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)