RI asked to review car policy<\/p>\n
JAKARTA (JP): The U.S. automotive industry joined Japan and
\nthe European Commission in pressing the Indonesian government to
\nreview its controversial national car policy which they all
\nconsider contradictory to World Trade Organization agreements.<\/p>\n
The government, however, has shown no sign of backing down,
\nwith Minister of Industry and Trade Tunky Ariwibowo affirming
\nyesterday the government's commitment to make the program a
\nsuccess.<\/p>\n
"The policy has already been taken...and we will make it a
\nsuccess," Tunky announced after meeting with Andrew H. Card, Jr.,
\npresident and chief executive officer of the American Automobile
\nManufacturers Association.<\/p>\n
The American association groups General Motors Corporation
\n(GM), Ford Motor Company and Chrysler Corporation, all of which
\nhave an increasing presence in Indonesia.<\/p>\n
In a press conference earlier yesterday, Card called for the
\nIndonesian government to examine its planned national car
\nprogram, which he said contradicts free market principles.<\/p>\n
"Indonesia has an exemplary record of deregulation and opening
\nmarkets," Card said. "Unfortunately, the exemplary record has
\nbeen marred by a program that does not reflect free market
\nprinciples."<\/p>\n
Indonesia announced in February that carmakers wholly owned by
\nIndonesians, who used Indonesian technology and met local content
\nrequirements, were eligible for tax and tariff breaks.<\/p>\n
It then announced that the only company that could meet the
\nrequirements was PT Timor Putra Nasional, controlled by President
\nSoeharto's youngest son Hutomo Mandala Putra. The company, a
\nnewcomer to the industry, has agreed to develop the national car,
\nto be called Timor, jointly with Kia Motors Corp. of South Korea.<\/p>\n
Card, who served as U.S. secretary of transportation under
\nGeorge Bush, warned the policy could affect the flow of
\ninvestment from the United States and other countries into
\nIndonesia. He said it might even affect investment flows to other
\nmembers of the Association of Southeast Asian Nations (ASEAN).<\/p>\n
ASEAN is comprised of Brunei, Indonesia, Malaysia, the
\nPhilippines, Singapore, Thailand and Vietnam.<\/p>\n
"It causes people to second guess investment strategy in
\nIndonesia, and quite possibly the region," Card said.<\/p>\n
He said the flawed nature of Indonesia's national car policy
\nhas made GM review plans to expand local production of its right-
\nhand drive Chevrolet Blazer truck.<\/p>\n
Indonesia hosts GM's only right-hand drive Cherokee Blazer
\ntruck production plant.<\/p>\n
Modify<\/p>\n
Late last month, a senior Ford executive said in Bangkok that
\nhis company will examine and perhaps scrap plans to build a plant
\nin Indonesia because of the policy.<\/p>\n
"If those policies stay, we'll have to modify our plans in
\nIndonesia," said David Snyder, president of Ford's Thailand
\nRegional Office.<\/p>\n
Card, however, reiterated that GM, Ford and Chrysler will not
\ntotally abandon the Indonesian auto market just because of the
\nnew auto policy.<\/p>\n
"I don't want to give impression that GM, Ford and Chrysler
\nwould abandon the Indonesian market. They are in this market and
\nwill be in this market. The question is to what degree," Card
\nsaid yesterday, adding it depends if Indonesia becomes a
\nmanufacturing base for its home market and the region.<\/p>\n
Card warned that it would be unfortunate if Indonesia
\ncontinued to ignore foreign demands as "the world has been
\nspeaking with a very loud and firm voice". Industrial countries
\nagree that Indonesia's national car program collides with WTO
\nprovisions.<\/p>\n
Japan's auto industry and government, as well as the European
\nCommission, have expressed concern over the policy they consider
\na breach of WTO rules.<\/p>\n
The Japan Automobile Manufacturers Association, whose makes
\ndominate the Indonesian market by more than 90 percent, has
\nthreatened to challenge the policy at the WTO.<\/p>\n
Neither the Japanese government nor the European Commission,
\nhowever, have stated they will bring the issue to the WTO.<\/p>\n
Tunky has stressed the Indonesian government believes its
\nnational car policy conforms to WTO provisions. He also said that
\nthe government studied WTO provisions closely before announcing
\nthe policy.<\/p>\n
Tunky reiterated yesterday that the government will not
\nnegotiate with Japan or any other country over its plan to
\nmanufacture the Timor. Instead, it will ask for a stronger
\ncommitment from Kia Motors to make the project a success.<\/p>\n
Card, however, criticized Kia's appointment, saying that Kia
\n"has no track record of transferring technology."<\/p>\n
Meanwhile, Kia's chairman Sun Hong-kim said in Seoul last week
\nthat technology transfers from Kia to Timor Putra would depend
\nvery much on the seriousness of the latter in developing the
\nnational car.<\/p>\n
He promised that Kia would fully support the technology
\ntransfer. As proof, Kia will train 1,000 workers this year to be
\nemployed by Timor Putra.<\/p>\n
He added that 30 independent vendors, which currently supply
\ncomponents to Kia, will visit Indonesia next month to sound out
\ninvestment possibilities.<\/p>\n
Yong Kun-chong, an adviser at Kia, noted that the company
\nwould ship 4,000 semi-assembled sedans to Timor Putra every
\nmonth, starting next month, until its joint venture assembling
\nplant in Cikampek, West Java, is ready to start production in
\n1998.<\/p>\n
A director of Timor Putra, Suparto Soejatmo, said the company
\nhad already received orders for 33,000 Timor cars. The vehicle
\nwill sell for Rp 35 million (US$15,570), half the price of an
\naverage Japanese car.<\/p>\n
Tunky, however, noted yesterday that the government has not
\napproved Timor Putra's plan to import semi-assembled sedans. He
\nsaid his office is still studying the company's progress report
\nand proposal. (rid)<\/p>",
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