13 banks ordered to finance Timor car project<\/p>\n
JAKARTA (JP): The government has ordered three state banks and
\n10 private banks to lend US$1.3 billion to the producer of the
\ncountry's so-called national car, PT Timor Putra Nasional.<\/p>\n
Coordinating Minister for Economic and Finance Saleh Afiff
\nconfirmed that the consortium of 13 banks would be directly
\nsupervised by the central bank's governor, J. Soedrajad
\nDjiwandono.<\/p>\n
\"The loans to PT Timor will be at market interest rates,\"
\nAfiff said here Monday after chairing a special meeting on the
\nnational car with some ministers.<\/p>\n
The three state banks are Bank Dagang Negara, Bank Rakyat
\nIndonesia and Bank Ekspor Impor Indonesia, Afiff said.<\/p>\n
But he declined to name the private banks, saying only that
\nthey were large ones.<\/p>\n
The Kontan economic weekly reported last week that the private
\nbanks included Bank Central Asia -- Indonesia's largest private
\nbank which is controlled by Sudono Salim -- Bank Internasional
\nIndonesia and Bank Lippo.<\/p>\n
Some of the private banks, according to Kontan, were willing
\nto immediately write off any credit they would give Timor Putra.<\/p>\n
Banking sources said earlier that Bank Indonesia would provide
\nsubsidized liquidity credit of up to 70 percent of the funds
\nneeded for the car project.<\/p>\n
The sources said the governor was originally opposed to state
\nbanks granting large loans to Timor Putra, given the tight
\nlending growth limits he imposed on commercial banks for 1997.
\nBut Soedradjad later succumbed to strong pressure to approve the
\ndeal.<\/p>\n
Soedradjad dismissed the speculation, saying he supported the
\nnational car program.<\/p>\n
\"I'm the strongest supporter of the national car program,\"
\nSoedradjad said.<\/p>\n
In February 1996, the government announced a preferential car
\npolicy which exempted producers of a national car from import
\nduty and luxury tax.<\/p>\n
However, the government announced that Timor Putra -- a
\ncompany controlled by President Soeharto's youngest son Hutomo
\nMandala Putra -- was the only company that qualified for the duty
\nand tax exemptions, at least for three years.<\/p>\n
Timor Putra is cooperating with Kia Motors Corp. of South
\nKorea to produce sedans here, under the brand name Timor.<\/p>\n
The protection granted Timor Putra will last for three years
\non condition that the car has at least 20 percent local
\ncomponents by the end of the first year, 40 percent by the end of
\nthe second year and 60 percent by the end of the third year.<\/p>\n
But Timor Putra was immediately licensed to import up to
\n45,000 fully assembled cars from Kia's plant in South Korea and
\nto sell them in Indonesia as national cars pending the completion
\nof its assembly plant in West Java.<\/p>\n
The policy has been protested by Japan, the United States and
\nthe European Union. Japan is currently seeking arbitration from
\nthe World Trade Organization (WTO) over the car policy, alleging
\nthat Indonesia has breached international trade rules.<\/p>\n
Japan's decision to challenge Indonesia's national car policy
\nat WTO has hardened the government's determination to push ahead
\nwith the national car program.<\/p>\n
Following Japan's newest move late last month, President
\nSoeharto instructed relevant ministers to expedite the program so
\nit is completed before the WTO panel announces its judgment on
\nJapan's complaint.<\/p>\n
Minister of Industry and Trade Tunky Ariwibowo said the banks'
\nsupport would help expedite the program.<\/p>\n
He said the funds from the 13 banks would finance the
\nconstruction of the assembly plant of PT Kia Timor Motors -- a
\nventure by Kia and Timor Putra.<\/p>\n
With the credit Timor Putra could achieve 60 percent local
\ncontent by mid 1999, Tunky said.<\/p>\n
Afiff said all parties should support the national car program
\nso it could be completed on time.<\/p>\n
\"Everyone must support the program. If necessary, we will
\nfight Japan's opposition to our national car program,\" Afiff was
\nquoted by Antara as saying.<\/p>\n
State Minister of Research and Technology Minister B.J.
\nHabibie raised the possibility of a merger between Timor Putra
\nand PT Maleo, the developer of a car the state-owned Strategic
\nIndustrial Development Board has been designing for the last few
\nyears.<\/p>\n
\"It is very possible that Timor Putra could be merged with PT
\nMaleo under the umbrella of the Industri Mobil Indonesia
\n(Indonesian Car Industry),\" Habibie said.<\/p>\n
But he said the details of such a tie-up had yet to be
\ndiscussed. (rid)<\/p>",
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