Bimantara-Hyundai project shelved<\/p>\n
JAKARTA (JP): PT Bimantara Citra Mobil Nasional said yesterday
\nthe decision to shelve its joint project with South Korea's
\nHyundai Motor Co was made due to the government's plan to remove
\ntax incentives given to the country's car industry.<\/p>\n
Bimantara Citra Mobil's president Jongkie D. Sugiarto said
\nyesterday the company was awaiting clarification from the
\ngovernment about the plan to eliminate the tax incentives by 2000
\nbefore it made further plans for the project.<\/p>\n
According to the government's existing regulation, cars
\nassembled domestically with a local content of at least 60
\npercent are given tax incentives, such as the exemption of import
\nduty for its imported components.<\/p>\n
Jongkie said the company could not continue to build a car
\nmanufacturing plant or car component plants without knowing what
\nthe government would do with the tax incentives.<\/p>\n
\"If we continue the project now, it is expected to be
\ncompleted by mid-1999, while the government's lift of the
\nincentive is scheduled to take effect in 2000,\" he said.<\/p>\n
Indonesia has agreed to reduce high tariffs now ranging at 200
\npercent on imported cars in return for the International Monetary
\nFund's bailout program to cope with the monetary crisis, a source
\nsaid.<\/p>\n
Details of the government's measure are expected to be
\nannounced during the new ministerial cabinet meeting in April,
\nafter the presidential election.<\/p>\n
Jongkie said if the government dropped the import tax
\ndramatically, importing cars would be a better choice than
\nbuilding them here.<\/p>\n
Hyundai announced Monday it had temporarily shelved the joint
\nventure Bimantara Hyundai Indonesia (BHI), which planned to build
\na car manufacturing plant costing US$400 million in Purwakarta,
\nWest Java, citing financial difficulties.<\/p>\n
Hyundai said it might pull out altogether from the project,
\ndepending on the result of government negotiations on reducing
\nthe import tax and if the financial crisis did not improve.<\/p>\n
The joint venture had planned to build 100,000 cars, using 60
\npercent local components, to benefit from the import duty and
\nluxury tax.<\/p>\n
Jongkie said PT BHI had also decided to review other
\ninvestment plans, including a $250 million project to build a car
\ncomponent manufacturing plant.<\/p>\n
\"We are going to evaluate which components we will manufacture
\nand which we will not make before deciding our next step in
\nApril,\" he said.<\/p>\n
Jongkie said the monetary upheaval caused by sharp currency
\ndrops and the tight monetary policy played a major part in
\ncausing the project's suspension.<\/p>\n
Both Bimantara and Hyundai faced difficulties getting banks to
\nfinance their project, he said.<\/p>\n
\"If we continued with the project with no guarantee from
\nbanks, it would be very dangerous. The plant's construction could
\nstop in the middle of the road,\" he said. (das)<\/p>",
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