(AFP) Many Malaysian businesses are ready for the 2003 opening of regional markets but must venture offshore to take full advantage of it, International Trade Minister Rafidah Aziz said today.

Local companies must "change their mindsets" and be motivated by the US slowdown to expand into the Asean Free Trade Area (AFTA) which has a market of half a billion people, Rafidah said.

Malaysia has already removed tariffs on some 60 percent of imported products ahead of AFTA while the rest -- apart from cars -- have tariffs below five percent, she told a press conference.

"Quite a number of them (local businesses) have been competing in the Malaysian market without any tariff protection already... the fact that they are successful in the domestic market even now means that we are quite well prepared for AFTA," Rafidah said.

"But there must be a change in mindsets not to look at purely the local market... don't look at protecting ourselves in our little market of 22 million, look at this half a billion market," she said.

"Once they go beyond domestic, it means they will have to meet certain standards... that will enable them to eventually go global."

Reprieve

A quarter of Malaysian exports now go to markets in the Association of Southeast Asian Nations (Asean) and around 20 percent to the US, she added.

Under AFTA, Asean's six original members -- Malaysia, Thailand, Indonesia, Brunei, the Philippines and Singapore -- must cut import tariffs to a maximum five percent by January 2003.

Laos, Cambodia, Myanmar and Vietnam have been given longer.

Malaysia has obtained a two-year reprieve for its heavily-protected auto market. Thailand and Jakarta have sought compensation in the form of trade concessions from Malaysia for the delay.

Asked about Monday's talks between Malaysian and Thai senior officials in Kuala Lumpur on the issue, Rafidah said they were still negotiating.

Trade ministers from the two countries would make a decision soon, she added but declined to give details. Malaysia must finalise all negotiations for compensation by July 19.