Thailand and Malaysia remain at odds over the execution of the Assn. of Southeast Asian Nations (ASEAN) Free Trade Agreement (AFTA), with the automotive sector lying at the heart of the dispute.
Thailand gave Malaysia a deadline of Aug. 10 to create a list of trade concessions to compensate for Malaysia's decision to continue to place tariffs on automobiles.
Under AFTA, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand are committed to slashing auto and auto-parts tariffs within the region to a maximum of 5% by the end of next year.
ASEAN members, however, granted Malaysia a 2-year period to ease into the tariff cuts so that the country could protect its national car, Proton. Tariffs in Malaysia are as high as 300%. If Thailand does not accept Malaysia's compensation package, it reportedly plans to take retaliatory action by mid-October.
Malaysian officials dismiss Thailand's claims, saying that its automotive industry will hardly be affected by its delay, especially in comparison to main importers Japan and South Korea.
New vehicle sales in the region year-on-year for January-May were up 11.1% in Malaysia, 14.1% in Thailand and 9.1% in Indonesia. The Philippines saw vehicle sales drop 14.9%.