This morning as I was having my breakfast of Chee Cheong Fun I looked at my copy of The Star newspaper and immediately the following headline grabbed my attention: Rafidah> All set for FTA in Japan
. This immediately made me think... wow! Are car prices finally going to come down to sane levels (the FTA encompasses many other industries and products but I'm primarily interested in cars)?
Read The Star article here
. Basically the article in The Star gives nothing away which is very typical of mainstream English and Bahasa Malaysia newspapers in the country. However the article did mention the following:
The Japan-Malaysia Economic Partnership Agreement (JMEPA) has been finalised, with differences over issues involving the automotive and steel sectors being resolved.
International Trade and Industry Minister Datuk Seri Rafidah Aziz said both sides had agreed on a comprehensive economic framework, which would pave the way for a Free Trade Agreement.
“We have tied the loose strings in the JMEPA. What we have decided today will become the basis for the agreement in principle between the two Prime Ministers (who meet) on Wednesday,” she told a joint press conference with Japanese Economy, Trade and Industry Minister Shoichi Nakagawa yesterday.
Which means of course that nothing is set in stone yet. The JMEPA which includes the FTA between Malaysia and Japan is expected to be signed by December this year. More excerpts from The Star article:
The report said the conclusion of the negotiations was a major coup for Japan, which had lobbied hard for Malaysia to reduce tariffs on imported steel and automotive products.
Rafidah, who will accompany Abdullah to Japan, said the JMEPA would be translated into legal text to be officially signed by both governments in December.
Now the following question begs to be answered. What exactly is a major coup for Japan? The Star will did not offer any answers but a little Googling may provide the answer. Asashi Shimbun has an article on the FTA talks as well. You may read Asashi Shimbun's article here. From Asashi Shimbun's article (right at the end of the article):
Among points agreed to Sunday were a 10-year phasing out of tariffs on Japanese automobiles and steel exports. Nakagawa called the deal "extremely significant".
The Asashi Shimbun article may be a little misleading though... Reuters has a much more comprehensive article. Read the Reuters article here. An extract from the Reuters article:
The in-principle agreement would virtually scrap Malaysian duties on imports of large Japanese cars and on Japanese-made car kits by 2008, said a Japanese official who declined to be named.
This would put these Japanese imports on an equal footing with auto imports from Malaysia's Southeast Asian neighbours. Under a regional free trade pact, Malaysia has vowed to cut tariffs on Southeast Asian auto imports to 0 to 5 percent by 2008.
Japan has begun its own talks with the 10-member Association of South East Asian Nations (ASEAN) aimed at clinching a pact to create a massive regional free trade zone.
"Eventually it will dovetail (with Southeast Asian free trade)," Rafidah said of the Malaysia-Japan trade arrangements.
This bit is interesting and it contradicts the Asashi Shimbun article somewhat. There's no mention of a 10 year phasing-out period but instead sets the year 2008 as the deadline for the reduction of duties to be fully reduced.
Interestingly, Japan is pushing for terms similar to Malaysia's AFTA pact with ASEAN. Now the treatment for AFTA in regards to car prices in Malaysia has been terrrible. It remains to be seen how Malaysia will play its cards with Japan and its ASEAN neighbours particularly Thailand which is being called the Detroit of Asia. Now for the last bit of excerpt from the online articles... again from Reuters:
Malaysia plans to announce an overhauled auto policy this year, taking into account pressure from its trading partners to open up the domestic market and its own goal of opening up other markets for Proton, whose strategy relies on offshore sales.
We shall see what the government has in mind for us peasants. Hopefully it's something great. Pak Lah needs to do something to impress the rakyat... he's been NATO (no action, talk only) for far too long.
Unrelated rant: Proton needs all the luck it can get if it expects to compete offshore. Even with so much protectionism they are already finding it hard to compete in the domestic market. Proton is also losing ground very quickly to Perodua. Mark my words, Perodua's Myvi will outsell Proton's phantom TRM. When will Proton ever learn? It doesnt' take much to win the Malaysian auto market... better quality, more safety features and a reasonable price... Perodua seems to be heading in this direction. We'll see what Proton will do with the TRM once it's finally launched.