Malaysian Automotive Association (Maa) Thoughts On Afta

Malaysian Automotive Association (Maa) Thoughts On Afta

According to an industry body, Malaysian new vehicle sales will rebound this year after falling 6.9 percent in 2003 although foreign car prices are expected to rise by as much as 10 percent under a new tax structure. The Malaysian Automotive Association (MAA), which groups almost all carmakers in the country, projected that new vehicle sales will grow five percent to 425,000 in 2004. After record sales in 2002, Malaysia's car market cooled last year as buyers held back in the hope of lower prices with the government's adherence to a regional free trade agreement. According to the MAA, Malaysian new vehicle sales fell 6.9 percent in 2003 to 405,010 units. 

Passenger car sales for 2003 were 319,847 units versus 359,934 units the year before. Commercial vehicle sales were 50,824 units versus 42,727 in 2002. At the end of 2003 the government cut import tariffs on cars to between 70 and 200 percent from over 300 percent. However, it also raised excise duties to 60-100 percent, leaving prices much the same or even higher, and shifting more of the tax burden to the consumer. However, the industry body said the move had at least brought some certainty. 

Based on its yearly report, the MAA said that since the direction of policy on AFTA had been announced, hopefully there would no longer be a wait-and-see attitude from consumers to buying vehicles. The tariffs cut brought Malaysia in line with the letter of the Association of South East Asian Nations Free Trade Area (AFTA), whose lead countries have cut auto tariffs to between zero and five percent to boost regional trade. The MAA said that the brighter economic outlook and low interest rates would also help fuel new car sales in 2004. 

Malaysia's delayed decision on tax policy, which should benefit national carmakers such as Perusahaan Otomobil Nasional Bhd (Proton), had allowed Thailand to grab a larger chunk of car manufacturing capacity. MAA data showed that national carmaker Proton sold 155,420 units in 2003 with a 49 percent share of the passenger car market, down sharply from 214,373 in 2002 and a 60 percent share of the pasenger car market.