(AFP) Malaysia and Thailand are still at odds after four meetings on ways to compensate Bangkok for a two-year delay in opening up the Malaysian auto sector, a minister said today.

International Trade Minister Rafidah Aziz, quoted by Bernama news agency, cited fundamental differences over how much the delay would affect Thai exports.

She said further discussions would be held to narrow down the differences. Malaysia must finalise all negotiations for compensation by July 19.

Rafidah said that before compensatory trade adjustments could be considered, countries concerned must show how their exports would be affected.

She said Thailand must show it has a substantial interest in supplying the deferred products, the capacity to export automotive products and the capacity to fulfil the 40 percent local content requirement.

Malaysian and Thai senior officials met in Kuala Lumpur on Monday on the issue.

Rafidah said Malaysia recently concluded two meetings with Indonesia and both nations agreed that compensation would be in the form of collaboration between their automotive sectors.

Two-year delay

Under the proposed Association of Southeast Asian Nations (Asean) Free Trade Area (Afta), the group's six original members must cut tariffs on imports of agreed products to a maximum of five percent by Jan 1, 2003.

But last year Malaysia won a two-year delay for its heavily-protected auto sector.

Rafidah said Malaysia would meet the 2005 extended auto deadline and would include completely-built-up and completely-knocked-down automotive products under the common tariff scheme.

Malaysia was not a stumbling block towards the implementation of Afta but would like to put its "house in order" first for those products before acceding to the scheme, she said.

The deferment was to give national carmakers time to recover from the 1997/98 East Asian financial crisis.

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.