Exports of national car Proton to the Middle East have been seriously affected by the war in Iraq, a senior minister said today.

"They should have been sending 5,000 units to Iraq in July and August, but the shipment has been cancelled," Minister of International Trade and Industry Rafidah Aziz told a press conference.

The order was worth RM150 million, she said.

Further shipments of 3,000 vehicles to Kuwait, Qatar and Dubai cannot be delivered, and a shipment of 3,000 to Iran is doubtful, she said, adding that Proton would look to the Southeast Asian region as an alternative market.

Suffering from misperception

Speaking after meeting with private sector leaders to discuss the early effects of the war in Iraq, she noted that shipping costs were also rising due to war-risk premiums, and bulk exports such as palm oil to the Middle East were affected.

"Initial feedback shows there is already a slowdown," she said.

The hotel industry also recorded a drop, she said, noting that Malaysia suffered from the misperception that it was at risk of terrorism.

Malaysia's trade with 13 Middle Eastern countries in 2002 totalled RM12.57 billion, representing 1.9 percent of total trade, she said.

The top export to the region was palm oil, which brought in RM1.31 billion last year. AFP