Bimantara to become second national car manufacturer
Bimantara to become second national car manufacturer
JAKARTA (JP): Another son of President Soeharto is negotiating a cooperation deal with a South Korean company to become Indonesia's second national car manufacturer and thereby gain valuable tax exemptions.
The president's second son, and chairman of the Bimantara Group, Bambang Trihatmodjo, said yesterday that his group hopes to start producing sedans with 1500 cc or 1600 cc engines, to be called Bimantara, later this year, in cooperation with Hyundai of South Korea.
"The price of the cars is likely be less than Rp 35 million (US$15,217) if we get the same exemptions as Timor Putra," he said. PT Timor Putra is the company run by Soeharto's youngest son, Hutomo Mandala Putra.
Bambang said the plan to establish a car manufacturing plant was considered after seeing that the government's new policy on the automotive industry was not limited to a single national car producer.
Last month the government issued a number of regulations -- consisting of a Presidential instruction, a government regulation and two ministerial decrees -- exempting imports of components for cars which will have Indonesian brand names and be produced by Indonesian companies using domestic technology, engineering and designs from the luxury sales tax and other duties.
The new rulings came only days after Hutomo, launched the prototype of a Timor sedan assembled by Timor Putra. The components for the Timor cars were imported from South Korea's Kia Motor company.
Competition
Bambang, when asked yesterday about possible competition with his younger brother, said: "This is not about brotherhood, but pure business. We are ready to compete."
Bambang acknowledged that the impact of the new policy will be positive, "but ideally, there should be more than one company.
"In South Korea, with a population of about 60 million, there are three or four national cars. In Indonesia, with its developing market, the purchasing power of the public will increase if prices go down. So, at least three national cars in Indonesia would be preferable," he said.
Benny Soebianto, vice president of the country's major car assembling company, PT Astra International, also acknowledged the new policy would arouse competition.
"Competition is good. It forces us to reduce costs and increase the local content of our products," he said.
Benny acknowledged that the new policy will have an impact on Astra's products. "But we still have to study the market before deciding whether or not we should cut back production. At least, for now, we are still running at our normal production level.
"If we are forced to cut our current prices, we will do so because our current cost structure still allows us to do so."
Minister of Trade and Industry Tunky Ariwibowo said yesterday that the government's new policy on the automotive industry was a general one, meaning that it was applicable to any car producer as long as it could meet the terms of the regulations.
"Of course, we must check whether or not the terms are properly met," he said prior to a cabinet meeting on the economy yesterday.
Among the requirements, Tunky said, was the need for the producer to export its products -- including cars and components -- in the future.
"We can't continue being the market for industrial countries' products," he said.
Tunky described the policy as a breakthrough which still needed close monitoring and evaluation.
"We have decided to allow Timor Putra to be the first company to implement the decree, so we will see how it develops," he said.
Tunky refused to mention how long the government would monitor Timor Putra, but asserted that the company would report to the government on a regular basis.
Responding to reports that the Japanese and American embassies in Jakarta had questioned the government about the new policy, Tunky said he had met with the foreign missions and explained the situation. He said he was not worried about the possibility of a reciprocal economic sanction.
"The policy is a government decision which everyone must abide by, and the foreign missions understand that," he said. (icn/rid/pwn)
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