With the larger market size, consumers in ASEAN are now offered a wider variety of quality goods produced regionally at lower prices. However, there is increasing competition for domestic industries for certain products, due to the liberalized market. This could be illustrated from the impact of implementation of AFTA on Malaysia’s automobile industry. Previously, Malaysia used local policies and charged high import duty on import cars to protect national cars, domestic assemblers and component parts makers. With introduction of AFTA, tariffs at 20 % and below will be reduced to 0-5 % within 7 years (effective by 1 January 2000). It means that all trade barriers will be removed and these have negative implications for future development of local automotive industry. As we know, last time people buy national cars because it’s cheaper than import cars, but with the reduction of tariff, price for import cars is almost the same as national cars. Thus, with the apprehension in minds that import cars are high class and quality assurance, Malaysians prefer to buy foreign cars with only a slightly higher price. Firms that are small and inefficient in operation will collapse because cannot compete with others.