EU to seek WTO panel on Timor car policy<\/p>\n
GENEVA (Agencies): The European Union will next week ask
\nfellow members of the World Trade Organization (WTO) to agree to
\nset up a panel to look into Indonesia's controversial national
\ncar policy, trade diplomats have confirmed.<\/p>\n
The move follows a similar request by Japan which was blocked
\nby Indonesia at the last meeting of the WTO's Dispute Settlement
\nBody on April 30.<\/p>\n
The United States has had discussions with Indonesia over the
\npolicy and is widely expected to seek a panel itself.<\/p>\n
All three powers argue that the policy discriminates against
\ntheir own automobiles.<\/p>\n
Indonesia has rejected their complaints, insisting it is not
\nviolating WTO's rules.<\/p>\n
In February 1996, the government granted import duty and
\nluxury tax exemptions to PT Timor Putra Nasional as the sole
\nproducer of a so-called national car, driving its cost down 60
\npercent less than other cars in Indonesia.<\/p>\n
Timor Putra -- controlled by President Soeharto's youngest
\nson, Hutomo Mandala Putra -- is cooperating with Kia Motors Corp
\nof South Korea to produce the national car. It currently imports
\nthe car fully assembled from South Korea as its production
\nfacilities are still being built.<\/p>\n
Last week a Timor Putra official said sports cars would also
\nbe imported from Kia Motors from early next year.<\/p>\n
Trade envoys in Geneva said the announcement had angered many
\ngovernments. "It looks as though the Indonesians plan to fight
\nthis case right down the line," said one.<\/p>\n
Japanese officials said they would not be pressing for a panel
\nat the next meeting of WTO's Dispute Settlement Body on May 23.
\n"This will give Indonesia more time to reconsider what it is
\ndoing," one diplomat said.<\/p>\n
Had Tokyo persisted, a panel would have been automatically set
\nup as WTO rules only allow members to block a request once.<\/p>\n
The dispute at the WTO has strengthened Indonesia's
\ndetermination to speed up the car program. The government has
\nordered three state banks and 10 private banks to finance the
\nconstruction of Timor manufacturing facilities.<\/p>\n
The consortium of 13 banks, supervised directly by Bank
\nIndonesia's Governor J. Soedradjad Djiwandono, were initially
\nasked to lend US$1.3 billion to Timor Putra.<\/p>\n
But Coordinating Minister for Economy and Finance Saleh Afiff
\nwas reported yesterday as saying in Jakarta that the loan would
\nbe less because its planned production capacity was based on an
\noverestimate of car sales.<\/p>\n
Afiff refused to give details of the credit cut. "What is
\nclear is that it will be significant."<\/p>\n
He said Timor Putra's projected sale of 200,000 sedans by 1999
\nwas a big overestimation. He said even the country's best-selling
\nvehicle, Toyota's Kijang van, sells only 70,000 a year.<\/p>\n
Sedan sales in Indonesia account for only about 15 percent of
\nauto sales or about 40,000 a year.<\/p>\n
"We doubt the estimated sales of Timor cars can be met," Afiff
\nsaid.<\/p>\n
"By decreasing the syndicated loan to Timor, the bank
\nconsortium is more willing (to go on with the project). I think
\nthat's logical," he said.<\/p>\n
In March, Soemitro Soerachmat, president of PT Timor
\nDistributor Nasional -- a subsidiary of Timor Putra -- said the
\ncompany had cut its monthly sales target from 4,000 vehicles to
\n2,500 following flagging sales.<\/p>\n
Soemitro said yesterday Timor Putra would need only $670
\nmillion, not $1.3 billion, to construct its manufacturing plant
\nwith an annual capacity of 200,000 vehicles by the year 2000.<\/p>\n
Timor Putra would initially produce 70,000 sedans and jeeps a
\nyear at its plant in Krawang, West Java, starting in 1998 but
\nwould gradually expand production to 200,000 vehicles a year in
\n2000, Soemitro said.<\/p>\n
"This is to anticipate an increase in domestic market demand,"
\nSoemitro said as he inspected the assembling of Timor sedans at
\nthe Indomobil plant in Tambun, West Java. (rid)<\/p>\n
Editorial -- Page 4<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/eu-to-seek-wto-panel-on-timor-car-policy-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }