Indomobil says new auto policy could harm output<\/p>\n
JAKARTA (JP): Local car producer PT Indomobil Sukses
\nInternational announced on Wednesday the government's new
\nautomobile policy would severely hurt its automotive assembly
\noperation.<\/p>\n
Company president Subronto Laras said Indomobil might have to
\nsell its assembly facilities if the government failed to support
\nthe company's commitment to improve its automotive manufacturing
\ntechnology.<\/p>\n
\"If there is no chance to benefit from manufacturing
\nactivities, I will sell our assembly facilities. We might get
\nsome profit out of it,\" he said, adding that the new automobile
\npolicy would make being a mere car seller more profitable.<\/p>\n
Subronto said he was disappointed with the new policy, which
\nabolished tax breaks tied to the level of local components used
\nin automobile production.<\/p>\n
He said Indomobil had invested millions of dollars to build
\nassembly facilities in order to increase its local content.<\/p>\n
However, companies which own assembly facilities now receive
\nthe same treatment as those companies which merely import
\nvehicles, he said.<\/p>\n
The government announced last week a new automotive policy in
\nwhich import tariffs and luxury taxes on automobiles were
\nrestructured, and incentives for vehicles with high local content
\nremoved.<\/p>\n
Cars with high local content, which previously received tax
\nbreaks, are subject to higher import duties and luxury taxes.
\nImported cars, on the other hand, pay lower import duties.<\/p>\n
Soebronto said the new policy would not automatically increase
\nthe price of Indomobil's most popular model, the Suzuki Carry
\nvan, which has around 50 percent local content.<\/p>\n
\"It depends on the fluctuation of rupiah against the dollar,\"
\nhe said. Suzuki models account for 65 percent of Indomobil's
\ntotal sales.<\/p>\n
Indomobil reported a consolidated net loss of Rp 717 billion
\nin 1998, compared to a Rp 404 billion net loss in 1997.<\/p>\n
The company attributed the loss partly to a significant drop
\nin automobile sales.<\/p>\n
Car sales dropped by 85 percent in 1998 to 11,808 units, and
\nmotorbike sales fell by 78 percent to 84,406 units.<\/p>\n
Soebronto said Indomobil was very active in restructuring its
\ndebt.<\/p>\n
He said the restructuring program included moving the debts of
\nseveral of its subsidiaries, including truck manufacturer Hino,
\nfrom Bank Central Asia, Risjad Salim International and PT Indo
\nJaya Tata Lestari to the company's stockholder, the Salim family.<\/p>\n
The company plans to convert the debts of Indomobil and a
\nnumber of its subsidiaries to equity through private placement,
\nhe said.<\/p>\n
Indomobil expects to sell around 10,000 cars and 80,000
\nmotorbikes this year. These figures represent some 20 percent of
\ntotal estimated domestic car and motorbike sales of 50,000 units
\nand 400,000 units, respectively.(cst)<\/p>",
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