Bimantara starts building $1.08b automotive estate

PURWAKARTA, W. Java (JP): Minister of Industry and Trade Tunky Ariwibowo laid a stone here yesterday for the construction of the 500-hectare Bimantara Automotive Industrial Estate, which is expected to begin operation in 1998.

The industrial estate, which is owned by the Bimantara Group -- controlled by President Soeharto's second son Bambang Trihatmodjo -- will house manufacturers of car components, motorbikes and motorcycle components as well as a dry port, a bounded warehouse and other public facilities.

Bambang said that the estate will cost about Rp 2.5 trillion (US$1.08 billion), of which 30 percent will be financed with Bimantara's equity and the remainder with loans.

He said that the automotive plants will start production in the third quarter of 1998, with an initial capacity of 100,000 units per year. "We'll increase the capacity to 200,000 units per year in 2001," he said, adding that companies operating on the estate will employ 15,000 workers.

Bimantara also plans to set up an assembly plant to produce cars with local brand names -- Cakra and Nenggala -- in cooperation with Hyundai Motor company of South Korea.

Bimantara, in producing the cars, has applied to the government for tax and tariff breaks similar to those given to PT Timor Putra Nasional, which will produce a "national car" called Timor in cooperation with Kia Motors of South Korea.

Exemption

The government, under a presidential decree, is offering an exemption of tariffs on imported components and luxury tax on cars that qualify as "national cars" produced by Indonesian firms on the condition that local contents reach 20 percent by the end of the first year of operations, 40 percent by the end of the second year and 60 percent by the end of the third year.

Bimantara, which launched last night its Cakra and Nenggala cars, currently assembles the vehicles in Bekasi, West Java, by using technology from Hyundai Motor.

Bambang said yesterday that in 1998, his company will export its cars to Singapore and Brunei. In 2003, the exports will be expanded to Australia, New Zealand and other countries of the Association of Southeast Asian Nations (ASEAN).

"In the 2000s, we hope that the Indonesian automotive industry will become a net earner of foreign exchange," he said.

Asked about his company's efforts to get a tax break, Bambang said: "We have made all-out efforts and we'll continue trying to get such a facility."

Minister Tunky has repeatedly said that the government will give such a facility only to one company, Timor Putra, in three years' time. Timor Putra is controlled by Bambang's younger brother, Hutomo Mandala Putra.

Bambang said that Bimantara will proceed with its own "national car" program with or without a tax break from the government.

Jongkie D. Sugiarto, the president of Bimantara Cakra Nusa, said that his company will sell Cakra cars at Rp 41.7 million ($18,051) (on the road) per unit.

"If the government granted us a tax break, we could set a lower price," said Jongkie.

In comparison, a Timor car, which was launched early this month, is sold at Rp 35.75 million.

Jongkie said that the price of Nenggala cars will be Rp 59 million per unit.

According to Jongkie, by the end of this year, his company expects to sell about 1,000 Cakra cars.

Tunky said yesterday that the domestic demand for automotive vehicles is estimated at 385,000 units this year. "By the year 2000, the demand may reach 625,000 units per annum," he said. (13)