'Auto boom in SE Asia hinges on Afta implementation'

Southeast Asia is set to become the world's fifth largest automobile market by 2005 but success hinges on implementation of the delayed Asean Free Trade Area (Afta), an industry roundtable heard Tuesday.

The 10-member Association of Southeast Asian Nations slashed tariffs on most products in the region to below five per cent in January, part of efforts to form a powerful trading bloc to counter China's overwhelming economic clout.

"Under Afta the dream will come true for global carmakers but only if Afta is implemented," Kour Nam Tiang, director of PT Astra International, told more than 100 industry executives at the eighth Asia-Pacific Automotive Industry Roundtable.

Southeast Asia's auto industry has recovered steadily since the financial crisis of 1997-1998 and in the first half of 2003 grew 13 per cent compared to zero to one per cent for the industry worldwide this year, Kour said,

An integrated Asean is expected to see 1.6 million vehicle sales in 2005 and 2.3 million by 2010, while the majority of global growth in the auto market from 2004-2010 will be in Asia, mostly in Asean, China and India, Ford Motor chief Bill Ford said here last month.

Kour warned that Southeast Asia must comply with the Afta agreements or risk becoming bogged down in excessive costs.

"Thailand, Indonesia and the Philippines are the only ones currently following the spirit of Afta," he said.

Malaysia, one of the two biggest car manufacturers in the region along with Thailand, has controversially delayed opening its auto sector until 2005 in order to prepare its state auto manufacturer Proton for competition.