Timor car may need more help<\/p>\n
JAKARTA (JP): Some automotive industry analysts predict that
\nthe government will introduce more measures to protect PT Timor
\nPutra Nasional if the car it is developing fails in the local
\nmarket.<\/p>\n
Sri Mulyani I. Sumartono and Faisal H. Basri, both economists
\nat the University of Indonesia, said last week that in addition
\nto giving special exemptions to Timor Putra -- the only firm
\nassigned to develop a national car -- the government will have to
\nsave the company if it fails in the competitive sedan market.<\/p>\n
\"When it turns out that Timor Putra cannot compete locally...I
\nsuspect that the government will introduce new measures to
\nprotect it,\" Sri said after a seminar on the government's
\nnational car program.<\/p>\n
The government announced in February that it will provide a
\nseries of tax and tariff breaks to Timor Putra, which is
\ncontrolled by President Soeharto's youngest son Hutomo Mandala
\nPutra, to produce a national car under the Indonesian brand name
\n\"Timor\" in cooperation with Kia Motors Corp. of South Korea.<\/p>\n
The government has turned down all proposals from other firms
\ninterested in developing similar cars under the same special
\nconditions.<\/p>\n
\"I don't understand why a new company which hasn't even begun
\nproduction is qualified as a pioneering firm to develop a
\nnational car,\" Sri told the seminar organized by the Center for
\nInformation and Development Studies (CIDES).<\/p>\n
Sri and Faisal said the government's granting of \"pioneer\"
\nstatus to Timor Putra lacked transparency and they questioned the
\ncompany's ability to develop the car within three years.<\/p>\n
The government has given Timor Putra three years to develop
\nthe car, which must contain 20-percent local content by the end
\nof the first year, 40 percent after second year and 60 percent by
\nthe end of the third year.<\/p>\n
\"Unless there is a miracle, three years will not be enough for
\nTimor Putra to meet the target of 60-percent local content,\"
\nFaisal said.<\/p>\n
Components<\/p>\n
Other industry analysts believe that local vendors are not
\nstrong enough to support production of the Timor car because most
\ncomponents are produced for commercial vehicles, not passenger
\ncars.<\/p>\n
They add that all the local vendors combined would not
\ncontribute more than 13 percent of the necessary components.<\/p>\n
Umar Juoro, a CIDES researcher, agreed with Sri and Faisal,
\nsaying that it will not be easy for Timor Putra to fulfill the
\n60-percent local content requirement.<\/p>\n
\"However, the new policy could advocate developing the
\ndomestic component industry and encourage the existing car firms
\nto enter the component and machinery industries,\" Umar said at
\nthe seminar.<\/p>\n
But, said Sri, even if Timor Putra can meet the requirements,
\nthere is no guarantee that the Timor car will be accepted by the
\nmarket.<\/p>\n
\"The government can issue rulings to extend tax and tariff
\nbreaks to Timor Putra or require state institutions to buy its
\ncar. However, it cannot force the market to accept the car,\" Sri
\nnoted.<\/p>\n
Sri argued that people in higher income brackets will maintain
\ntheir preferences for certain cars, while most Indonesians --
\nwith their extended families -- will continue buying multi-
\npurpose vehicles rather than sedans.<\/p>\n
If Timor Putra's cars are not popular with local consumers,
\nSri said, the government could require state institutions to
\npurchase its cars as their operational vehicles.<\/p>\n
The government, he said, is likely to defend Timor Putra until
\nit is ready to compete with existing car assemblers and may
\nrequire other entries into the national car program to meet the
\n60-percent local content requirement to qualify for the tax and
\ntariff breaks. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/timor-car-may-need-more-help-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}