Malaysia's two-year delay in opening its auto market is not an impediment to a regional free trade plan, an Association of Southeast Asian Nations (Asean) business group said today.

At the same time, the Asean Business Advisory Council said some countries were lagging in the implementation of the Asean Free Trade Area (Afta) programme and called for efforts to be accelerated.

Council chairman Rudy Pesik told reporters at the end of a two-day meeting here that Malaysia's delay was "not a problem but a strategy that is allowed in Asean.

"We try to accomodate the needs of certain countries. Maybe in Malaysia the top hit is the (local auto manufacturer) Proton but in Indonesia it is rice and sugar so we have different products where, although there is a will to (liberalise) we are not yet prepared.

"Its not a clean slate where all the products will have zero to five percent tariffs by now. We reserved some products which are permitted as a safeguard for national interests but the list should not be too long."

Tariffs for most products in the region were slashed to below five percent in January under Afta but Malaysia, the biggest car manufacturer in the region, has delayed opening its auto sector until 2005.

Prime Minister Mahathir Mohamad reiterated in his farewell budget earlier this month that car prices would not fall under Afta as the government would replace import duties with excise duties.

Some countries lagging behind

Council member and Proton CEO Mahaleel Ariff, asked whether this was against the spirit of Afta, said: "We cannot comment on that. The government has to look at its coffers, it's that simple.

"The free trade commitment by Asean is strong. Ninety-two percent of our products are already between zero and five percent tariffs. We are talking about eight to seven percent left, so there is huge progress."

Pesik, however, said some countries were lagging behind in the implementation of Afta, pointing out for example that handicrafts were still not within the five percent tarriff although in the United States and Europe they faced no import tariffs.

"It is not running as well as it should have been," he said.

"We are just not used to dealing with our Asean brothers and sisters. We always in the past marketed to the same customers - the US, Europe and Japan. We competed with each other to penetrate these three areas.

"Now we realise there is a lot of potential among our Asean neighbours. Trade volume is doubling every year and that is nothing compared to what we can achieve if we work together seriously on this."

The business council had identified tourism and the agricultural and food industries as key factors to focus on for joint marketing and promotion by the region. - AFP