RI brushes off threats of WTO sanctions<\/p>\n
JAKARTA (JP): An Indonesian economist says that a new
\ngovernment policy on the automotive industry cannot be used by
\nJapan as grounds for complaining to the World Trade Organization.<\/p>\n
Sjahrir, the chairman of the Institute for Economics and
\nFinancial Research and a lecturer at the University of
\nIndonesia's School of Economics, said there is a reasonable
\njustification for the government's recently-announced policy,
\nwhich exempts wholly-owned Indonesian companies from paying
\nduties on imported components for the production of cars with
\ndomestic brand names. The sales of such cars will also be
\nexempted from luxury tax.<\/p>\n
\"People will ask why, after some 20 years, cars assembled in
\nIndonesia have low proportions of local content. Is it because we
\ndon't have the skills, or is it because the principal companies
\nwon't allow technology transfer to take place?\" he said.<\/p>\n
Sjahrir was responding to a report in the Monday edition of
\nthe Asia Wall Street Journal which stated that the Japanese
\ngovernment is presently investigating Indonesia's new \"national
\ncar\" program to determine if it conflicts with international
\nrules on fair trade. Japan is also considering a complaint to the
\nWTO to address its grievance.<\/p>\n
The government's new policy, under Presidential Instruction
\nNo. 2\/1996 issued last month, grants import duty and luxury sales
\ntax exemptions to cars which use Indonesian brand names and are
\nproduced by Indonesian companies and developed with domestic
\ntechnology, engineering and designs.<\/p>\n
PT Timor Putra National -- owned by President Soeharto's
\nyoungest son, Hutomo (Tommy) Mandala Putra -- and its production
\nof Timor-brand sedans is, according to the government, the only
\ncompany in the country that currently meets the policy's terms.<\/p>\n
Components for the Timor are imported from South Korea's Kia
\nMotor company.<\/p>\n
Minister of Industry and Trade Tunky Ariwibowo said yesterday
\nthat he would soon give an official explanation of the
\ngovernment's new policy and Indonesia's plans to expand its
\nautomotive industry to the Japanese ambassador in Jakarta.<\/p>\n
Tunky, who was speaking to reporters after installing 277
\nthird-echelon officials at his ministry, said he had heard of the
\nreport only yesterday.<\/p>\n
He refused to address accusations of the new policy being a
\nhidden form of protection which could lead to a monopolized
\nmarket.<\/p>\n
\"The government will explain its overall economic policies,\"
\nhe said.<\/p>\n
Sjahrir said that Indonesia's position in the WTO is strong
\nand that Japan would not retaliate by pulling its investments out
\nof Indonesia.<\/p>\n
Sjahrir said it is still debatable whether the new policy is
\nin line with the government's plan to reduce Indonesia's rising
\ncurrent account deficit, which is expected to reach close to US$8
\nbillion in the current 1995\/1996 fiscal year.<\/p>\n
\"The Timor sedan requires more imports and this will lead to a
\nhigher current account deficit,\" he said. \"The low prices of the
\nsedans are not because it is more efficient, but because it is
\nexempt from taxes,\" Sjahrir pointed out. (kod\/pwn)<\/p>",
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