BMW Thailand's new president warns that China could become the regional auto export hub if Southeast Asian nations delay tariff cuts.
BMW's Karsten Engel said Malaysia's decision to postpone these cuts should not lead other nations to delay the introduction of the Asian Free Trade Agreement. Automak-ers cannot plan for the future, he said, until they know whether the Association of South East Asian Nations will cut taxes or follow Malaysia's lead and defer tariff reductions at least until 2005.
Otherwise, China could be the beneficiary, with investment going there instead of Thailand. The Thai government persuaded BMW, General Motors and Ford Motor Co., to build plants in the kingdom with promises of making the place the 'Detroit of the East.' But in October, ASEAN ministers allowed Malaysia to put off tariff reductions on imported vehicles and parts.
BMW's policy is clear, though. Although it has a huge plot of land next to its year-old plant in Rayong, it has no plans to expand before AFTA happens.
The Thai government, with an election looming, may well wish that reports of Malaysian premier Mahathir Mohamad's ill health are not exaggerated. He alone stands in the way of an early start for AFTA.