A local consumer advocate group, Era Konsumer today urged the government to be cautious with its implementation of the proposed domestic tax on cars when the Asean Free Trade Agreement (Afta) kicks in next year to avoid being misconstrued as discriminatory to imported cars.

"The government must be careful about the domestic tax [on cars]. It could be seen as being discriminatory. It could still be seen as a protectionist [policy] if there is a tax difference between foreign and locally-made cars," Era Konsumer secretary-general T Indrani told malaysiakini in a telephone interview today.

Prime Minister Dr Mahathir Mohamad dashed the hopes of many prospective cars buyers on Thursday when he announced that car prices will not go down as anticipated by many following Afta.

The import duties on 'completely knocked down' cars, which are currently about 42 percent, are expected to be cut to less than five percent by 2005.

The premier said that while the Malaysian government could no longer impose high duties on imported cars, there will other taxes on both locally-produced and imported cars.