goods and services and this is set to grow under an FTA.

Malaysia’s auto trade body welcomed the move to cut the import duty. "It’s a positive development," said the president of the Malaysian Automotive Association, Aishah Ahmad told Malaysian media. "It will encourage more exports to fellow ASEAN countries."Asked how soon the new tax structure would be reflected in car prices, she said: "We are still computing the impact on car prices. It’s too soon to tell."The government set a deadline of December 31, 2010 to abolish its approved permit (AP) system of importing cars.

21 center imageLeft: GoAuto e-news details the possible export deal on March 15

In the past, licences to import cars have been given exclusively to unlisted Malay firms and Malay businessmen, a practice that critics say has enriched the tiny elite and opened the way for corruption.

The government said the new policy aimed to provide a clear and transparent direction for all industry participants, and "transform the local auto sector into one that is viable, competitive and resilient".

It said it would also continue to support the domestic car industry through grants and incentives.

Previously, state-controlled car-maker Proton Holdings Bhd had received tax rebates.

"The government expects to see an industry with two strong national vehicle manufacturers complemented by a number of foreign vehicle manufacturers," the statement said.

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is the other national car maker.

The government also said it would not issue new manufacturing licences until overcapacity in the domestic automotive sector was resolved.

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