The government will not object if national car-maker Proton decides to sell part of its equity to any company, said International Trade and Industries Minister Rafidah Aziz in Parliament today.

Proton has been engaged in talks with Ford Motor Company in a bid to link up with bigger partners as Malaysia plans to fully liberalise its automotive sector in 2005 under the Asean Free Trade Area Agreement.

"It's up to Proton to judge the viability of such plans and weigh the long-term potential of linking up with big companies such as Ford," said Rafidah.

According to her, Ford was interested in investing in Proton and building a regional centre to manufacture its car and those of its associates.

Rumours that Ford was going to own a stake in Proton have been circulating early this year.

However, Proton chief executive Tengku Mahaleel Tengku Ariff has ruled out the sale of an equity stake in Proton in the near future.

Afta since 1993

Earlier, Rafidah replied to a question by Abu Seman Yusop (BN-Alor Gajah) on Malaysia's plan to face the coming of Afta in 2003.

"There's a wrong perception that Afta will only be implemented in 2003," said Rafidah

Rafidah clarified that Afta was implemented in 1993, and is now in its final stage of implementation.

She explained that local industries will face competition from other countries within the Asean region without tariff protection on Jan 1, 2003 when the Asean-6 becomes an integrated market.

The Asean-6 comprises Malaysia, Indonesia, Brunei, Singapore, the Philippines and Thailand.

Tariff concession

According to Rafidah, until now, 96.6 percent of all Malaysian products have been offered for tariff concession under the Common Effective Preferential Tariff (CEPT) scheme.

The CEPT is an agreed effective tariff, preferential to Asean, to be applied to goods originating from member states under Afta.

"From this total, 90.8 percent are already under five percent tariff rate, while 60.3 percent are not charged with any import duty," she said.

"The tariff abolishment and low import duty show that the products manufactured by local industries are able to compete with imported products from neighbouring countries," she added.

Rafidah explained that the government has been briefing local entrepreneurs about the opportunities and challenges of Afta.

She added that information on Afta was disseminated to the public via print and electronic media.

Competition from Afta

Labour-intensive and low technology industries will face increased competition from Afta. Rafidah said the government is providing various incentives, financial packages and technical assistance to assist industries faced with competition.

Today, the minister announced that the government has revised the financial assistance schemes for small- and medium-sized enterprises (SMEs).

The maximum loan under the schemes has been increased from RM2 million to RM5 million, among other changes. Also increased were the grants to improve product quality and competitiveness.

For example, the grant for product improvement and process development is increased from RM250,000 to RM500,000.

Under the Eighth Malaysia Plan, RM355 million have been allocated for financial grants and RM100 million for easy loan.

In 1998, there was a total of 22,799 manufacturing establishments in Malaysia with 90 percent comprising SMEs.