Higher import duties might end trade

Toyota Hiace

UMW Holdings Bhd, a company that exports Toyota Hiace vans from Malaysia to Thailand, is worried at a devision by the Thai government to maintain import duties of 20% on vehicles built in Malaysia.

UMW argues that a rate of 5% should apply in accordance with the Common Effective Preferential Tariff (CEPT). The CEPT limits tariffs to a rate of 5% (or lower) on goods that have a ASEAN content of 40% or more, and this is the case for the Malaysian built Hiace.

Thailand's none compliance to the CEPT in the case of Malaysia is a reaction to APs, or approved permits that Thailand see as a non-tariff barrier preventing vehicles from entering the Malaysian market. Until the APs are removed, Thailand intends to keep the 20% tariff in effect for Malaysian built vehicles.

UMW claim that the decision will force them to offer their products at uncompetitive prices, and although they do intend to continue business in Thailand for the time being, they are prepared to pull out if the sales levels are too low as a result.