Total investment in Malaysia's automotive sector plunged 66.7 percent to RM1.1 billion in 2004, International Trade and Industry Minister Rafidah Aziz said today.

Rafidah did not give a reason for the steep fall, adding that her ministry approved eight projects worth RM71.1 million in the first two months of this year.

Of the eight, four were new projects while the others were largely for the expansion of existing operations, she said.

Earlier this year the government suspended the implementation of a new tax and tariff regime pending a review of its auto policy on concerns that foreign car companies may shelve fresh investments or even relocate operations.

More time

Malaysia, which lobbied successfully for more time to comply with a regional trade liberalization agreement, has promised to cut tariffs on cars made by members of the Association of Southeast Asian Nations (Asean) to 20 percent this year and to five percent by 2008.

The government, however, raised excise taxes on cars and parts sold in Malaysia to 40-250 percent from 30-100 percent last December, effectively nullifying any advantage from the tariff cut for local consumers and foreign rivals of national car manufacturer Proton Holdings, which receives rebates.

The government had said it will announce a fresh auto policy in June.