Bimantara's request for car policy review refused

Bimantara's request for car policy review refused

JAKARTA (JP): The government has turned down the Bimantara
Group's request to revise the national car policy, despite
Bimantara claiming that it is ready to produce a national
car.

In contrast, PT Timor Putra Nasional, the only company that
will get import tariff and tax breaks for the next three years
under the scheme, has delayed launching its national car for six
months from September to next March because local component
producers are not yet ready.

"We'll not revise Presidential Instruction No. 2/1996 on the
national car," Minister of Industry and Trade Tunky Ariwibowo
said on Tuesday night after a three-hour meeting with senior
Bimantara Group officials, including its chairman Bambang
Trihatmodjo, President Soeharto's second son.

The government announced in February that it would grant tax
and tariff breaks to Timor Putra, which is controlled by Hutomo
Mandala Putra -- President Soeharto's youngest son -- to produce
Timor sedans in cooperation with Kia Motors Corp. of South Korea.

Tunky reiterated that for the next three years only Timor
Putra would be exempt from the tariff and luxury sales taxes on
the imported car components and equipment it will need to produce
the first Indonesian car, to be called Timor.

"After three years we may review the regulation and we may
consider giving preferences to other national car producers. But
for now only Timor Putra is eligible," Tunky said, adding that it
is easier for the government to monitor the national car project
if only one company is getting the tax breaks.

But when asked by reporters on the local content of his
company's cars, Bambang said, "Both already have 17 percent local
content.

"We're ready to produce the national car as required by
Presidential Instruction No. 2/1996," he concluded.

The new car policy, which also stipulates that the national
car producing company is 100 percent owned by Indonesian
shareholders, gives Timor Putra three years to develop the Timor
car.

The car has to contain local components of 20 percent by the
end of the first year, 40 percent by the end of the second year
and 60 percent by the end of the third year.

The government said that if the company fails to meet the
stipulations, it will be penalized by having to pay the duty and
luxury sales taxes.

Asked about Presidential Decree No. 42/1996 on national cars
made by Indonesian workers abroad, which has not been officially
announced yet, Tunky said, "I'll give my answer about this in due
course."

Tunky noted that for the time being, other car producers,
including the Bimantara Group, should work with the incentives
offered by the deregulatory package of June 1993, which exempts
car producers from the import tariffs if their local content
exceeds 60 percent.

The Bimantara Group's Chairman Bambang Trihatmodjo was
accompanied at the meeting by commissioner Peter F. Gontha, and
Jongkie D. Sugiarto, the president of PT Bimantara Cakra Nusa --
a Bimantara affiliate producing Hyundai cars. He said on Tuesday
that his company had presented the government a proposal on the
national car.

Saying that there had been no answer until that evening's
meeting from the government, he noted that ideally there should
be more than one national car producer.

Bambang noted that Bimantara, through the subsidiary Bimantara
Cakra Nusa, hopes to start producing sedans, to be called
Bimantara, later this year, in cooperation with Hyundai of South
Korea.

Last Thursday the Bimantara car subsidiary acquired brand
licenses from the government to produce the 1,500 cc Bimantara
Cakra car and the 1,600 Bimantara Nenggala car.

Cakra and Nenggala are the names of special weapons owned
respectively by Kresna and Baladewa, brothers in Javanese
Mahabarata-based shadow-puppet plays. (13)