Bimantara to start its 'national car' project next month

Bimantara to start its 'national car' project next month

By Riyadi

SEOUL (JP): Hyundai Motor Company of South Korea is determined
to support Bimantara Group's "national car" project, which will
be launched next month despite the Indonesian government's
refusal to give the manufacturer tax and tariff breaks.

Hyo-whi Baik, executive vice president of Hyundai Motor, said
here yesterday that his company's partner, Bimantara, will launch
its national car program by introducing a sedan with a 1,500 cc
engine called Bimantara Cakra on July 23.

"They are doing their utmost. They have a very ambitious plan
and we totally agree to build a huge factory. They have secured
the land (in Cikampek, West Java) to build a factory with a
capacity of 100,000 units a year," Baik told The Jakarta Post.

He said the manufacturing plant will be built soon after the
launching of Bimantara's Cakra. The plant will take up to two
years to build.

Young-ho Sohn, a director at Hyundai Motor responsible for the
Southeast Asian region, noted that once the US$700 million
Cikampek manufacturing plant is ready, it will be able to produce
Bimantara cars with a local content of 40 percent in the first
year of operation and 60 percent in the second year.

He added that over 40 suppliers of car components in South
Korea which normally supply Hyundai Motor will soon establish
auto parts manufacturing facilities in Indonesia to support
Bimantara's automobile operations.

Meanwhile, Baik expressed disappointment over the Indonesian
government's decision to assign only one firm, PT Timor Putra
Nasional, to build the country's national car with tax and tariff
incentives.

"We already started the idea of such a national car project
two years ago with our partner... Our national car concept was
already there before the government announced it in February,"
Baik said.

He explained that Hyundai Motor's honorary chairman, Se-Yung
Chung, mentioned the idea of a national car project in his
meeting with President Soeharto two years ago.

"We don't want the Indonesian government to give us special
favor. We don't want it. Just treat us equally," said Baik, who
is in charge of Hyundai's overseas productions.

He noted, however, that it will be a difficult time for
Bimantara's carmaker, PT Citramobil Nasional, to survive the
first two years before the completion of its Cikampek
manufacturing plant in 1998.

"How can they sell Cakra and Nenggala if Timor is coming in
September?" Baik queried, referring to the 1,500 cc Bimantara
Cakra and 1,600 cc Bimantara Nenggala to be produced by
Bimantara, and the 1,500 Timor cars to be sold by Timor Putra.

Both Bimantara Cakra and Bimantara Nenggala will be assembled
by Citramobil in cooperation with Hyundai Motor, while Timor will
be produced by Timor Putra Nasional in cooperation with Kia
Motors Corporation of South Korea.

Timor cars, which will be assembled in Kia's factory in Asan
Bay, South Korea, will start arriving in Indonesia early next
month and will be ready for customers in September. The car will
be sold at some Rp 35 million (US$14,835), half the price of most
cars of the same type in Indonesia.

"Even though can we reduce our prices, frankly speaking, I
don't know whether we can compete against Timor cars or not,"
Baik said.

He noted that after the announcement of the national car
project in February in which Timor Putra Nasional was given the
sole right to produce a national car, the sales of Hyundai
Elantra, which will be renamed Bimantara Nenggala, dropped
drastically from 200 vehicles a month to 70.

"I just realized that they have a large number of stock in
inventory because people are just waiting for Timor cars," Baik
said. "Not only Hyundai but also others, including Japanese car
assemblers, are now suffering. Everybody is now suffering."

However, Baik said, Hyundai will continue with its investment
plans in Indonesia. The company plans to expand its production
bases abroad as Korea's domestic auto market is saturated and
labor costs keep increasing.

"That's our main reason for building our factories abroad.
Indonesia will be our production base to serve the Southeast
Asian region," Baik said.

He added that Hyundai Motor has already started building
factories in India and Turkey. It plans to build another one in
Egypt and is sounding out the possibility of building another
factory in Brazil.

Hyundai sold 1,239,925 vehicles last year, of which 745,299
were domestic sales and 494,626 in overseas markets. This year,
the company plans to produce 1.4 million vehicles, of which some
800,000 will be sold on the domestic market and the other 600,000
in markets abroad.