KUALA LUMPUR, Dec 30 (Reuters) - Malaysia will announce on Wednesday a new car tax regime which analysts say is unlikely to bring much cheer to foreign manufacturers hoping to win a bigger slice of Southeast Asia's second largest auto market.
The Office of Prime Minister Abdullah Ahmad Badawi is due to unveil the long-awaited structure by early evening on New Year's Eve. The tax regime will take effect on January 1.
Malaysia's national carmaker Proton , set up in the early 1980s, has long been protected by tariffs of up to 300 percent on foreign imports, a policy that hampered trade liberalisation moves within the Association of South East Asian Nations (ASEAN).
The government has said it would bring in new excise duties in January to replace existing high tariffs on imports, as it belatedly joins the ASEAN Free Trade Agreement (AFTA) scheme.
But government officials and industry analysts insisted on Tuesday that the new regime would not make imports any cheaper.
Deputy Finance Minister Shafie Salleh said: "We have explained that the car prices will not be reduced."
"The bottomline is there will be just a marginal change in car prices," said one industry analyst.
A source close to the government told Reuters under the new regime import duties on cars brought in from fellow ASEAN countries and assembled in Malaysia would be cut to 20 percent from 42 percent now.
All imported cars and Proton will be subjected to a flat 20 percent excise duty. "So everybody will be treated equally on the excise duty," the source said.
Currently, excise duties for non-national cars range from 25-65 percent based on the vehicles' open market value, while Proton pays half of the excise levied on other carmakers. It also pays a maximum import duty of 13 percent for parts.
Anticipation of cheaper imports came after AFTA put a brake on Malaysian car sales, allowing Thailand to overtake Malaysia as the biggest car market in ASEAN.
ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Last month, Proton posted a 41 percent drop in second-quarter net profit to the end of September, hurt by poor sales and stiff competition from Japanese and Korean brands.
Proton's passenger car sales fell 16.3 percent year-on-year in October to 27,468 units, the ninth straight month of soft Malaysian demand.
Proton is due to unveil soon a new Wira model to replace its dowdy sedan, using the company's own Campro engine.
The launch should cut production costs and royalty payments to Japanese parts suppliers, which in turn would trim Proton's exposure to yen strength versus the dollar-pegged ringgit.
Proton shares hit a year low of 6.00 ringgit in April, battered by worries over the looming tax changes and poor sales of old, overpriced models ahead of new model launches.
The shares closed 0.6 percent up at 8.50 ringgit ($2.23) on Tuesday.