Thai Prime Minister Thaksin Shinawatra said on Tuesday he expected Bangkok's row with Malaysia over its delay in opening up its auto market under a regional free trade pact to be resolved next year.

The 10-member Association of Southeast Asian Nations (Asean) slashed tariffs on most products in the region to below five percent in 2003, part of efforts to form a powerful trading bloc to counter China's overwhelming economic clout.

But Malaysia, one of the two biggest car manufacturers in the region along with Thailand, has delayed opening its auto sector until 2005 in order to prepare its state auto manufacturer Proton for competition.

It is expected to cut import tariffs to 20 percent in January under the Asean Free Trade Area (Afta), and further to below five percent by 2008 to give national carmakers more time to prepare for competition.

Thaksin said Thailand was initially concerned that Kuala Lumpur's move could set back Afta.

Moving better

However, "I think next year, things will be settled, things will be moving better. They will be ready next year, it should be okay," he told reporters at the end of a two-day Asean summit.

Industry experts recently predicted that Asean was set to become the world's fifth largest automobile market next year but success hinged on implementation of the delayed Afta.

An integrated Asean is expected to see 1.6 million vehicle sales in 2005 and 2.3 million by 2010, Ford Motor chief Bill Ford said last month.

But only Thailand, Indonesia and the Philippines have implemented the Afta pact while other members are reducing tariffs in a slow piecemeal way with high non-tariff barriers, other experts said.