A highly anticipated new tax and tariff structure for Malaysia's troubled auto industry may be announced as early as this week, a report said today.

After a two-month delay, the policy is currently waiting for the final seal of approval, the Star said, citing unnamed industry sources.

The government is expected to address several issues affecting the motor industry, including discrepancies arising from the changes in tax structure announced early this year, which have put local assemblers at a disadvantage compared with those in other regional countries, it said.

Taxes for locally assembled and fully imported cars may be reduced, it said, but quoted a source familiar with the policy as saying that the government wants to ensure car prices remain unchanged and that no new taxes are expected.

The controversial system of issuing Approved Permits (APs) for vehicle imports will likely be addressed under the policy, after a recent row over the issue between Trade Minister Rafidah Aziz and former premier Dr Mahathir Mohamad.

Mahathir, who launched the Proton national car in the 1980s, has blamed the AP scheme for the automaker's flagging sales by flooding the market with undervalued imports.

Rebates for local producers

Malaysia announced last year that from January 2005 it would cut import duties on cars from Southeast Asian countries in line with a regional trade pact, but continue giving local producers rebates to minimise the impact.

Then in January it delayed implementation of the plan until June, pending a review of the tariff structure, on concerns that foreign companies might shelve new investments or even relocate current Malaysian operations.

Malaysia had previously 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 duty on cars and parts sold here to 40-250 percent from 30-100 percent last December, effectively nullifying any advantage from the tariff reduction for local consumers and foreign rivals of Proton, which receives rebates.