Deputy prime minister Najib Razak has called for further cuts in car prices after the government imposed a new auto policy which reduces tariffs on imports.

To better compete with imports, struggling national automaker Proton late Friday announced price reductions on cars of between 2.5 to 7 percent, while fellow Malaysian company Perodua cut prices by 4 percent for some models.

A Toyota importer has also reportedly announced price reductions of between 5.6 and 11 percent.

But Najib said the cuts were not significant or meaningful enough.

"We want car manufacturers and dealers which had announced their price cuts to conduct another study as we feel that the reductions are too small," he was quoted as saying in the New Straits Times .

The government on Wednesday announced a new auto policy with a string of measures including tax cuts of from five percent from 15 percent for imports from the 10-member Association of Southeast Asian Nations.

Prices to fall

The policy is aimed at boosting Malaysia's aspirations to become a regional auto hub, while making its national auto industry more competitive.

"If we can reduce the prices of cars, we can dictate the demand for national cars and help boost the local automotive industry," Najib was quoted as saying in the Star daily.

He said the Finance Ministry had projected desired price cuts before drafting the auto policy but did not reveal the figures.

Prime Minister Abdullah Ahmad Badawi on Thursday said prices for Proton and Perodua cars and some foreign makes would fall after the policy was launched.

Under the new policy Malaysia has also said it will phase out its controversial "approved permit" system for car imports by Dec 31, 2010.