A couple of month ago, a friend bought a used Mercedes Benz at a dealer. The car was imported from Japan and he has applied for an AP through the International Trade and Industry Ministry and got the necessary approval.

So by the end of the year, he will be packing his Merc into a shipping container and wait for his car at a Malaysian port, pay the necessary customs and excise duties before being able to drive it again on Malaysian roads.

The car cost him NZD13,000 (about RM32,500) and he is estimated to pay about RM35,000 in customs duties at the port, making the total cost about RM75,000 after shipping. The estimated value of the same model car in Malaysia is about RM250,000.

So his net worth will increase by RM175,000 just like that! Wealth creation? I doubt it. Value and worth may go high or low depending on the scarcity and perceived value of the commodity, er, in this case a car.

A Mercedes brings along its prestige, history of reliability and perceived beauty, enhanced by the company's investment in branding. If public perception changed, it is no longer viewed as desirable or ugly, and no one wants it, then the value might be worthless.

If we can import any car from any country we like, without having to pay any form of duties, would the value or price of car be as high? As an example, New Zealand has no tariff regime for imported cars so anyone can log on to the Internet, order and pay for a car from Japan, US or Thailand and arrange for shipping to the nearest port.

But to be able to drive it on NZ roads, the car must pass certain rules. As a result, car prices in NZ are relatively cheap. I bought a Mitsubishi Chariot 98 at an auction for NZD4,000, about RM10,000.

Any form of trade barrier; tariff, licencing, permit etc will only benefit those lucky few who have the licence or permit to import. The rest of the population, the have-nots, will have to pay higher prices and derive less benefits. To put it bluntly, this is a transfer of wealth from the unprivileged masses to the privileged few.

Why do I say so?

Let's take the example of high car prices, as a result of these trade barriers. For a start, because the prices are higher (irrespective of the make, locally or imported), a smaller number of people can afford to buy cars less economic benefits to the country. A deadweight loss.

If the car were used as a taxi, the taxi charge would have to be higher, because the taxi driver has to pay for an expensive car, as well as the expensive taxi licence. This will apply to the rest of the economy in that a small portion of the cost of the expensive car and transportation costs will be passed on to the consumers.

In the end, you and I - the ordinary blokes - are paying to enrich the privileged few.

Much benefit will be accrued to the economy by removing trade barriers. For a start, car prices and other protected goods prices would start to fall. Our purchasing power would increase.

With lower prices for commodity and consumer goods, labour costs would also be relatively lower (workers wouldn't have to demand higher wages) and we would become more efficient to be able to compete globally.

There will be more wealth to be shared in the country besides the creation of wealth in the future. When people feel wealthy, they consume more and invest more. Keynesian cross shifts upwards - higher income and higher employment.

What about Proton, Perodua and other related car manufacturers and their suppliers? They will have to work harder for their profits, or shall I say, they will have to earn their profits. When Malaysians become wealthier, they will demand for better and higher value cars besides expanding the market for cars.

Instead of their share of car market shrinking, with more Malaysians being able to afford more news cars, car manufacturers will see their markets expanding. In the long term, if Proton and Perodua are able to be competitive and efficient, they might be able to take on other global car manufacturers.