Free trade Malaysian style

The Japanese press is reporting a hiccup in the proposed Japan-Malaysia ‘free trade agreement’. bq. Malaysia cut trade tariffs on car parts in January based on Association of Southeast Asian Nations (ASEAN) rules. But it hiked the commodity tax on imported cars and locally made foreign vehicles, leaving domestic manufacturers in a highly advantageous position. (“Manichi Daily News”:http://mdn.mainichi.co.jp/news/20040718p2a00m0fp012000c.html) It’s been clear for some time that Malaysia’s ASEAN trading partners are less than amused by these shenannigans. The Japanese stand on this issue, however, was not always quite as straightforward as it seems. For many years Malaysia’s national auto manufacturer (Proton) was engaged in a partnership with the the struggling Japanese manufacturer, Mitsubishi, who presumably profited from the protection. The new owners of Mitsubishi (Daimler-Chrysler) “got out”:http://www.aiada.org/article.asp?id=4700 of the partnership with Proton earlier this year. The market for imported vehicles in Malaysia is dominated by Japanese and Korean manufacturers who have “reportedly”:http://www.sandsmuseum.com/cars/elise/information/press/press/press2004/protonsell.html won a half share of demand despite the high protection for the local product. Former PM, Mahatir Mohammed is now a consultant to the Malaysian Proton car company; he is said to be demanding another 20 years of ‘infant industry’ protection for the national car maker.

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