I have blogged previously on Thailand’s refusal to lower duties for incoming Malaysian vehicles down to Common Effective Preferential Tariff (CEPT) tax rates of 5%. As the region’s largest CBU vehicle producer, Thailand stands to lose out because of Malaysia’s new National Automotive Policy which imposes Non-Tariff Barriers to cars coming into the country, such as those from Thailand.

The NAP was formulated to have a balance between opening up the market according to AFTA requirements, as well as protect Proton and Perodua. Examples of Non-Tariff Barriers imposed by our NAP are Approved Permits and quotas – for example there is a limit of a maximum of 20,000 cars coming in yearly from Thailand. Approved Permits are capped at a maximum of 10% of industry volume. There is also racial-based barriers requiring the importer of CBU vehicles to be 70% owned by Bumiputras or by the Malaysian government (through Khazanah?). Also, duties are calculated from a price list published by the Customs, instead of the General Agreement on Tariffs and Trade valuation method.

The Philippines has joined Thailand and Indonesia in opposing Malaysia’s Non-Tariff Barriers. Ford cars in Malaysia like the Ford Focus are CBU imports from the Philippines. The members of the ASEAN Free Trade Area Council will meet at the upcoming ASEAN Economic Ministers (AEM) meeting on Tuesday, August 21 2006. The CEPT 5% rate for Malaysia will be one of the issues discussed at the meeting.

Related Posts:
Thailand: “Malaysia non-compliant under AFTA