KUALA LUMPUR, Sept 23 (Reuters) - Malaysian auto firm UMW Holdings said on Monday it does not expect a big drop in car prices when the country lifts tariff barriers in 2005.
"We don't see a drastic drop in prices. There may be a slight reduction," UWM group financial controller Meor Mohar Azhar said at a company briefing.
He said the government might introduce other form of taxes to make up for the shortfall in revenue from import tariffs.
Malaysia, one of the region's largest auto markets, imposes duties as high as 300 percent on imports.
It has managed to delay the lifting of barriers to its auto sector to other countries in the region, which is taking place under the ASEAN Free Trade Area (AFTA) agreement, and continues to protect its car makers from liberalisation.
Malaysia held back the liberalisation by two years saying it needed more time to prepare national carmaker Proton for competition.
Under AFTA, six of the Association of South East Asian Nations (ASEAN) 10 member countries pledged to cut tariffs next year to between zero and five percent on all manufactured goods bar a tiny minority. Most of the planned reductions are already in place.
The six are Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The four later members -- Cambodia, Laos, Myanmar and Vietnam -- intend to reduce tariffs in stages through the decade.
UMW also said it was not concerned about the current trend of global carmakers exerting tighter control on their local franchise in the region.
"Our relationship with Toyota goes a long way back, and they are happy with us. To us, it's not a concern," Meor said.
UMW is the sole distributor of Toyota cars in Malaysia. It assembles and distributes Toyota models such as Camry, Altis and Unser.
DaimlerChrysler AG signed earlier this month a pact with local distributorCycle & Carriage Bintang (CCB) for wholesale distribution of Mercedes Benz vehicles in Malaysia.
CCB had held exclusive distribution rights for Mercedes in Malaysia since 1974 but the German-U.S. auto giant, which owns the trademark luxury brand, now wants direct involvement in the region.