BMW to set up Asian head office in Malaysia: Dr Mahathir

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German car maker BMW has decided to set up its Asian regional office in Malaysia, Prime Minister Dr Mahathir Mohamad said.

Part of the company's regional activities would be sited in the new township of Cyberjaya, south of the capital, and its spare parts shipped through the Tanjung Pelepas port in southern Johor state, he was quoted by Friday's New Straits Times as saying.

The premier, who had earlier visited the BMW plant in Munich, said at the end of a three day visit to Germany that the carmaker had submitted its application and it was now "just waiting for my approval."

"It's a welcome project from a company as big as BMW," he added.

Trade Minister Rafidah Aziz was quoted as saying that BMW was "seriously looking" at benefits from the Asean Free Trade Area (AFTA).

"BMW's decision is a recognition of Malaysia's strategic position in Asean and beyond. We have the backup facilities and supporting industries. We can expect more spin-offs from the project," she said.

Request for incentives

Under AFTA, most countries in the 10-member Association of Southeast Asian Nations (Asean) must cut import tariffs to a maximum of five percent by 2003.

Malaysia has won a reprieve for its auto industry until 2005 to give more time to national carmaker Proton, which is protected by high tariffs on imported cars, to prepare for liberalisation.

Rafidah said her ministry was looking into BMW's request for incentives, including 100 percent equity in the project and in retail distribution domestically.

BMW currently has about 35 percent share of the Malaysian luxury car market, the newspaper said.

The Malaysian francise holder of BMW cars - Auto Bavaria Bhd, a unit of Tractors Malaysia Bhd - was not available for comment. Tractors is a member of the Sime Darby group, which also holds the BMW franchises for Singapore and Hong Kong.

Tractors in a statement today said it welcomed BMW's decision to base its regional headquarters in Malaysia and would meet with the company to discuss their respective roles.

The news sent Sime Darby share price down RM0.25 to close at RM5.20 Friday amid concerns it may lose its sole distributor rights, dealers said.



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