PT Timor given tax exemptions<\/p>\n
JAKARTA (JP): The government confirmed yesterday that an car
\nassembly company controlled by one of President Soeharto's sons
\nhas been given pioneer status and is therefore exempt from import
\nduty on car components and the luxury sales tax on car sales
\nunder new regulations enacted last week.<\/p>\n
Trade and Industry Minister Tunky Ariwobowo said that, in
\norder to qualify for the pioneer status, automobile companies
\nmust use an Indonesian brand-name for its cars, must be owned
\nwholly by Indonesian shareholders and must gradually develop
\nimproved national technology, engineering and design
\ncapabilities.<\/p>\n
The announcement comes only two days after Tommy, the popular
\nname of the President's youngest son Hutomo Mandala Putra,
\nlaunched the prototype Timor sedans which his company, PT Timor
\nPutra, assembled from components imported from South Korea's Kia
\nMotor company.<\/p>\n
\"The customs and excise tax directorate general has been
\nnotified of the import duty relief for PT Timor Putra,\" Tunky
\nsaid when he announced four new government regulations on the\"
\nNational Automobile Industry\" program.<\/p>\n
The new rulings, consisting of a Presidential instruction, a
\ngovernment regulation and a decree by the trade industry minister
\nand finance minister, were enacted on Feb.19 but were announced
\nonly yesterday.<\/p>\n
Executives of most automobile companies who were summoned by
\nTunky on Tuesday and Wednesday for technical briefings on the new
\nregulations seemed to be shocked by the new rulings as none of
\nthem could immediately qualify for the pioneer status.<\/p>\n
Tommy stunned domestic car companies by announcing at the
\nlaunch of the Timor prototypes on Monday that his cars would be
\nsold at half the price of Japanese makes of the same class (1,600
\ncc engine displacement capacity).<\/p>\n
He said PT Timor Putra would eventually manufacture Timor cars
\nby itself.<\/p>\n
PT Timor Putra, a joint venture with Kia Motor which, is 70
\npercent controlled by Tommy through Timor Putra and PT Indauda, a
\ncar assembling company based in Surabaya.<\/p>\n
\"But the Timor cars will be produced by PT Timor Putra as a
\nwholly-Indonesian owned company,\" Tunky said yesterday in
\nreferring to the requirement that an automobile company has to be
\nwholly owned by national shareholders to qualify for the pioneer
\nstatus.<\/p>\n
Tunky said yesterday that the national automobile industry
\nprogram is designed to develop national self-reliance in the
\nautomobile industry to allow the industry to export its products
\nand to procure components from different sources.<\/p>\n
The regulations stipulate that the local content of cars
\nproduced by automobile companies which have been granted the
\npioneer status must exceed 20 percent at the end of the first
\nyear of production, 40 percent after the second year and more
\nthan 60 percent after the third year.<\/p>\n
The exemption from import duties and the luxury sales tax
\nautomatically slashed the show-room prices of cars in the country
\nbecause sedans are subject to 100-200 percent import duties and
\nluxury sales tax rates of 20 to 35 percent.<\/p>\n
The rulings stipulate that car components imported by pioneer
\nautomobile companies can be used only for production and for
\nreplacement.<\/p>\n
Companies which are granted the import duty and luxury sales
\ntax exemptions will be audited by the trade and industry ministry
\nwith regard to the amount of local content they have achieved.<\/p>\n
If the minimum local content requirements are not fulfilled,
\nthe automobile companies will be required to pay the import
\nduties and luxury sales tax due on those cars.<\/p>\n
Subronto Laras, president of the Indomobil Group, the second
\nlargest assembler of automobiles in the country, declined to
\ncomment on the new rulings.<\/p>\n
\"I need two weeks to study the provisions of the new
\nregulations,\" Subronto said after he and the executives of other
\nmajor car companies met with Tunky yesterday.<\/p>\n
Subronto ruled out the possibility of selling locally made
\nsedans at Rp 35 million a unit, as promised by Tommy for his
\nTimor cars, if the import tariffs and taxes imposed on
\nautomobiles are not slashed.<\/p>\n
In a related development, House member Budi Hardjono of the
\nindustry and trade commission, commented yesterday that
\ngovernment regulations on the car industry should be transparent
\nand the same for all companies.<\/p>\n
\"Government regulations cannot work in favor of specific
\ncompanies at the expense of others,\" Budi said, warning that
\ndiscriminate rulings might prompt Japanese investors here to
\nrelocate their plants overseas. (kod\/vin)<\/p>",
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